Question 1

Tourists are minor participants in what?

Accepted Answer

A)  the currency conversion exchange 
B)  capital venturing 
C)  foreign traveling 
D)  FDI 
E)  the foreign exchange market 
A)  the currency conversion exchange 
B)  capital venturing 
C)  foreign traveling 
D)  FDI 
E)  the foreign exchange market

Question 2

Explain the difference between spot exchange rates and forward exchange rates.Briefly explain how the forward exchange market works.

Accepted Answer

The spot exchange rate is the rate at wh

Question 3

According to the International 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 4

According to the textbook,PPP theory does not seem to be a particularly good predictor of exchange rate movements for time spans of

Accepted Answer

A)  one year or less. 
B)  three years or less. 
C)  five years or less. 
D)  ten years or less. 
E)  twenty years or less. 
A)  one year or less. 
B)  three years or less. 
C)  five years or less. 
D)  ten years or less. 
E)  twenty years or less.

Question 5

A country's currency is said to be freely convertible when neither residents nor non-residents are allowed to convert it into a foreign currency.

Accepted Answer

A) True 
 B)False

Question 6

PPP theory stands for what?

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 theory 
A)  productivity power premium theory 
B)  process productivity predictor theory 
C)  purchasing power parity theory 
D)  personal power predictor theory 
E)  production possibilités parameter theory

Question 7

______________ refers to a range of barter-like agreements by which goods and services can be traded for other goods and services.

Accepted Answer

A)  Separate trade 
B)  Reciprocal trade 
C)  Countertrade 
D)  Alternative trade 
E)  Cashless trade 
A)  Separate trade 
B)  Reciprocal trade 
C)  Countertrade 
D)  Alternative trade 
E)  Cashless trade

Question 8

The market through which an individual or institution exchanges one currency into another is called the foreign exchange market.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Which of the following is not one of the four main uses that international businesses have for the foreign exchange market?

Accepted Answer

A)  International businesses use foreign exchange markets to convert money they earn in foreign currencies to their home currencies 
B)  International businesses use foreign exchange markets in determining domestic wage rates 
C)  International businesses use foreign exchange markets when they have spare cash that they wish to invest for short terms in money markets 
D)  Currency speculation 
E)  Short term money market investments 
A)  International businesses use foreign exchange markets to convert money they earn in foreign currencies to their home currencies 
B)  International businesses use foreign exchange markets in determining domestic wage rates 
C)  International businesses use foreign exchange markets when they have spare cash that they wish to invest for short terms in money markets 
D)  Currency speculation 
E)  Short term money market investments

Question 11

Explain the concept of countertrade.When does countertrade make sense? How does countertrade help solve the no convertibility problem?

Accepted Answer

Counter trade refers to a range of barte

Question 12

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 13

Current estimates are that currencies worth approximately __________ trillion dollars (U.S.)were traded every day.

Accepted Answer

A)  1 
B)  200 
C)  13 
D)  4.2 
E)  5.3 
A)  1 
B)  200 
C)  13 
D)  4.2 
E)  5.3

Question 14

A stronger Korean won,remembering that Kia cars sold in the United States are paid for in dollars,means what for the Korean based Kia?

Accepted Answer

A)  a need to hedge Japanese yen 
B)  a use for the Euro, a neutral currency 
C)  less profit 
D)  a use for gold to protect against currency fluctuations 
E)  more profit 
A)  a need to hedge Japanese yen 
B)  a use for the Euro, a neutral currency 
C)  less profit 
D)  a use for gold to protect against currency fluctuations 
E)  more profit

Question 15

At the basic level,exchange rates are determined by the demand and supply of one currency relative to the demand and supply for another.

Accepted Answer

A) True 
 B)False

Question 16

You are the manager of a company that operates internationally providing agricultural equipment that has been manufactured and assembled in Canada.You have sold your products in the United States for many years and are now looking to enter other markets.
For a firm like yours that deals in international markets,what does "foreign exchange risk" mean? How could foreign exchange risk affect the profitability of your firm exporting tractors to a German buyer?

Accepted Answer

A foreign exchange risk is a risk that t

Question 17

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 18

The text gives Bolivia as an example of the impact of ______________ on exchange rates.

Accepted Answer

A)  interest rates 
B)  trade imbalances 
C)  market psychology 
D)  bad economic management 
E)  money supply 
A)  interest rates 
B)  trade imbalances 
C)  market psychology 
D)  bad economic management 
E)  money supply

Question 19

The law of one price states that identical products sold in different countries must sell for the same price when their price is expressed in the same currency in competitive markets free of transportation costs and barriers to trade.

Accepted Answer

A) True 
 B)False

Question 20

A forward exchange is an investment fund that not only buys financial assets but also sells them short.

Accepted Answer

A) True 
 B)False

Tourists are minor participants in what?

Explain the difference between spot exchange rates and forward exchange rates.Briefly explain how the forward exchange market works.

According to the International 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

According to the textbook,PPP theory does not seem to be a particularly good predictor of exchange rate movements for time spans of

A country's currency is said to be freely convertible when neither residents nor non-residents are allowed to convert it into a foreign currency.

PPP theory stands for what?

______________ refers to a range of barter-like agreements by which goods and services can be traded for other goods and services.

The market through which an individual or institution exchanges one currency into another is called the foreign exchange market.

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

Which of the following is not one of the four main uses that international businesses have for the foreign exchange market?

Explain the concept of countertrade.When does countertrade make sense? How does countertrade help solve the no convertibility problem?

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

Current estimates are that currencies worth approximately __________ trillion dollars (U.S.)were traded every day.

A stronger Korean won,remembering that Kia cars sold in the United States are paid for in dollars,means what for the Korean based Kia?

At the basic level,exchange rates are determined by the demand and supply of one currency relative to the demand and supply for another.

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.

The text gives Bolivia as an example of the impact of ______________ on exchange rates.

The law of one price states that identical products sold in different countries must sell for the same price when their price is expressed in the same currency in competitive markets free of transportation costs and barriers to trade.

A forward exchange is an investment fund that not only buys financial assets but also sells them short.

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 Randd

Global Manufacturing and Materials Management

Global Human Resource Management

Filters

Exam 9: The Foreign Exchange Market

Tourists are minor participants in what?

Explain the difference between spot exchange rates and forward exchange rates.Briefly explain how the forward exchange market works.

According to the International 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

According to the textbook,PPP theory does not seem to be a particularly good predictor of exchange rate movements for time spans of

A country's currency is said to be freely convertible when neither residents nor non-residents are allowed to convert it into a foreign currency.

PPP theory stands for what?

______________ refers to a range of barter-like agreements by which goods and services can be traded for other goods and services.

The market through which an individual or institution exchanges one currency into another is called the foreign exchange market.

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

Which of the following is not one of the four main uses that international businesses have for the foreign exchange market?

Explain the concept of countertrade.When does countertrade make sense? How does countertrade help solve the no convertibility problem?

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

Current estimates are that currencies worth approximately __________ trillion dollars (U.S.)were traded every day.

A stronger Korean won,remembering that Kia cars sold in the United States are paid for in dollars,means what for the Korean based Kia?

At the basic level,exchange rates are determined by the demand and supply of one currency relative to the demand and supply for another.

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.

The text gives Bolivia as an example of the impact of ______________ on exchange rates.

The law of one price states that identical products sold in different countries must sell for the same price when their price is expressed in the same currency in competitive markets free of transportation costs and barriers to trade.

A forward exchange is an investment fund that not only buys financial assets but also sells them short.

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 Randd

Global Manufacturing and Materials Management

Global Human Resource Management

Filters