Question 1

Which of the following is a feature of the foreign exchange market?

Accepted Answer

A) The market never sleeps 
B) The market has not yet created a global link 
C) There are not yet significant differences in the exchange rates 
D) High-speed computer linkages between trading centers have yet to be created 
E) Prices for various currencies are primarily set in New York and London 
A) The market never sleeps 
B) The market has not yet created a global link 
C) There are not yet significant differences in the exchange rates 
D) High-speed computer linkages between trading centers have yet to be created 
E) Prices for various currencies are primarily set in New York and London

Question 2

When a U.S.tourist in Japan goes to a bank to convert her dollars into Japanese yen, the exchange rate is the

Accepted Answer

A) forward exchange rate. 
B) regulated exchange rate. 
C) sanctioned exchange rate. 
D) spot exchange rate. 
E) Japanese central bank rate 
A) forward exchange rate. 
B) regulated exchange rate. 
C) sanctioned exchange rate. 
D) spot exchange rate. 
E) Japanese central bank rate

Question 3

_____________ is based on the premise that analyzable market trends and waves can be used to predict future trends and waves.

Accepted Answer

A) Technical analysis 
B) Fundamental analysis 
C) Basic analysis 
D) Central analysis 
E) Econometric analysis 
A) Technical analysis 
B) Fundamental analysis 
C) Basic analysis 
D) Central analysis 
E) Econometric analysis

Question 4

The type of analysis that predicts exchange rate movements by using price and volume data to determine past trends is called

Accepted Answer

A) fundamental analysis. 
B) primary evaluation. 
C) technical analysis. 
D) principal investigation. 
E) econometric analysis 
A) fundamental analysis. 
B) primary evaluation. 
C) technical analysis. 
D) principal investigation. 
E) econometric analysis

Question 5

What are the functions of the foreign exchange market? Would international commerce be possible without its existence?

Accepted Answer

The foreign exchange market is a market

Question 6

The law of one price and purchasing power parity are two components of

Accepted Answer

A) market psychology 
B) price and exchange rates 
C) interest rate 
D) prices inflation 
E) economic theory 
A) market psychology 
B) price and exchange rates 
C) interest rate 
D) prices inflation 
E) economic theory

Question 7

When two parties agree to exchange currency and execute the deal immediately, the transaction is referred to as a ______________.

Accepted Answer

A) point-in-time exchange 
B) temporal exchange 
C) spot exchange 
D) forward exchange 
E) transaction 
A) point-in-time exchange 
B) temporal exchange 
C) spot exchange 
D) forward exchange 
E) transaction

Question 8

A country's currency is said to be _____________ when the country's government allows both residents and non-residents to purchase unlimited amounts of foreign currency with it.

Accepted Answer

A) technically convertible 
B) freely convertible 
C) externally convertible 
D) nonconvertible 
E) internally convertible 
A) technically convertible 
B) freely convertible 
C) externally convertible 
D) nonconvertible 
E) internally convertible

Question 9

The PPP theory seems to best predict exchange rate changes for countries with

Accepted Answer

A) very low rates of inflation and developed capital markets. 
B) very low rates of inflation and underdeveloped capital markets. 
C) very high rates of inflation and underdeveloped capital markets. 
D) very high rates of inflation and developed capital markets. 
E) low rates of inflation and underdeveloped capital markets 
A) very low rates of inflation and developed capital markets. 
B) very low rates of inflation and underdeveloped capital markets. 
C) very high rates of inflation and underdeveloped capital markets. 
D) very high rates of inflation and developed capital markets. 
E) low rates of inflation and underdeveloped capital markets

Question 10

Fundamental analysis uses price and volume data to determine past trends, which are expected to continue into the future.

Accepted Answer

A) True 
 B)False

Question 11

Calculate the forward exchange rate using the following information.spot exchange rate is $1.45 for 1 Euro.The nominal interest rate in Canada is 6 percent and the nominal interest rate in Europe is 4%.

