Question 1

Which of the following would a follower of the inefficient market school of thought agree with?

Accepted Answer

A)  Companies would be better off investing in foreign exchange forecasting services. 
B)  Forward exchange rates do the best possible job of forecasting future spot exchange rates. 
C)  Companies can optimize their foreign exchange transactions by using forward markets. 
D)  Forward rates reflect all available information about likely future changes in exchange rates. 
A)  Companies would be better off investing in foreign exchange forecasting services. 
B)  Forward exchange rates do the best possible job of forecasting future spot exchange rates. 
C)  Companies can optimize their foreign exchange transactions by using forward markets. 
D)  Forward rates reflect all available information about likely future changes in exchange rates.

Question 2

Consider the role of investor psychology and bandwagon effects on how well purchasing power parity and the international Fisher effect explain short-term movements in exchange rates.

Accepted Answer

Neither PPP nor the International Fisher

Question 3

Which of the following is referred to as the purchasing power parity puzzle?

Accepted Answer

A)  Reduced levels of inflation in countries where the growth in the money supply is faster than the growth in its output. 
B)  The reason why countries with high inflation rates see depreciation in their currency exchange rates. 
C)  Identical products being sold in different countries for the same price when their price is expressed in terms of the same currency. 
D)  The failure to find a strong link between relative inflation rates and exchange rate movements. 
A)  Reduced levels of inflation in countries where the growth in the money supply is faster than the growth in its output. 
B)  The reason why countries with high inflation rates see depreciation in their currency exchange rates. 
C)  Identical products being sold in different countries for the same price when their price is expressed in terms of the same currency. 
D)  The failure to find a strong link between relative inflation rates and exchange rate movements.

Question 4

A(n) _____ is one in which prices do not reflect all available information.

Accepted Answer

A)  inefficient market 
B)  speculative market 
C)  efficient market 
D)  externally convertible market 
A)  inefficient market 
B)  speculative market 
C)  efficient market 
D)  externally convertible market

Question 5

Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?

Accepted Answer

A)  Currency pairing 
B)  Carry trade 
C)  Currency exchange 
D)  Currency swap 
A)  Currency pairing 
B)  Carry trade 
C)  Currency exchange 
D)  Currency swap

Which of the following would a follower of the inefficient market school of thought agree with?

Consider the role of investor psychology and bandwagon effects on how well purchasing power parity and the international Fisher effect explain short-term movements in exchange rates.

Which of the following is referred to as the purchasing power parity puzzle?

A(n) _____ is one in which prices do not reflect all available information.

Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 10: The Foreign Exchange Market

Which of the following would a follower of the inefficient market school of thought agree with?

Consider the role of investor psychology and bandwagon effects on how well purchasing power parity and the international Fisher effect explain short-term movements in exchange rates.

Which of the following is referred to as the purchasing power parity puzzle?

A(n) _____ is one in which prices do not reflect all available information.

Which of the following refers to the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters