Question 1

The effect of arbitrage activities in foreign exchange markets is to:

Accepted Answer

A) create disparity among the rates of various currencies 
B) maximize exchange rate quotation differentials 
C) hinder the otherwise smooth functioning of the exchange markets 
D) create wide swings in quotations from period to period 
E) none of the above 
A) create disparity among the rates of various currencies 
B) maximize exchange rate quotation differentials 
C) hinder the otherwise smooth functioning of the exchange markets 
D) create wide swings in quotations from period to period 
E) none of the above E

Question 2

For most of the remainder of the decade after the September 11th terrorist attacks:

Accepted Answer

A) the Fed then maintained a high liquidity,low interest rate environment. 
B) the Fed then maintained a low liquidity,low interest rate environment. 
C) the Fed then maintained a low liquidity,high interest rate environment. 
D) the Fed then maintained a high liquidity,high interest rate environment. 
E) none of the above 
A) the Fed then maintained a high liquidity,low interest rate environment. 
B) the Fed then maintained a low liquidity,low interest rate environment. 
C) the Fed then maintained a low liquidity,high interest rate environment. 
D) the Fed then maintained a high liquidity,high interest rate environment. 
E) none of the above A

Question 3

Which of the following statements is false?

Accepted Answer

A) The Board of Governors of the Federal Reserve System authorizes member banks to accept drafts that arise in the course of certain types of international transactions. 
B) Multinational corporations may engage in foreign exchange management for speculative purposes,as well as for defensive purposes. 
C) Arbitrage in the foreign exchange market is the simultaneous purchasing of commodities or securities in one market and selling them in another where the price is higher. 
D) All the above statements are correct. 
A) The Board of Governors of the Federal Reserve System authorizes member banks to accept drafts that arise in the course of certain types of international transactions. 
B) Multinational corporations may engage in foreign exchange management for speculative purposes,as well as for defensive purposes. 
C) Arbitrage in the foreign exchange market is the simultaneous purchasing of commodities or securities in one market and selling them in another where the price is higher. 
D) All the above statements are correct. D

Question 4

An instrument through which a bank retains title to goods until they are paid for is called a (n)

Accepted Answer

A) bill of exchange 
B) commercial letter of credit 
C) trust receipt 
D) documentary draft 
A) bill of exchange 
B) commercial letter of credit 
C) trust receipt 
D) documentary draft

Question 5

A trust receipt as used in financing international transactions:

Accepted Answer

A) is issued by bonded warehouses for merchandise stored therein 
B) allows the release of merchandise on a consignment basis by the bank that issued the letter of credit 
C) is evidence of ownership of funds held in escrow by the importer's bank 
D) is a negotiable instrument that trades freely in the money market 
A) is issued by bonded warehouses for merchandise stored therein 
B) allows the release of merchandise on a consignment basis by the bank that issued the letter of credit 
C) is evidence of ownership of funds held in escrow by the importer's bank 
D) is a negotiable instrument that trades freely in the money market

Question 6

The least costly form of claim in foreign exchange is a:

Accepted Answer

A) banker's sight draft 
B) cable order 
C) time draft 
D) bill of exchange 
A) banker's sight draft 
B) cable order 
C) time draft 
D) bill of exchange

Question 7

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 exports to 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 
E) none of the above 
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 exports to 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 
E) none of the above

Question 8

A contract for the purchase or sale of a currency where delivery will take place at a future date is called a forward exchange rate.

Accepted Answer

A) True 
 B)False

Question 9

A nation with a relatively lower inflation rate than other countries will have a relatively stronger currency holding other factors constant.

Accepted Answer

A) True 
 B)False

Question 10

A flexible exchange rate system in which currency exchange rates are determined by supply and demand has been in place since 1973.

Accepted Answer

A) True 
 B)False

Question 11

The attitude of central banks and commercial banks toward bankers' acceptances:

Accepted Answer

A) has been unfavorable regarding bankers' acceptances as attractive long-term commitments 
B) has never been constructive and has,in fact,been in opposition to their use at times 
C) is one of approval provided that before investing in such instruments guarantees can be obtained from the Export-Import Bank 
D) is irrelevant,since they are prevented from investing in such instruments by regulations or laws 
E) none of the above 
A) has been unfavorable regarding bankers' acceptances as attractive long-term commitments 
B) has never been constructive and has,in fact,been in opposition to their use at times 
C) is one of approval provided that before investing in such instruments guarantees can be obtained from the Export-Import Bank 
D) is irrelevant,since they are prevented from investing in such instruments by regulations or laws 
E) none of the above

Question 12

In the field of foreign trade,the most common form of credit instrument is the:

Accepted Answer

A) bankers' acceptance 
B) trust receipt 
C) sight draft 
D) none of the above 
A) bankers' acceptance 
B) trust receipt 
C) sight draft 
D) none of the above

Question 13

The International Bank for Reconstruction and Development (World Bank)was created to provide banking services for U.S.firms operating overseas.

Accepted Answer

A) True 
 B)False

Question 14

If someone needs to make a payment in the currency of another country,they must have actual possession of that currency.

Accepted Answer

A) True 
 B)False

Question 15

A trust receipt is an instrument through which a bank retains title to goods until they are paid for.

Accepted Answer

A) True 
 B)False

Question 16

To protect against loss as a result of adverse currency fluctuations,an export firm may:

Accepted Answer

A) demand cash settlement 
B) sell a millennial contract as a hedge 
C) require the customer to make payment in the exporter's currency 
D) require a government guarantee against currency loss of value 
E) none of the above 
A) demand cash settlement 
B) sell a millennial contract as a hedge 
C) require the customer to make payment in the exporter's currency 
D) require a government guarantee against currency loss of value 
E) none of the above

Question 17

Should a business fail after receiving shipping documents from its bank on the basis of a trust receipt,the bank:

Accepted Answer

A) becomes a preferred creditor to the extent of the amount due less cash deposits with the bank 
B) repossesses the merchandise on the basis of a specific lien thereon 
C) repossesses the merchandise on the basis of its holding of title to the merchandise 
D) has a prior claim relative to other general creditors 
A) becomes a preferred creditor to the extent of the amount due less cash deposits with the bank 
B) repossesses the merchandise on the basis of a specific lien thereon 
C) repossesses the merchandise on the basis of its holding of title to the merchandise 
D) has a prior claim relative to other general creditors

Question 18

In recent years,the principal market for bankers' acceptances has been:

Accepted Answer

A) domestic banks 
B) domestic business corporations 
C) foreign business corporations 
D) all of the above 
E) none of the above 
A) domestic banks 
B) domestic business corporations 
C) foreign business corporations 
D) all of the above 
E) none of the above

Question 19

Purchasing power parity (PPP)states that the currency of a country with relatively higher inflation will depreciate relative to the currency of a country with a relatively lower inflation rate.

Accepted Answer

A) True 
 B)False

Question 20

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by:

Accepted Answer

A) purchasing a letter of credit 
B) having payment sent to a bank in the exporter's country to be held until proper shipment is made 
C) post-dating a check 
D) insisting on payment only upon delivery 
A) purchasing a letter of credit 
B) having payment sent to a bank in the exporter's country to be held until proper shipment is made 
C) post-dating a check 
D) insisting on payment only upon delivery

The effect of arbitrage activities in foreign exchange markets is to:

For most of the remainder of the decade after the September 11th terrorist attacks:

Which of the following statements is false?

An instrument through which a bank retains title to goods until they are paid for is called a (n)

A trust receipt as used in financing international transactions:

The least costly form of claim in foreign exchange is a:

The Export-Import Bank:

A contract for the purchase or sale of a currency where delivery will take place at a future date is called a forward exchange rate.

A nation with a relatively lower inflation rate than other countries will have a relatively stronger currency holding other factors constant.

A flexible exchange rate system in which currency exchange rates are determined by supply and demand has been in place since 1973.

The attitude of central banks and commercial banks toward bankers' acceptances:

In the field of foreign trade,the most common form of credit instrument is the:

The International Bank for Reconstruction and Development (World Bank)was created to provide banking services for U.S.firms operating overseas.

If someone needs to make a payment in the currency of another country,they must have actual possession of that currency.

A trust receipt is an instrument through which a bank retains title to goods until they are paid for.

To protect against loss as a result of adverse currency fluctuations,an export firm may:

Should a business fail after receiving shipping documents from its bank on the basis of a trust receipt,the bank:

In recent years,the principal market for bankers' acceptances has been:

Purchasing power parity (PPP)states that the currency of a country with relatively higher inflation will depreciate relative to the currency of a country with a relatively lower inflation rate.

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by:

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 Valuation

Securities 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

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Exam 6: International Finance and Trade

The effect of arbitrage activities in foreign exchange markets is to:

For most of the remainder of the decade after the September 11th terrorist attacks:

Which of the following statements is false?

An instrument through which a bank retains title to goods until they are paid for is called a (n)

A trust receipt as used in financing international transactions:

The least costly form of claim in foreign exchange is a:

The Export-Import Bank:

A contract for the purchase or sale of a currency where delivery will take place at a future date is called a forward exchange rate.

A nation with a relatively lower inflation rate than other countries will have a relatively stronger currency holding other factors constant.

A flexible exchange rate system in which currency exchange rates are determined by supply and demand has been in place since 1973.

The attitude of central banks and commercial banks toward bankers' acceptances:

In the field of foreign trade,the most common form of credit instrument is the:

The International Bank for Reconstruction and Development (World Bank)was created to provide banking services for U.S.firms operating overseas.

If someone needs to make a payment in the currency of another country,they must have actual possession of that currency.

A trust receipt is an instrument through which a bank retains title to goods until they are paid for.

To protect against loss as a result of adverse currency fluctuations,an export firm may:

Should a business fail after receiving shipping documents from its bank on the basis of a trust receipt,the bank:

In recent years,the principal market for bankers' acceptances has been:

Purchasing power parity (PPP)states that the currency of a country with relatively higher inflation will depreciate relative to the currency of a country with a relatively lower inflation rate.

An importer will generally try to avoid making payment for a purchase before the goods are actually shipped by:

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 Valuation

Securities 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