Question 1

The Federal Reserve was set up in 1913

Accepted Answer

A)  after one failed attempt 
B)  to be in charge of the U.S. monetary system 
C)  issue all bank notes 
D)  determine exchange rates 
E)  B and C 
A)  after one failed attempt 
B)  to be in charge of the U.S. monetary system 
C)  issue all bank notes 
D)  determine exchange rates 
E)  B and C E

Question 2

What are some of the basic features of the Bretton Woods exchange rate system?

Accepted Answer

The Bretton Woods exchange rate system was a modified gold standard system where only the United States promised convertibility from gold to dollars. All other countries had to fix the price of gold with respect to their currency and no country was allowed to devalue without the collective permission of the other countries. In addition, the International Monetary Fund and the World Bank were set up to provide short and long term financing, respectively, to help countries keep their exchange rates stable.

Question 3

An invoicing center allows a multinational to consolidate its receivables and payments and be able to make payments in multiple currencies.

Accepted Answer

A) True 
 B)False  False

Question 4

One reason for gold and silver to become the popular choice of coins was its relative abundance in Europe

Accepted Answer

A) True 
 B)False

Question 5

The Euro replaced the local currencies of the 12 European countries in 2005

Accepted Answer

A) True 
 B)False

Question 6

Under the Bretton Woods system, no country was required to guarantee the convertibility of dollars to gold.

Accepted Answer

A) True 
 B)False

Question 7

Under the Bretton Woods system, the following was agreed except the following:

Accepted Answer

A)  the United States only would be required to guaranty convertibility of gold into dollars 
B)  all countries will fix the interest rates and will not change them without the permission of other countries 
C)  no country could devalue its currency without the permission from the other countries 
D)  the International Monetary Fund (IMF) would provide short term financing to countries to maintain currency stability 
E)  other countries would fix the price of gold but offer no guaranty of convertibility 
A)  the United States only would be required to guaranty convertibility of gold into dollars 
B)  all countries will fix the interest rates and will not change them without the permission of other countries 
C)  no country could devalue its currency without the permission from the other countries 
D)  the International Monetary Fund (IMF) would provide short term financing to countries to maintain currency stability 
E)  other countries would fix the price of gold but offer no guaranty of convertibility

Question 8

The average daily turnover in 2007 in the foreign exchange market was approximately US$3.2 trillion per day.

Accepted Answer

A) True 
 B)False

Question 9

What is the difference between fixed and floating exchange rate systems? Which system leads to higher volatility?

Accepted Answer

The answer of What is the difference between fixed and...

Question 10

President Nixon closed the gold window which guaranteed convertibility of dollars to gold in 1971.

Accepted Answer

A) True 
 B)False

Question 11

A direct quote is defined as the price of one unit of a foreign currency quoted in home currency, i.e., HC/FC where HC is home currency and FC is foreign currency

Accepted Answer

A) True 
 B)False

Question 12

If a company has to make a payment of £100,000 every three months and the pound is expected to appreciate, it would be better for the company to lag the payments,

Accepted Answer

A) True 
 B)False

Question 13

If the direct quote for the British pound for an American investor is $1.50/£, then the indirect quote is

Accepted Answer

A)  £0.67/$ 
B)  £0.50/$ 
C)  $0.75/£ 
D)  $0.50/£ 
E)  £3.00/$ 
A)  £0.67/$ 
B)  £0.50/$ 
C)  $0.75/£ 
D)  $0.50/£ 
E)  £3.00/$

Question 14

In a freely floating exchange rate system

Accepted Answer

A)  exchange rates are determined by the supply of foreign exchange only 
B)  exchange rates are determined by the demand for foreign exchange only 
C)  exchange rates are more volatile compared to a fixed exchange rate system 
D)  exchange rates are more stable than a fixed exchange rate system 
E)  exchange rates are determined by each government based on their needs 
A)  exchange rates are determined by the supply of foreign exchange only 
B)  exchange rates are determined by the demand for foreign exchange only 
C)  exchange rates are more volatile compared to a fixed exchange rate system 
D)  exchange rates are more stable than a fixed exchange rate system 
E)  exchange rates are determined by each government based on their needs

Question 15

According to the classical theory of the price-specie-flow mechanism, the flow of gold determines the final equilibrium price

Accepted Answer

A) True 
 B)False

Question 16

What major factors play a role in determining exchange rates?

Accepted Answer

The answer of What major factors play a role in...

Question 17

The Bank of England was established in 1694 as a private bank to

Accepted Answer

A)  to mint gold coins for the U.K government 
B)  to mint silver and gold coins for private use 
C)  to issue bank notes for circulation in the United Kingdom 
D)  to manage the accounts of the monarchy 
E)  none of the above 
A)  to mint gold coins for the U.K government 
B)  to mint silver and gold coins for private use 
C)  to issue bank notes for circulation in the United Kingdom 
D)  to manage the accounts of the monarchy 
E)  none of the above

Question 18

The following country rarely intervenes in the foreign exchange market to influence the price of the currency.

Accepted Answer

A)  Japan 
B)  United Kingdom 
C)  United States 
D)  Germany 
E)  China 
A)  Japan 
B)  United Kingdom 
C)  United States 
D)  Germany 
E)  China

Question 19

The following are major participants in the foreign exchange markets except

Accepted Answer

A)  market makers 
B)  brokers 
C)  central banks 
D)  corporations and individuals 
E)  government agencies 
A)  market makers 
B)  brokers 
C)  central banks 
D)  corporations and individuals 
E)  government agencies

Question 20

A U.S. company exports goods to a Japanese company. If the Japanese Yen is expected to appreciate in the future

Accepted Answer

A)  the Japanese company may be forced to raise prices to stay profitable 
B)  the Japanese company will find it expensive to buy from the U.S. company 
C)  the Japanese company has the luxury of reducing prices 
D)  the Japanese customer should consider switching to other suppliers 
E)  none of the above 
A)  the Japanese company may be forced to raise prices to stay profitable 
B)  the Japanese company will find it expensive to buy from the U.S. company 
C)  the Japanese company has the luxury of reducing prices 
D)  the Japanese customer should consider switching to other suppliers 
E)  none of the above

The Federal Reserve was set up in 1913

What are some of the basic features of the Bretton Woods exchange rate system?

An invoicing center allows a multinational to consolidate its receivables and payments and be able to make payments in multiple currencies.

One reason for gold and silver to become the popular choice of coins was its relative abundance in Europe

The Euro replaced the local currencies of the 12 European countries in 2005

Under the Bretton Woods system, no country was required to guarantee the convertibility of dollars to gold.

Under the Bretton Woods system, the following was agreed except the following:

The average daily turnover in 2007 in the foreign exchange market was approximately US$3.2 trillion per day.

What is the difference between fixed and floating exchange rate systems? Which system leads to higher volatility?

President Nixon closed the gold window which guaranteed convertibility of dollars to gold in 1971.

A direct quote is defined as the price of one unit of a foreign currency quoted in home currency, i.e., HC/FC where HC is home currency and FC is foreign currency

If a company has to make a payment of £100,000 every three months and the pound is expected to appreciate, it would be better for the company to lag the payments,

If the direct quote for the British pound for an American investor is $1.50/£, then the indirect quote is

In a freely floating exchange rate system

According to the classical theory of the price-specie-flow mechanism, the flow of gold determines the final equilibrium price

What major factors play a role in determining exchange rates?

The Bank of England was established in 1694 as a private bank to

The following country rarely intervenes in the foreign exchange market to influence the price of the currency.

The following are major participants in the foreign exchange markets except

A U.S. company exports goods to a Japanese company. If the Japanese Yen is expected to appreciate in the future

Introduction and Overview

International Business Environment-Culture

Economic and Other Related Environmental Variables

The Political and Legal Environment

International Trade and Foreign Direct Investments

Entry Strategies

Functional Integration

Production and Operations Management and Supply Chain Management

Outsourcing

International Marketing

Human Resource Management and Organizational Structures

International Financial Management

International Accounting

Filters

Exam 10: International Finance

The Federal Reserve was set up in 1913

What are some of the basic features of the Bretton Woods exchange rate system?

An invoicing center allows a multinational to consolidate its receivables and payments and be able to make payments in multiple currencies.

One reason for gold and silver to become the popular choice of coins was its relative abundance in Europe

The Euro replaced the local currencies of the 12 European countries in 2005

Under the Bretton Woods system, no country was required to guarantee the convertibility of dollars to gold.

Under the Bretton Woods system, the following was agreed except the following:

The average daily turnover in 2007 in the foreign exchange market was approximately US$3.2 trillion per day.

What is the difference between fixed and floating exchange rate systems? Which system leads to higher volatility?

President Nixon closed the gold window which guaranteed convertibility of dollars to gold in 1971.

A direct quote is defined as the price of one unit of a foreign currency quoted in home currency, i.e., HC/FC where HC is home currency and FC is foreign currency

If a company has to make a payment of £100,000 every three months and the pound is expected to appreciate, it would be better for the company to lag the payments,

If the direct quote for the British pound for an American investor is $1.50/£, then the indirect quote is

In a freely floating exchange rate system

According to the classical theory of the price-specie-flow mechanism, the flow of gold determines the final equilibrium price

What major factors play a role in determining exchange rates?

The Bank of England was established in 1694 as a private bank to

The following country rarely intervenes in the foreign exchange market to influence the price of the currency.

The following are major participants in the foreign exchange markets except

A U.S. company exports goods to a Japanese company. If the Japanese Yen is expected to appreciate in the future

Introduction and Overview

International Business Environment-Culture

Economic and Other Related Environmental Variables

The Political and Legal Environment

International Trade and Foreign Direct Investments

Entry Strategies

Functional Integration

Production and Operations Management and Supply Chain Management

Outsourcing

International Marketing

Human Resource Management and Organizational Structures

International Financial Management

International Accounting

Filters