Question 1

A stronger U.S. dollar generally

Accepted Answer

A)  results in more imports of foreign merchandise 
B)  leads to concern about worsening trade surpluses 
C)  results in higher domestic inflation 
D)  results in more exports 
A)  results in more imports of foreign merchandise 
B)  leads to concern about worsening trade surpluses 
C)  results in higher domestic inflation 
D)  results in more exports

Question 2

Foreign exchange markets may be described as

Accepted Answer

A)  specific locations in major industrial cities. 
B)  major financial centers connected by good communications systems. 
C)  money markets outside of the United States. 
D)  facilities of central banks for foreign exchange. 
A)  specific locations in major industrial cities. 
B)  major financial centers connected by good communications systems. 
C)  money markets outside of the United States. 
D)  facilities of central banks for foreign exchange.

Question 3

This theory states that a country with a relatively lower nominal interest rate will have its currency appreciate relative to a country with a relatively higher interest rate.

Accepted Answer

A)  Purchasing power parity 
B)  International Fisher effect 
C)  Theory of equilibrium 
D)  Dynamic balancing effect 
A)  Purchasing power parity 
B)  International Fisher effect 
C)  Theory of equilibrium 
D)  Dynamic balancing effect

Question 4

Which of the following statements is false?

Accepted Answer

A)  An order bill of lading carries title to the goods being shipped. 
B)  There are no foreign offices of U.S. banks in foreign countries. 
C)  In dealing with a foreign bank, an exporter generally works through a local subsidiary of that bank. 
D)  The Ex-Im Bank is authorized by Congress. 
A)  An order bill of lading carries title to the goods being shipped. 
B)  There are no foreign offices of U.S. banks in foreign countries. 
C)  In dealing with a foreign bank, an exporter generally works through a local subsidiary of that bank. 
D)  The Ex-Im Bank is authorized by Congress.

Question 5

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

Accepted Answer

A) True 
 B)False

Question 6

Foreign exchange hedging by a multinational corporation is

Accepted Answer

A)  a normal responsibility of foreign exchange specialists. 
B)  not ordinarily considered to be prudent business. 
C)  usually described in speculative terms. 
D)  permitted only for defensive purposes. 
A)  a normal responsibility of foreign exchange specialists. 
B)  not ordinarily considered to be prudent business. 
C)  usually described in speculative terms. 
D)  permitted only for defensive purposes.

Question 7

The international monetary system consists of institutions and mechanisms that foster international trade, manage the flow of financial capital, and determine currency exchange rates.

Accepted Answer

A) True 
 B)False

Question 8

Purchasing commodities, securities, or bills of exchange in one market and immediately selling them in another to make a profit from price differences in the two markets is called

Accepted Answer

A)  profiteering. 
B)  skimming. 
C)  arbitrage. 
D)  hedging. 
A)  profiteering. 
B)  skimming. 
C)  arbitrage. 
D)  hedging.

Question 9

It is also called the International Bank for Reconstruction and Development.

Accepted Answer

A)  United National International Bank 
B)  International Monetary Fund 
C)  Bretton Woods system 
D)  World Bank 
A)  United National International Bank 
B)  International Monetary Fund 
C)  Bretton Woods system 
D)  World Bank

Question 10

Foreign exchange markets are electronic communication systems connecting the major financial centers of the world.

Accepted Answer

A) True 
 B)False

Question 11

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might

Accepted Answer

A)  buy pounds in New York. 
B)  sell dollars in London. 
C)  simultaneously sell pounds in New York and buy dollars in London. 
D)  simultaneously buy pounds in New York and sell dollars in London. 
A)  buy pounds in New York. 
B)  sell dollars in London. 
C)  simultaneously sell pounds in New York and buy dollars in London. 
D)  simultaneously buy pounds in New York and sell dollars in London.

Question 12

An increase in demand for a currency relative to other currencies will cause it to appreciate in value.

Accepted Answer

A) True 
 B)False

Question 13

The 1991 Maastricht Treaty formally committed the countries of the European Union to economic and monetary union.

Accepted Answer

A) True 
 B)False

Question 14

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

Accepted Answer

A) True 
 B)False

Question 15

Slow economic growth in investments in another country would be an example of political risk.