Accepted Answer

A) 1.44 
B) 1.43 
C) 1.45 
D) 1.41 
E) 1.42 
A) 1.44 
B) 1.43 
C) 1.45 
D) 1.41 
E) 1.42

Question 12

In international trade, the risk of not getting paid for a product that is exported from one country to another is referred to foreign exchange risk.

Accepted Answer

A) True 
 B)False

Question 13

According to the Fisher effect, if the real rate of interest in a country is 5 percent and the annual inflation is expected to be 10 percent, the nominal interest rate will be

Accepted Answer

A) 5 percent. 
B) 10 percent. 
C) 12.5 percent 
D) 15 percent. 
E) 20 percent. 
A) 5 percent. 
B) 10 percent. 
C) 12.5 percent 
D) 15 percent. 
E) 20 percent.

Question 14

PPP theory stands for

Accepted Answer

A) Productivity Power Premium theory. 
B) Process Productivity Predictor theory. 
C) Purchasing Power Parity theory. 
D) Personal Power Predictor theory. 
E) Production Possibilités Parameter 
A) Productivity Power Premium theory. 
B) Process Productivity Predictor theory. 
C) Purchasing Power Parity theory. 
D) Personal Power Predictor theory. 
E) Production Possibilités Parameter

Question 15

A currency is _____________ when neither residents nor non-residents are allowed to convert it into a foreign currency.

Accepted Answer

A) freely convertible 
B) nonconvertible 
C) externally convertible 
D) technically convertible 
E) inconvertible 
A) freely convertible 
B) nonconvertible 
C) externally convertible 
D) technically convertible 
E) inconvertible

Question 16

The _____________ theory tells us that a country with a high inflation rate will see deprecation in its currency exchange rate.

Accepted Answer

A) law of one price 
B) monetary system 
C) PPP 
D) price inflation 
E) currency determinism 
A) law of one price 
B) monetary system 
C) PPP 
D) price inflation 
E) currency determinism

Question 17

Small Canadian businesses will be ____________ than large Canadian businesses to be exposed to currency risk associated with the Canadian dollar.

Accepted Answer

A) less likely 
B) unlikely 
C) likely 
D) probably likely 
E) more likely 
A) less likely 
B) unlikely 
C) likely 
D) probably likely 
E) more likely

Question 18

Your company has decided to enter the Argentinean market with a product line of automobile accessories.You have decided to use two wholesalers, who will distribute to the retail market.The potential size of the market is $10,000, 000 USD per year.However, both of your wholesalers will not assume the risk of invoices charging USD and they want at least 60 days before paying.They argue that they will have to give their retailers 60 days to pay and their retailers will only pay them in pesos.Argentina has just come out of a currency crisis and your Canadian bank has warned you of possible severe currency fluctuations.What payment and currency strategy will you suggest to your senior management? Explain your answer.

Accepted Answer

If you agree to the payment strategy tha

Question 19

The rate at which one currency is converted into another is called the ___________.

Accepted Answer

A) replacement percentage 
B) resale rate 
C) exchange rate 
D) interchange ratio 
E) valuation rate 
A) replacement percentage 
B) resale rate 
C) exchange rate 
D) interchange ratio 
E) valuation rate

Question 20

In essence, PPP theory predicts that

Accepted Answer

A) there is no relationship between changes in relative prices and changes in exchange rates. 
B) changes in relative prices will result in stability in exchange rates. 
C) stability in relative prices will result in a change in exchange rates. 
D) changes in relative prices will result in a change in exchange rates. 
E) changes in market barriers will result in changes in exchange rates 
A) there is no relationship between changes in relative prices and changes in exchange rates. 
B) changes in relative prices will result in stability in exchange rates. 
C) stability in relative prices will result in a change in exchange rates. 
D) changes in relative prices will result in a change in exchange rates. 
E) changes in market barriers will result in changes in exchange rates

Which of the following is a feature of the foreign exchange market?

When a U.S.tourist in Japan goes to a bank to convert her dollars into Japanese yen, the exchange rate is the

_____________ is based on the premise that analyzable market trends and waves can be used to predict future trends and waves.

The type of analysis that predicts exchange rate movements by using price and volume data to determine past trends is called

What are the functions of the foreign exchange market? Would international commerce be possible without its existence?

The law of one price and purchasing power parity are two components of

When two parties agree to exchange currency and execute the deal immediately, the transaction is referred to as a ______________.

A country's currency is said to be _____________ when the country's government allows both residents and non-residents to purchase unlimited amounts of foreign currency with it.

The PPP theory seems to best predict exchange rate changes for countries with

Fundamental analysis uses price and volume data to determine past trends, which are expected to continue into the future.

Calculate the forward exchange rate using the following information.spot exchange rate is $1.45 for 1 Euro.The nominal interest rate in Canada is 6 percent and the nominal interest rate in Europe is 4%.

In international trade, the risk of not getting paid for a product that is exported from one country to another is referred to foreign exchange risk.

According to the Fisher effect, if the real rate of interest in a country is 5 percent and the annual inflation is expected to be 10 percent, the nominal interest rate will be

PPP theory stands for

A currency is _____________ when neither residents nor non-residents are allowed to convert it into a foreign currency.

The _____________ theory tells us that a country with a high inflation rate will see deprecation in its currency exchange rate.

Small Canadian businesses will be ____________ than large Canadian businesses to be exposed to currency risk associated with the Canadian dollar.

The rate at which one currency is converted into another is called the ___________.

In essence, PPP theory predicts that

Globalization

Country Differences in Political Economy

The Cultural Environment

Ethics in International Business

International Trade Theories

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Global Monetary System

Global Strategy

Entering Foreign Markets

Exporting, Importing, and Countertrade

Global Marketing and RD

Global Production, Outsourcing, and Logistics

Global Human Resource Management

Filters

Exam 9: The Foreign Exchange Market

Which of the following is a feature of the foreign exchange market?

When a U.S.tourist in Japan goes to a bank to convert her dollars into Japanese yen, the exchange rate is the

_____________ is based on the premise that analyzable market trends and waves can be used to predict future trends and waves.

The type of analysis that predicts exchange rate movements by using price and volume data to determine past trends is called

What are the functions of the foreign exchange market? Would international commerce be possible without its existence?

The law of one price and purchasing power parity are two components of

When two parties agree to exchange currency and execute the deal immediately, the transaction is referred to as a ______________.

A country's currency is said to be _____________ when the country's government allows both residents and non-residents to purchase unlimited amounts of foreign currency with it.

The PPP theory seems to best predict exchange rate changes for countries with

Fundamental analysis uses price and volume data to determine past trends, which are expected to continue into the future.

Calculate the forward exchange rate using the following information.spot exchange rate is $1.45 for 1 Euro.The nominal interest rate in Canada is 6 percent and the nominal interest rate in Europe is 4%.

In international trade, the risk of not getting paid for a product that is exported from one country to another is referred to foreign exchange risk.

According to the Fisher effect, if the real rate of interest in a country is 5 percent and the annual inflation is expected to be 10 percent, the nominal interest rate will be

PPP theory stands for

A currency is _____________ when neither residents nor non-residents are allowed to convert it into a foreign currency.

The _____________ theory tells us that a country with a high inflation rate will see deprecation in its currency exchange rate.

Small Canadian businesses will be ____________ than large Canadian businesses to be exposed to currency risk associated with the Canadian dollar.

The rate at which one currency is converted into another is called the ___________.

In essence, PPP theory predicts that

Globalization

Country Differences in Political Economy

The Cultural Environment

Ethics in International Business

International Trade Theories

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Global Monetary System

Global Strategy

Entering Foreign Markets

Exporting, Importing, and Countertrade

Global Marketing and RD

Global Production, Outsourcing, and Logistics

Global Human Resource Management

Filters