A) a structure, rather than a mere commitment, to limiting the growth of the money supply in the economy. B) a recipe for conservative and prudent financial management. C) designed to eliminate the power of politicians to exercise judgment by relying on an automatic and unbendable rule. D) all of the above. A) a structure, rather than a mere commitment, to limiting the growth of the money supply in the economy. B) a recipe for conservative and prudent financial management. C) designed to eliminate the power of politicians to exercise judgment by relying on an automatic and unbendable rule. D) all of the above.

Exam 9: Foreign Exchange Rate Determination and Forecasting

Foreign exchange forecasting can be either long-term,or short-term in duration.Compare and contrast the motivation for and the techniques a forecaster might use for each of the time periods.

Free

(Essay)

4.9/5

(33)

Question 1

Correct Answer:

Verified

Short-run forecasts are usually more tactical in nature as a firm may desire to reduce exchange rate risk associated with foreign receivable or payables.Technical factors and short-term market expectations are often more important for short-run forecasters than long-run parity or fundamental economic conditions.
Long-run forecasts are more strategic in nature as firms make key decisions about entering new foreign markets.Longer time horizons tend to be less accurate but also require less accuracy.What forecasters typically desire is a general long-run understanding of the relationships between markets.Fundamental analysis and parity conditions tend to be more important than technical factors in this type of forecasting.

A major U.S.multinational firm has forecast the euro/dollar rate to be euro1.10/$ one year hence,and an exchange rate of $1.40 for the British pound (£)in the same time period.What does this imply the company's expected rate for the euro per pound to be in one year?

Free

(Multiple Choice)

4.8/5

(36)

Question 2

Correct Answer:

Verified

Technical analysis of exchange rates developed in part due to the forecasting inadequacies of fundamental exchange rate theories.

Free

(True/False)

4.8/5

(37)

Question 3

Correct Answer:

Verified

True

The stability of the Russian Ruble in the 1990s (until the Russian debt crisis)was considered an observable success of the Yeltsin administration.

(True/False)

4.9/5

(35)

Question 4

After the Russian government (in August 1998)allowed the Ruble to move outside its official trading range of between Ru5.70/$-Ru6.35/$,the value of the Ruble eventually to around by May 1999.

(Multiple Choice)

4.7/5

(37)

Question 5

It is safe to say that most determinants of the spot exchange rate are also affected by changes in the spot rate.i.e.,they are linked AND mutually determined.

(True/False)

4.8/5

(41)

Question 6

Describe the asset market approach to exchange rate determination.How is this consistent with economic theory of (say,security)prices in general?

(Essay)

4.9/5

(38)

Question 7

Short-term foreign exchange forecasts are often motivated by such activities as whereas long-term forecasts are more likely motivated by .

(Multiple Choice)

4.8/5

(37)

Question 8

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

(True/False)

4.8/5

(39)

Question 9

The ________ is the Argentine currency unit.

(Multiple Choice)

4.9/5

(40)

Question 10

A currency board is

(Multiple Choice)

4.9/5

(32)

Question 11

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks,as well as the expected future levels and rates of growth of monetary stock

(Multiple Choice)

4.9/5

(43)

Question 12

When country Central banks work together to intervene and push a particular currency's value in a desired direction,this is known as coordinated intervention.

(True/False)

4.9/5

(42)

Question 13

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

(True/False)

4.8/5

(37)

Question 14

Argentina's economic performance in the 1990s while their peso was pegged to the U.S.dollar can be characterized as rates of inflation and rates of unemployment.

(Multiple Choice)

4.8/5

(40)

Question 15

The Central Bank practice of the active buying and selling of the domestic currency against foreign currencies is the process of ________.

(Multiple Choice)

4.7/5

(36)

Question 16

The more efficient the foreign exchange market is,the more likely it is that exchange rate movements are random walks.

(True/False)

4.9/5

(39)

Question 17

The Chinese government announces that on December 31,2006 the value of the Yuan will officially change from 6.40 Yuan/$ to 6.00 Yuan/$.This would be an official of the Chinese currency of .

(Multiple Choice)

4.8/5

(39)

Question 18

There is a long-standing saying that "what worries bankers is unemployment,but what worries elected officials is inflation."

(True/False)

4.7/5

(29)

Question 19

When the Russian Ruble reached the limits of the bands about its managed float targets (Ru5.70/$ to Ru6.35/$)in 1997,the Russian government would intervene in the markets to stabilize the Ruble.If the exchange rate approached Ru5.70/$ the government would Rubles using foreign exchange and gold,or if the exchange rate approached Ru6.35/$ they would Rubles.

(Multiple Choice)

4.9/5

(45)

Question 20

Showing 1 - 20 of 53

Foreign exchange forecasting can be either long-term,or short-term in duration.Compare and contrast the motivation for and the techniques a forecaster might use for each of the time periods.

A major U.S.multinational firm has forecast the euro/dollar rate to be euro1.10/$ one year hence,and an exchange rate of $1.40 for the British pound (£)in the same time period.What does this imply the company's expected rate for the euro per pound to be in one year?

Technical analysis of exchange rates developed in part due to the forecasting inadequacies of fundamental exchange rate theories.

The stability of the Russian Ruble in the 1990s (until the Russian debt crisis)was considered an observable success of the Yeltsin administration.

After the Russian government (in August 1998)allowed the Ruble to move outside its official trading range of between Ru5.70/$-Ru6.35/$,the value of the Ruble eventually to around by May 1999.

It is safe to say that most determinants of the spot exchange rate are also affected by changes in the spot rate.i.e.,they are linked AND mutually determined.

Describe the asset market approach to exchange rate determination.How is this consistent with economic theory of (say,security)prices in general?

Short-term foreign exchange forecasts are often motivated by such activities as whereas long-term forecasts are more likely motivated by .

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

The ________ is the Argentine currency unit.

A currency board is

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks,as well as the expected future levels and rates of growth of monetary stock

When country Central banks work together to intervene and push a particular currency's value in a desired direction,this is known as coordinated intervention.

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

Argentina's economic performance in the 1990s while their peso was pegged to the U.S.dollar can be characterized as rates of inflation and rates of unemployment.

The Central Bank practice of the active buying and selling of the domestic currency against foreign currencies is the process of ________.

The more efficient the foreign exchange market is,the more likely it is that exchange rate movements are random walks.

The Chinese government announces that on December 31,2006 the value of the Yuan will officially change from 6.40 Yuan/$ to 6.00 Yuan/$.This would be an official of the Chinese currency of .

There is a long-standing saying that "what worries bankers is unemployment,but what worries elected officials is inflation."

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

Exam 9: Foreign Exchange Rate Determination and Forecasting

Foreign exchange forecasting can be either long-term,or short-term in duration.Compare and contrast the motivation for and the techniques a forecaster might use for each of the time periods.

A major U.S.multinational firm has forecast the euro/dollar rate to be euro1.10/$ one year hence,and an exchange rate of $1.40 for the British pound (£)in the same time period.What does this imply the company's expected rate for the euro per pound to be in one year?

Technical analysis of exchange rates developed in part due to the forecasting inadequacies of fundamental exchange rate theories.

The stability of the Russian Ruble in the 1990s (until the Russian debt crisis)was considered an observable success of the Yeltsin administration.

After the Russian government (in August 1998)allowed the Ruble to move outside its official trading range of between Ru5.70/$-Ru6.35/$,the value of the Ruble eventually ________ to around ________ by May 1999.

It is safe to say that most determinants of the spot exchange rate are also affected by changes in the spot rate.i.e.,they are linked AND mutually determined.

Describe the asset market approach to exchange rate determination.How is this consistent with economic theory of (say,security)prices in general?

Short-term foreign exchange forecasts are often motivated by such activities as ________ whereas long-term forecasts are more likely motivated by ________.

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

The ________ is the Argentine currency unit.

A currency board is

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks,as well as the expected future levels and rates of growth of monetary stock

When country Central banks work together to intervene and push a particular currency's value in a desired direction,this is known as coordinated intervention.

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

Argentina's economic performance in the 1990s while their peso was pegged to the U.S.dollar can be characterized as ________ rates of inflation and ________ rates of unemployment.

The Central Bank practice of the active buying and selling of the domestic currency against foreign currencies is the process of ________.

The more efficient the foreign exchange market is,the more likely it is that exchange rate movements are random walks.

The Chinese government announces that on December 31,2006 the value of the Yuan will officially change from 6.40 Yuan/$ to 6.00 Yuan/$.This would be an official ________ of the Chinese currency of ________.

There is a long-standing saying that "what worries bankers is unemployment,but what worries elected officials is inflation."

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

After the Russian government (in August 1998)allowed the Ruble to move outside its official trading range of between Ru5.70/$-Ru6.35/$,the value of the Ruble eventually to around by May 1999.

Short-term foreign exchange forecasts are often motivated by such activities as whereas long-term forecasts are more likely motivated by .

Argentina's economic performance in the 1990s while their peso was pegged to the U.S.dollar can be characterized as rates of inflation and rates of unemployment.

The Chinese government announces that on December 31,2006 the value of the Yuan will officially change from 6.40 Yuan/$ to 6.00 Yuan/$.This would be an official of the Chinese currency of .