Accepted Answer

A) True 
 B)False

Question 16

A currency exchange rate indicates the value of one currency relative to the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 17

Key factors that influence currency exchange rates include which of the following

Accepted Answer

A)  production cost relationships 
B)  inflation rates 
C)  shipping rates 
D)  reserve requirements 
A)  production cost relationships 
B)  inflation rates 
C)  shipping rates 
D)  reserve requirements

Question 18

Under a floating exchange rate system, the value of one currency relative to another is determined by the forces of supply and demand.

Accepted Answer

A) True 
 B)False

Question 19

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

Accepted Answer

A)  The World Bank 
B)  The International Monetary Fund 
C)  The International Bank for Reconstruction and Development 
D)  None of the above 
A)  The World Bank 
B)  The International Monetary Fund 
C)  The International Bank for Reconstruction and Development 
D)  None of the above

Question 20

The Export-Import Bank

Accepted Answer

A)  makes loans and offers guarantees to foreign exporters to the United States. 
B)  may offer emergency credits to assist other countries to maintain their level of imports from the United States. 
C)  makes loans or offers guarantees when the soundness of the transaction is in doubt. 
D)  makes loans to domestic exporters to encourage foreign trade. 
A)  makes loans and offers guarantees to foreign exporters to the United States. 
B)  may offer emergency credits to assist other countries to maintain their level of imports from the United States. 
C)  makes loans or offers guarantees when the soundness of the transaction is in doubt. 
D)  makes loans to domestic exporters to encourage foreign trade.

A stronger U.S. dollar generally

Foreign exchange markets may be described as

This theory states that a country with a relatively lower nominal interest rate will have its currency appreciate relative to a country with a relatively higher interest rate.

Which of the following statements is false?

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

Foreign exchange hedging by a multinational corporation is

The international monetary system consists of institutions and mechanisms that foster international trade, manage the flow of financial capital, and determine currency exchange rates.

Purchasing commodities, securities, or bills of exchange in one market and immediately selling them in another to make a profit from price differences in the two markets is called

It is also called the International Bank for Reconstruction and Development.

Foreign exchange markets are electronic communication systems connecting the major financial centers of the world.

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might

An increase in demand for a currency relative to other currencies will cause it to appreciate in value.

The 1991 Maastricht Treaty formally committed the countries of the European Union to economic and monetary union.

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

Slow economic growth in investments in another country would be an example of political risk.

A currency exchange rate indicates the value of one currency relative to the U.S. dollar.

Key factors that influence currency exchange rates include which of the following

Under a floating exchange rate system, the value of one currency relative to another is determined by the forces of supply and demand.

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

The Export-Import Bank

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 6: International Finance and Trade

A stronger U.S. dollar generally

Foreign exchange markets may be described as

This theory states that a country with a relatively lower nominal interest rate will have its currency appreciate relative to a country with a relatively higher interest rate.

Which of the following statements is false?

A sight draft is one that is not accompanied by any special documents and is generally used when the exporter has confidence in the importer's ability to meet the draft when presented.

Foreign exchange hedging by a multinational corporation is

The international monetary system consists of institutions and mechanisms that foster international trade, manage the flow of financial capital, and determine currency exchange rates.

Purchasing commodities, securities, or bills of exchange in one market and immediately selling them in another to make a profit from price differences in the two markets is called

It is also called the International Bank for Reconstruction and Development.

Foreign exchange markets are electronic communication systems connecting the major financial centers of the world.

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might

An increase in demand for a currency relative to other currencies will cause it to appreciate in value.

The 1991 Maastricht Treaty formally committed the countries of the European Union to economic and monetary union.

The international monetary system consists of institutions and mechanisms that foster oversees the World Bank, sets international trade policy, and determines the exchange rate regime for all participating countries.

Slow economic growth in investments in another country would be an example of political risk.

A currency exchange rate indicates the value of one currency relative to the U.S. dollar.

Key factors that influence currency exchange rates include which of the following

Under a floating exchange rate system, the value of one currency relative to another is determined by the forces of supply and demand.

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

The Export-Import Bank

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters