Question 1

Prior to July 2,1997,the Thai government:

Accepted Answer

A) allowed the Thai Bhat to float against major currencies. 
B) fixed the Bhat's value against the Korean won only. 
C) fixed the Bhat's value against major currencies especially the U.S.dollar. 
D) none of the above

Question 2

The authors claim that random events,institutional frictions,and technical factors may cause currency values to deviate significantly from their long-term fundamental path.

Accepted Answer

A) True 
 B)False

Question 3

The most visible roots of the crisis were in the excesses of capital inflows into Thailand extending credit to a variety of domestic investments and enterprises beyond what the Thai economy could support and creating an investment "bubble."

Accepted Answer

A) True 
 B)False

Question 4

Slow economic growth and continued unemployment problems are common reasons for central banks to hold currency values down.

Accepted Answer

A) True 
 B)False

Question 5

Examples of a business motivation for long-run exchange rate forecasts include all but which of the following?

Accepted Answer

A) a major capital investment in a foreign country 
B) the desire to hedge a 90-day security 
C) a portfolio manager considering investing in foreign securities 
D) All of the above are examples of a business motivation for long-run exchange rate forecast.

Question 6

Which of the following did NOT contribute to the Russian currency crisis of 1998?

Accepted Answer

A) an accelerated flight of capital 
B) generally deteriorating economic conditions 
C) a surprisingly healthy government surplus that was neither funding internal investment nor external debt service 
D) all of the above

Question 7

The Asian Currency crisis appeared to begin in:

Accepted Answer

A) South Korea. 
B) Taiwan. 
C) Thailand. 
D) Japan.

Question 8

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

Accepted Answer

A) parity conditions 
B) asset approach 
C) balance of payments 
D) International Fisher Effect

Question 9

Which of the following is NOT a technique used by governments or central banks to impact domestic currency valuation?

Accepted Answer

A) Indirect Intervention 
B) Direct Intervention 
C) Capital Controls 
D) All of the above are techniques used to control currency valuation.

Question 10

Technical analysts,traditionally referred to as chartists,focus on fundamental data to determine past trends that are expected to continue into the future.

Accepted Answer

A) True 
 B)False

Question 11

The asset market approach to forecasting is not applicable to emerging markets.

Accepted Answer

A) True 
 B)False

Question 12

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks,as well as the expected future levels and rates of growth of monetary stock.

Accepted Answer

A) balance of payments 
B) monetary 
C) asset market 
D) law of one price

Question 13

Short-term foreign exchange forecasts are often motivated by such activities as ________ whereas long-term forecasts are more likely motivated by ________.

Accepted Answer

A) long-term investment;long-term capital appreciation 
B) long-term capital appreciation;desire to hedge a receivable 
C) the desire to hedge a payable;the desire for long-term investment 
D) the desire for long-term investment;the desire to hedge a payable

Question 14

________ is the active buying and selling of the domestic currency against foreign currencies.

Accepted Answer

A) Indirect Intervention 
B) Direct Intervention 
C) Foreign Direct Investment 
D) Federal Funding

Question 15

________,traditionally referred to as chartists,focus on price and volume data to determine past trends that are expected to continue into the future.

Accepted Answer

A) Mappists 
B) Trappist monks 
C) Filibusters 
D) Technical analysts

Question 16

The roots of the Asian currency crisis extended from a fundamental change in the economics of the region,the transition of many Asian nations from being net importers to net exporters.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

The answer of Foreign exchange forecasting can be either long-term,or...

Question 18

A country wishing for its currency to fall in value,particularly when confronted with a continual appreciation of its value against major trading partner currencies,the central bank may work to lower real interest rates,reducing the returns to capital.

Accepted Answer

A) True 
 B)False

Question 19

________ is the alteration of economic or financial fundamentals that are thought to be drivers of capital to flow in and out of specific currencies.

Accepted Answer

A) Indirect Intervention 
B) Direct Intervention 
C) Foreign Direct Investment 
D) Capital Controls

Question 20

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

Accepted Answer

A) the collapse of some Asian currencies 
B) the rate of inflation in the United States 
C) corporate socialism 
D) banking stability and management

Exam 9: Foreign Exchange Rate Determination

Prior to July 2,1997,the Thai government:

The authors claim that random events,institutional frictions,and technical factors may cause currency values to deviate significantly from their long-term fundamental path.

The most visible roots of the crisis were in the excesses of capital inflows into Thailand extending credit to a variety of domestic investments and enterprises beyond what the Thai economy could support and creating an investment "bubble."

Slow economic growth and continued unemployment problems are common reasons for central banks to hold currency values down.

Examples of a business motivation for long-run exchange rate forecasts include all but which of the following?

Which of the following did NOT contribute to the Russian currency crisis of 1998?

The Asian Currency crisis appeared to begin in:

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

Which of the following is NOT a technique used by governments or central banks to impact domestic currency valuation?

Technical analysts,traditionally referred to as chartists,focus on fundamental data to determine past trends that are expected to continue into the future.

The asset market approach to forecasting is not applicable to emerging markets.

The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks,as well as the expected future levels and rates of growth of monetary stock.

Short-term foreign exchange forecasts are often motivated by such activities as whereas long-term forecasts are more likely motivated by .

________ is the active buying and selling of the domestic currency against foreign currencies.

________,traditionally referred to as chartists,focus on price and volume data to determine past trends that are expected to continue into the future.

The roots of the Asian currency crisis extended from a fundamental change in the economics of the region,the transition of many Asian nations from being net importers to net exporters.

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 country wishing for its currency to fall in value,particularly when confronted with a continual appreciation of its value against major trading partner currencies,the central bank may work to lower real interest rates,reducing the returns to capital.

________ is the alteration of economic or financial fundamentals that are thought to be drivers of capital to flow in and out of specific currencies.

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