Question 1

If the spot exchange rate is $\le$1 = $1.50 when the market opens,and $\le$1 = $1.48 at the end of the day,the pound has appreciated,and the dollar has depreciated.

Accepted Answer

A) True 
 B)False

Question 2

Discuss the two schools of thought on exchange rate forecasting.

Accepted Answer

There are two schools of thought on whet

Question 3

The _____ argues that forward exchange rates do the best possible job of forecasting future spot rates and therefore investing in forecasting services would be a waste of money.

Accepted Answer

A) inefficient market school 
B) efficient market school 
C) Fisher Effect 
D) international Fisher Effect 
A) inefficient market school 
B) efficient market school 
C) Fisher Effect 
D) international Fisher Effect

Question 4

What are the main uses of foreign exchange markets for international business?

Accepted Answer

The foreign exchange market serves four

Question 5

Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.

Accepted Answer

A) True 
 B)False

Question 6

The _____ helps us to compare the relative prices of goods and services in different countries.

Accepted Answer

A) interest rate 
B) customs rate 
C) exchange rate 
D) tariff rate 
A) interest rate 
B) customs rate 
C) exchange rate 
D) tariff rate

Question 7

When a tourist changes one currency into another,the tourist is participating in the foreign exchange market.

Accepted Answer

A) True 
 B)False

Question 8

The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as:

Accepted Answer

A) economic exposure. 
B) financial exposure. 
C) translation exposure. 
D) transaction exposure. 
A) economic exposure. 
B) financial exposure. 
C) translation exposure. 
D) transaction exposure.

Question 9

_____ is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects.

Accepted Answer

A) The bandwagon effect 
B) The Fisher Effect 
C) The International Fisher Effect 
D) Capital flight 
A) The bandwagon effect 
B) The Fisher Effect 
C) The International Fisher Effect 
D) Capital flight

Question 10

The most important trading centers for currencies are in Zurich,Frankfurt,Paris,Hong Kong,and Sydney.

Accepted Answer

A) True 
 B)False

Question 11

What is countertrade? Why would a firm engage in countertrade?

Accepted Answer

Countertrade refers to a range of barter

Question 12

The International Fisher Effect has proven to have substantial power at predicting short-run changes in spot exchange rates.

Accepted Answer

A) True 
 B)False

Question 13

The impact of currency exchange rates on the reported financial statements of a company is translation exposure.

Accepted Answer

A) True 
 B)False

Question 14

The value of a currency is determined by the interaction between the demand and the supply of that currency relative to the demand and supply of other currencies.

Accepted Answer

A) True 
 B)False

Question 15

_____ are exchange rates governing some specific future date foreign exchange transactions.

Accepted Answer

A) Spot exchange rates 
B) Forward exchange rates 
C) Future exchange rates 
D) Currency swaps 
A) Spot exchange rates 
B) Forward exchange rates 
C) Future exchange rates 
D) Currency swaps

Question 16

International businesses use foreign exchange markets for all of the following reasons except:

Accepted Answer

A) to receive payments from foreign investments that may be in foreign currencies. 
B) to pay a foreign company for its products or services in its country's currency. 
C) to invest for short terms in money markets when they have spare cash. 
D) to cover themselves from all risks involved in currency speculation. 
A) to receive payments from foreign investments that may be in foreign currencies. 
B) to pay a foreign company for its products or services in its country's currency. 
C) to invest for short terms in money markets when they have spare cash. 
D) to cover themselves from all risks involved in currency speculation.

Question 17

If the spot rate is $1 = *20,and the 30-day forward rate is $1 = *30,the dollar is selling at a discount in the forward market.

Accepted Answer

A) True 
 B)False

Question 18

Compare and contrast currencies that are freely convertible,externally convertible,and nonconvertible.

Accepted Answer

A country's currency is said to be freel

Question 19

With the help of an example explain how a tourist participates in the foreign exchange market.

