Exam 10: Foreign Exchange Rate Determination and Forecasting

The ________ approach argues that exchange rates are determined by the supply and demand for a wide variety of financial assets

The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

Foreign exchange forecasting can be either long-term, or short-term in duration. Compare and contrast the motivation for and the techniques a forecaster might use for each of the time periods.

A major U.S. multinational firm has forecast the euro/dollar rate to be €1.10/$ one year hence, and an exchange rate of $1.40 for the British pound (£)in the same time period. What does this imply the company's expected rate for the euro per pound to be in one year?

The authors did NOT identify which of the following as a root of the Asian currency crisis?

A currency board is

The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.

The authors claim that theoretical and empirical studies appear to show that fundamentals do apply to the long-term for foreign exchange.

The ________ provides a means to account for international cash flows in a standardized and systematic manner.

The ________ approach argues that equilibrium exchange rates are achieved when the net inflow of foreign exchange arising from current account activities is equal to the net outflow of foreign exchange arising from financial account activities.

The longer the time horizon of the technical analyst the more accurate the prediction of foreign exchange rates is likely to be.

Which of the following did NOT contribute to the exchange rate collapse in emerging markets in the 1990s?

The ________ is the Argentine currency unit.

The balance of payments approach of exchange rate theory is largely dismissed by the academic community today, while the practitioner public still rely on different variations of the theory for their decision making.