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FIN 400 Exam 2 Prob Set 4 Questions And Answers Latest Update
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2024/2025FIN 400 Exam 2 Prob Set 4
Questions And Answers Latest
Update
All except ___ are participants in the foreign exchange market. ANS✔✔ Local companies
A cross rate is an exchange rate between ___. ANS✔✔ any two non-home currencies
A US company is expected to receive £100,000 in 120 days. If the company wants to minimize the
risk of foreign exchange, then it would . ANS✔✔ sell British pounds forward
Speculation in foreign exchange markets entails . ANS✔✔ buying in the current spot market and
selling in the future spot market
Which of the following are examples of indirect quotes? ANS✔✔ $1.67 per pound in UK
Foreign exchange markets are efficient if . ANS✔✔ good information is available at no or little cost
The theory of purchasing power parity says that . ANS✔✔ the exchange rate will adjust to reflect
changes in the price levels of two countries
Which of the following is not true about purchasing power parity? ANS✔✔ applicable to inflation
and exchange rate in the short term
The Fisher Effect assumes that the . ANS✔✔ nominal interest rate is equal to the real interest rate
plus the inflation rate
The International Fisher Effect says that the . ANS✔✔ future spot rate should move in an amount
equal to, but in the opposite direction from, the difference in interest rates between two countries
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