Exam 22: Exchange Rates and Financial Links Between Countries

Which of the following statements concerning the International Monetary Fund is true?

The IMF comprises of 50 member countries including all developed countries,and a few countries of Asia and Latin America.

Assume a U.S.investor buys a Mexican bond with a face value of MXP 1,000 and a 20 percent annual interest yield while the exchange rate is MXP 10 per dollar.What is the dollar return from the bond if the exchange rate at the end of the year is MXP 11 per dollar?

Suppose a 10-mile taxi ride costs £6.50 in London and $10.00 in Los Angeles.If the exchange rate is £1 = $1.70 purchasing power parity holds.

Suppose the official gold value of the Brazilian real changes from 457 reals per ounce to 528 reals per ounce.We can then say that:

Suppose you observe that with a given supply curve,the Peruvian demand for Argentinean pesos steadily decreases.This will most likely mean:

If $1 was equivalent to 120 Japanese yen in 2008 and 125 Japanese yen in 2010,it implies in 2010,there was:

The gold standard ended in the 1970s because the gold supplies failed to keep pace with the increase in money supplies required for industrialization and rapid economic growth witnessed in this era.

A country on a gold standard was able to maintain people's confidence in the value of its currency by:

If the euro per dollar exchange rate changes from $1 = 0.8 euros to $1 = 0.7 euros,it implies that the euro has depreciated against the dollar.

If a bushel of corn sells for $2 in the United States and for 4,000 COP (Colombian peso) in Colombia,and if 1 dollar is worth 2,200 COP,then:

Suppose a Canadian investor buys a one-year U.S.government bond that pays 7 percent interest.If the U.S.dollar appreciates 4 percent against the Canadian dollar during the year,what must be the yield on a comparable Canadian government bond for interest rate parity to hold?

If you receive a dollar return of 6 percent on a one-year Korean bond that yields 10 percent annually,this means that between the purchase date and the time of maturity:

The gold standard fixes the:

In the foreign exchange market where French francs are traded for Japanese yen,a decrease in the interest rate in France is most likely to cause:

The exchange-rate arrangement that emerged from the Bretton Woods conference is often called a managed float standard.

An upward-sloping supply curve of Korean won in terms of Canadian dollars indicates that:

The gold standard ended with the:

What is a currency board?

Appreciation of the dollar means that now it takes more dollars to buy one unit of foreign currency.