Question 1

A problem with market-based forecasting is that the "wisdom" of the market may be skewed by ____________________ who may include people motivated by entirely different motives than the actual purchase and delivery of a currency.

Accepted Answer

speculators

Question 2

If an exporter chooses to quote in his country's currency,or quotes in the importer's country currency and hedges with a money market hedge,it is to minimize his ____________________ risks.

Accepted Answer

currency f...

Question 3

In the United States,the Federal Reserve System technically fulfills the role of being a ____________________.

Accepted Answer

The answer of In the United States,the Federal Reserve System...

Question 4

The Ex-Im Bank provides loans to small exporters.

Accepted Answer

A) True 
 B)False

Question 5

In the United States,the Wall Street Journal publishes the forward rates for the currencies of _____ countries.

Accepted Answer

A)   four
B)   six
C)   twelve
D)   twenty
E)   None of the above

Question 6

In valuing a currency,the direct quote is

Accepted Answer

A)   the traditional way of expressing the value of a currency like the Canadian dollar.
B)   the value of the foreign currency expressed in units of the domestic currency.
C)   the traditional way of expressing the value of a currency like the Japanese yen.
D)   the value of the domestic currency expressed in units of foreign currency.
E)   None of the above

Question 7

International exchange rates began to float

Accepted Answer

A)   in 1971.
B)   at the end of the gold standard.
C)   and it changed the role of the International Monetary Fund.
D)   All of the above
E)   None of the above

Question 8

The Japanese government has been known to keep the value of the yen down in order to boost the Japanese economy through under-valued exports.

Accepted Answer

A) True 
 B)False

Question 9

In an options market hedge there is the option to sell or purchase certain currencies at a certain exchange rate either on or before a certain date.The agreed-upon exchange rate is called the

Accepted Answer

A)   international leverage.
B)   trade dimension.
C)   leveraging currency.
D)   transaction exposure.
E)   None of the above E

Question 10

As the Wall Street Journal quotes it,the exchange rate is the ____________________ between the bid and ask rates for exchanges of a value greater than $1,000,000 between banks.

Accepted Answer

The answer of As the Wall Street Journal quotes it,the...

Question 11

If it is agreed that an international exchange will be in the currency of the exporter's country,then there is no exchange rate fluctuation risk for the importer.

Accepted Answer

A) True 
 B)False  False

Question 12

Some currencies are traded in the futures' market as "commodities."

Accepted Answer

A) True 
 B)False

Question 13

The type of exchange rate for a foreign currency for immediate delivery (roughly the price of a foreign currency to be delivered within 48 hours)is called the forward rate.

Accepted Answer

A) True 
 B)False

Question 14

One of the functions of a nation's central bank is that of a check ____________________.

Accepted Answer

The answer of One of the functions of a nation's...

Question 15

Stable countries representing the greatest percentage of world trade all have _____ currencies.

Accepted Answer

A)   pegged
B)   volatile
C)   floating
D)   call
E)   None of the above

Question 16

In its absolute form,the exchange rate determination theory of Purchasing Power Parity

Accepted Answer

A)   says that exchange rates should reflect the price differences of each and every product between countries.
B)   says that the exchange rate should equalize price differences of similar products between countries.
C)   is impossible to achieve.
D)   All of the above
E)   None of the above

Question 17

The euro was first created as an artificial ____________________.

Accepted Answer

The answer of The euro was first created as an...

Question 18

A forward market hedge

Accepted Answer

A)   allows a company to protect itself from currency fluctuations.
B)   may involve selling forward a future receivable in a foreign currency.
C)   may involve purchasing forward the currency necessary to cover a foreign payable.
D)   All of the above
E)   None of the above

Question 19

Documents transferred through SWIFT have the same value as original paper documents.

Accepted Answer

A) True 
 B)False

Question 20

Importers generally prefer quotes that are written in the currency of the exporter's country.

Accepted Answer

A) True 
 B)False

Exam 8: Currency of Payment (Managing Transaction Risks)

A problem with market-based forecasting is that the "wisdom" of the market may be skewed by ____________________ who may include people motivated by entirely different motives than the actual purchase and delivery of a currency.

Correct Answerverifiedspeculators

If an exporter chooses to quote in his country's currency,or quotes in the importer's country currency and hedges with a money market hedge,it is to minimize his ____________________ risks.

Correct Answerverifiedcurrency f...View AnswerShow Answer

In the United States,the Federal Reserve System technically fulfills the role of being a ____________________.

Correct AnswerverifiedShow Answer

The Ex-Im Bank provides loans to small exporters.

Correct AnswerverifiedShow Answer

In the United States,the Wall Street Journal publishes the forward rates for the currencies of _____ countries.

Correct AnswerverifiedShow Answer

In valuing a currency,the direct quote is

Correct AnswerverifiedShow Answer

International exchange rates began to float

Correct AnswerverifiedShow Answer

The Japanese government has been known to keep the value of the yen down in order to boost the Japanese economy through under-valued exports.

Correct AnswerverifiedShow Answer

In an options market hedge there is the option to sell or purchase certain currencies at a certain exchange rate either on or before a certain date.The agreed-upon exchange rate is called the

Correct AnswerverifiedE

As the Wall Street Journal quotes it,the exchange rate is the ____________________ between the bid and ask rates for exchanges of a value greater than $1,000,000 between banks.

Correct AnswerverifiedShow Answer

If it is agreed that an international exchange will be in the currency of the exporter's country,then there is no exchange rate fluctuation risk for the importer.

Correct AnswerverifiedFalse

Some currencies are traded in the futures' market as "commodities."

Correct AnswerverifiedShow Answer

The type of exchange rate for a foreign currency for immediate delivery (roughly the price of a foreign currency to be delivered within 48 hours)is called the forward rate.

Correct AnswerverifiedShow Answer

One of the functions of a nation's central bank is that of a check ____________________.

Correct AnswerverifiedShow Answer

Stable countries representing the greatest percentage of world trade all have _____ currencies.

Correct AnswerverifiedShow Answer

In its absolute form,the exchange rate determination theory of Purchasing Power Parity

Correct AnswerverifiedShow Answer

The euro was first created as an artificial ____________________.

Correct AnswerverifiedShow Answer

A forward market hedge

Correct AnswerverifiedShow Answer

Documents transferred through SWIFT have the same value as original paper documents.

Correct AnswerverifiedShow Answer

Importers generally prefer quotes that are written in the currency of the exporter's country.

Correct AnswerverifiedShow Answer

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