International Business And Money Summary (all-incl
International Business and Money Summary (all-incl
Exam (elaborations)
International Business and Money Summary (all-inclusive) Questions and Answers 2023
5 views 0 purchase
Course
International Business and Money Summary (all-incl
Institution
International Business And Money Summary (all-incl
The extent to which the income from individual transactions is affected by fluctuations in foreign exchange values is known as _______ exposure. - -transaction
-Assume that the interest rate on borrowing in japan is 1 percent, while the interest rate on deposits in Australian banks is 5 percent....
International Business and Money Summary (all-
inclusive) Questions and Answers 2023
The extent to which the income from individual transactions is affected by fluctuations in foreign
exchange values is known as _______ exposure. - -transaction
-Assume that the interest rate on borrowing in japan is 1 percent, while the interest rate on
deposits in Australian banks is 5 percent. A trader borrows in yen and then converts the money
into Australian dollars and deposits it in an Australian bank to make 4 percent margin. Which
type of trade is this an example of? - -Carry Trade
-Which of the following is one of the mot important trading centers in the foreign exchange
market? - -Zurich
-An ___ is one in which prices do not reflect all available information. - -inefficient market
-Which of the following refers to the simultaneous purchase and sale of a given amount of
foreign exchange for two different value dates? - -currency swap
-Purchasing power parity theory states that given relatively efficient markets, the price of a
"basket of goods" should be - -roughly equivalent in each country
-The _____ is the rate at which a foreign exchange dealer converts one currency into another
currency on a particular day. - -spot exchange rate
-The ____ school of thought 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. - -efficient market
-An American company today invests some of its spare cash in a Hungarian money market
account that will earn 8 percent for two months. - -The dollar appreciates against the Hungarian
forint
-Which of the following involves borrowing in one currency where interest rates are low, and
then using the proceeds to invest in another currency where the interest rates are high. - -carry
trade
-Governments allows convertibility to preserve their foreign exchange reserves. - -False
-Currency fluctuations can make seemingly profitable trade and investment deals unprofitable
and vice versa. - -True
-Transaction exposure includes obligations for the purchase or sale of goods and services at
previously agreed prices and the borrowing or lending off funds in foreign currencies. - -True
1 / 2
-The efficient market school argues that investing in exchange rate forecasting services would be
a waste of money. - -True
-The most important trading centers for currencies are Zurich, Frankfurt, Paris, Hong Kong, and
Sydney. - -False
-To minimize the risk of an unanticipated change in exchange rates, a company can protect itself
by entering into a forward exchange contract. - -True
-If the spot rate is $1 = $120, and the 30-day forward rate is $1 = x130, the dollar is selling at a
discount in the forward market. - -False
-Carry trade is non speculative in nature - -False
-The impact of currency exchange rates on the reported financial statements of a company is
called economic exposure. - -False
-The International Fisher Effect states that for any two countries, the spot exchange rate should
change in an equal amount but in the opposite direction to the difference in nominal interest rates
between the two countries. - -True
-Arbitrage opportunities in foreign exchange markets tend to be small and disappear quickly. - -
True
-When Krista traveled from the US to England, she had to change her money from dollars into
pounds. Krista was participating in the currency exchange market. - -True
-If the spot exchange rate is 1 = $1.50 when the market opens, and 1 = $1.48 at the end of the
day, the pound was appreciated, and the dollar has depreciated. - -False
-The PPP theory is a strong predictor of short-run movements in exchange rates covering time
spans of five years or less. - -False
-If the demand for the dollars outstrips its supply and if the supply of Japanese yen is greater than
the demand for it, what will happen? - -The dollar will appreciate against the yen.
-The International Fisher Effect has - -not proven to be a good predictor of short-run changes in
sport exchange rates
-It follows from the Fisher Effect that if the real interest rate is the same worldwide, any
difference in interest rates between countries reflects differing expectations about - -inflation
rates
-When two parties agree to exchange currency and execute the deal immediately, the transaction
is a - -spot exchangePowered by TCPDF (www.tcpdf.org)
2 / 2
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LiamXavier. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.29. You're not tied to anything after your purchase.