Accepted Answer

The foreign exchange market is a market

Question 20

The risks that arise from volatile changes in exchange rates are commonly referred to as:

Accepted Answer

A) interest rate risks. 
B) basis risks. 
C) operational risks. 
D) foreign exchange risks. 
A) interest rate risks. 
B) basis risks. 
C) operational risks. 
D) foreign exchange risks.

If the spot exchange rate is $\le$ 1 = $1.50 when the market opens,and $\le$ 1 = $1.48 at the end of the day,the pound has appreciated,and the dollar has depreciated.

Discuss the two schools of thought on exchange rate forecasting.

The _____ argues that forward exchange rates do the best possible job of forecasting future spot rates and therefore investing in forecasting services would be a waste of money.

What are the main uses of foreign exchange markets for international business?

Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.

The _____ helps us to compare the relative prices of goods and services in different countries.

When a tourist changes one currency into another,the tourist is participating in the foreign exchange market.

The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as:

_____ is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects.

The most important trading centers for currencies are in Zurich,Frankfurt,Paris,Hong Kong,and Sydney.

What is countertrade? Why would a firm engage in countertrade?

The International Fisher Effect has proven to have substantial power at predicting short-run changes in spot exchange rates.

The impact of currency exchange rates on the reported financial statements of a company is translation exposure.

The value of a currency is determined by the interaction between the demand and the supply of that currency relative to the demand and supply of other currencies.

_____ are exchange rates governing some specific future date foreign exchange transactions.

International businesses use foreign exchange markets for all of the following reasons except:

If the spot rate is $1 = 20,and the 30-day forward rate is $1 = 30,the dollar is selling at a discount in the forward market.

Compare and contrast currencies that are freely convertible,externally convertible,and nonconvertible.

With the help of an example explain how a tourist participates in the foreign exchange market.

The risks that arise from volatile changes in exchange rates are commonly referred to as:

Globalization

National Differences in Political Economy

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting in the International Business

Financial Management in the International Business

Filters

Exam 9: The Foreign Exchange Market

If the spot exchange rate is ≤\le≤ 1 = $1.50 when the market opens,and ≤\le≤ 1 = $1.48 at the end of the day,the pound has appreciated,and the dollar has depreciated.

Discuss the two schools of thought on exchange rate forecasting.

The _____ argues that forward exchange rates do the best possible job of forecasting future spot rates and therefore investing in forecasting services would be a waste of money.

What are the main uses of foreign exchange markets for international business?

Currency fluctuations can make seemingly profitable trade and investment deals unprofitable and vice versa.

The _____ helps us to compare the relative prices of goods and services in different countries.

When a tourist changes one currency into another,the tourist is participating in the foreign exchange market.

The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as:

_____ is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation or when a country's economic prospects are shaky in other respects.

The most important trading centers for currencies are in Zurich,Frankfurt,Paris,Hong Kong,and Sydney.

What is countertrade? Why would a firm engage in countertrade?

The International Fisher Effect has proven to have substantial power at predicting short-run changes in spot exchange rates.

The impact of currency exchange rates on the reported financial statements of a company is translation exposure.

The value of a currency is determined by the interaction between the demand and the supply of that currency relative to the demand and supply of other currencies.

_____ are exchange rates governing some specific future date foreign exchange transactions.

International businesses use foreign exchange markets for all of the following reasons except:

If the spot rate is $1 = *20,and the 30-day forward rate is $1 = *30,the dollar is selling at a discount in the forward market.

Compare and contrast currencies that are freely convertible,externally convertible,and nonconvertible.

With the help of an example explain how a tourist participates in the foreign exchange market.

The risks that arise from volatile changes in exchange rates are commonly referred to as:

Globalization

National Differences in Political Economy

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting in the International Business

Financial Management in the International Business

Filters

If the spot exchange rate is $\le$ 1 = $1.50 when the market opens,and $\le$ 1 = $1.48 at the end of the day,the pound has appreciated,and the dollar has depreciated.

If the spot rate is $1 = 20,and the 30-day forward rate is $1 = 30,the dollar is selling at a discount in the forward market.