Question 1

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

Accepted Answer

A) True 
 B)False

Question 2

List the five underlying building blocks that determine the supply and demand of foreign exchange.

Accepted Answer

Foreign exchange is a unique commodity a

Question 3

Which of the following was true of the Bretton Woods system?

Accepted Answer

A)  All currencies in the system had floating exchange rates. 
B)  All currencies were pegged at a fixed rate to the dollar. 
C)  All currencies were maintained by fixing their prices in terms of gold. 
D)  All currencies in the system were required to be gold convertible. 
A)  All currencies in the system had floating exchange rates. 
B)  All currencies were pegged at a fixed rate to the dollar. 
C)  All currencies were maintained by fixing their prices in terms of gold. 
D)  All currencies in the system were required to be gold convertible.

Question 4

The Bretton Woods system did not allow the United States to unilaterally change the exchange rate of the dollar.

Accepted Answer

A) True 
 B)False

Question 5

The ____ is defined as the difference between the offer price and the bid price in a foreign exchange.

Accepted Answer

A)  cost to serve 
B)  spread 
C)  forward discount 
D)  forward premium 
A)  cost to serve 
B)  spread 
C)  forward discount 
D)  forward premium

Question 6

Which of the following will cause a country's currency to depreciate?

Accepted Answer

A)  High interest rates on the currency 
B)  High inflation rates 
C)  High account surplus 
D)  High in-flow of foreign funds 
A)  High interest rates on the currency 
B)  High inflation rates 
C)  High account surplus 
D)  High in-flow of foreign funds

Question 7

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Accepted Answer

A)  dollar 
B)  yuan 
C)  gold 
D)  diamonds 
A)  dollar 
B)  yuan 
C)  gold 
D)  diamonds

Question 8

Strategic hedging focuses on using forward contracts and swaps to contain currency risks.

Accepted Answer

A) True 
 B)False

Question 9

A clean floating exchange rate policy is a government policy to _____.

Accepted Answer

A)  set exchange rates purely on the basis of supply and demand 
B)  allow a currency's value to fluctuate according to the foreign exchange rate 
C)  allow selective government intervention in determining the exchange rate 
D)  link the exchange rate of a currency to the gold standard 
A)  set exchange rates purely on the basis of supply and demand 
B)  allow a currency's value to fluctuate according to the foreign exchange rate 
C)  allow selective government intervention in determining the exchange rate 
D)  link the exchange rate of a currency to the gold standard

Question 10

Which of the following is an advantage of a strong US dollar?

Accepted Answer

A)  US importers will find it easier to compete with low-cost imports. 
B)  US exporters will find it easier to compete on price abroad. 
C)  US firms will experience less competitive pressure to keep prices low. 
D)  US tourists will find it more expensive when traveling abroad. 
A)  US importers will find it easier to compete with low-cost imports. 
B)  US exporters will find it easier to compete on price abroad. 
C)  US firms will experience less competitive pressure to keep prices low. 
D)  US tourists will find it more expensive when traveling abroad.

Question 11

The Bretton Woods system had been built on the condition that the US inflation rate had to be continuously high.

Accepted Answer

A) True 
 B)False

Question 12

Forward transactions allow participants to buy and sell currencies now for future delivery.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

Accepted Answer

A)  The floating exchange rate 
B)  The fixed exchange rate 
C)  The stock market index 
D)  The Big Mac index 
A)  The floating exchange rate 
B)  The fixed exchange rate 
C)  The stock market index 
D)  The Big Mac index

Question 14

The _____ suggests the price for identical products in different countries would be the same,if trade barriers are absent.

Accepted Answer

A)  theory of purchasing power parity 
B)  fixed exchange rate policy 
C)  Penn effect 
D)  Bretton Woods system 
A)  theory of purchasing power parity 
B)  fixed exchange rate policy 
C)  Penn effect 
D)  Bretton Woods system

Question 15

Explain,with the help of examples,the three primary types of foreign exchange transactions.

Accepted Answer

There are three primary types of foreign

Question 16

A manager arguing against currency hedging would most likely argue that _____.

Accepted Answer

A)  currency hedging eats into company profits 
B)  currency hedging leaves firms at the mercy of the spot market 
C)  currency hedging decreases stability of cash flows and earnings 
D)  currency hedging is mainly a practice of very large MNEs 
A)  currency hedging eats into company profits 
B)  currency hedging leaves firms at the mercy of the spot market 
C)  currency hedging decreases stability of cash flows and earnings 
D)  currency hedging is mainly a practice of very large MNEs

Question 17

Which of the following is one of the major reasons the gold standard was abandoned?

Accepted Answer

A)  The increased flow of gold from the U.S. into foreign central banks. 
B)  The competitive devaluation of currencies during the Great Depression. 
C)  The strengthening of the U.S. dollar due to the rise in productivity levels in the United States. 
D)  The United States unilaterally announced that the dollar would not be convertible to gold. 
A)  The increased flow of gold from the U.S. into foreign central banks. 
B)  The competitive devaluation of currencies during the Great Depression. 
C)  The strengthening of the U.S. dollar due to the rise in productivity levels in the United States. 
D)  The United States unilaterally announced that the dollar would not be convertible to gold.

Question 18

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

Accepted Answer

A) True 
 B)False

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

List the five underlying building blocks that determine the supply and demand of foreign exchange.

Which of the following was true of the Bretton Woods system?

The Bretton Woods system did not allow the United States to unilaterally change the exchange rate of the dollar.

The ____ is defined as the difference between the offer price and the bid price in a foreign exchange.

Which of the following will cause a country's currency to depreciate?

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Strategic hedging focuses on using forward contracts and swaps to contain currency risks.

A clean floating exchange rate policy is a government policy to _____.

Which of the following is an advantage of a strong US dollar?

The Bretton Woods system had been built on the condition that the US inflation rate had to be continuously high.

Forward transactions allow participants to buy and sell currencies now for future delivery.

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

The _____ suggests the price for identical products in different countries would be the same,if trade barriers are absent.

Explain,with the help of examples,the three primary types of foreign exchange transactions.

A manager arguing against currency hedging would most likely argue that _____.

Which of the following is one of the major reasons the gold standard was abandoned?

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

Globalizing Business

Understanding Formal Institutions: Politics, Laws, and Economics

Emphasizing Informal Institutions: Cultures, Ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,Structuring,and Learning around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

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Exam 7: Dealing with Foreign Exchange

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

List the five underlying building blocks that determine the supply and demand of foreign exchange.

Which of the following was true of the Bretton Woods system?

The Bretton Woods system did not allow the United States to unilaterally change the exchange rate of the dollar.

The ____ is defined as the difference between the offer price and the bid price in a foreign exchange.

Which of the following will cause a country's currency to depreciate?

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Strategic hedging focuses on using forward contracts and swaps to contain currency risks.

A clean floating exchange rate policy is a government policy to _____.

Which of the following is an advantage of a strong US dollar?

The Bretton Woods system had been built on the condition that the US inflation rate had to be continuously high.

Forward transactions allow participants to buy and sell currencies now for future delivery.

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

The _____ suggests the price for identical products in different countries would be the same,if trade barriers are absent.

Explain,with the help of examples,the three primary types of foreign exchange transactions.

A manager arguing against currency hedging would most likely argue that _____.

Which of the following is one of the major reasons the gold standard was abandoned?

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

Globalizing Business

Understanding Formal Institutions: Politics, Laws, and Economics

Emphasizing Informal Institutions: Cultures, Ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,Structuring,and Learning around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

Filters