Question 1

A documentary draft is a draft that is accompanied by an order bill of lading and other documents.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is most correct?

Accepted Answer

A) Importers may use sight or time drafts in billing foreign customers when they have no confidence in the purchaser's ability and willingness to pay. 
B) A time draft becomes a banker's acceptance when the customer receives,signs,and returns the draft to the exporter. 
C) The currency rate is the rate at which a given unit of a foreign currency is quoted in terms of gold. 
D) All of the above statements are correct. 
E) none of the above statements is correct. 
A) Importers may use sight or time drafts in billing foreign customers when they have no confidence in the purchaser's ability and willingness to pay. 
B) A time draft becomes a banker's acceptance when the customer receives,signs,and returns the draft to the exporter. 
C) The currency rate is the rate at which a given unit of a foreign currency is quoted in terms of gold. 
D) All of the above statements are correct. 
E) none of the above statements is correct.

Question 3

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

Accepted Answer

A) True 
 B)False

Question 4

The firm that enters into a futures contract with respect to foreign exchange does so:

Accepted Answer

A) to offset possible loss in its collection process by a gain in the delivery process of the futures contract 
B) in anticipation of an increase in the value of the currency of the country for which the contract is established 
C) to decrease the cost of their sales transactions 
D) to eliminate a loss in the collection process of their accounts receivable in that country 
E) none of the above 
A) to offset possible loss in its collection process by a gain in the delivery process of the futures contract 
B) in anticipation of an increase in the value of the currency of the country for which the contract is established 
C) to decrease the cost of their sales transactions 
D) to eliminate a loss in the collection process of their accounts receivable in that country 
E) none of the above

Question 5

Foreign exchange hedging by a multinational corporation is:

Accepted Answer

A) a normal responsibility of the company CEO 
B) not ordinarily considered to be prudent business 
C) usually described in speculative terms 
D) permitted only for defensive purposes 
E) none of the above 
A) a normal responsibility of the company CEO 
B) not ordinarily considered to be prudent business 
C) usually described in speculative terms 
D) permitted only for defensive purposes 
E) none of the above

Question 6

Key factors that influence currency exchange rates include all of the following EXCEPT:

Accepted Answer

A) supply and demand relationships 
B) legal constraints 
C) interest rates 
D) inflation rates 
A) supply and demand relationships 
B) legal constraints 
C) interest rates 
D) inflation rates

Question 7

A stronger U.S.dollar generally

Accepted Answer

A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above 
A) results in more imports of foreign merchandise 
B) leads to concern about worsening trade deficits 
C) results in lower domestic inflation 
D) all of the above

Question 8

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

Accepted Answer

A) has been favorable regarding bankers' acceptances as attractive short-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 
A) has been favorable regarding bankers' acceptances as attractive short-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

Question 9

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

Accepted Answer

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

Question 10

The traveler's letter of credit is usually used by:

Accepted Answer

A) travel agencies 
B) individuals traveling abroad 
C) importers' banks 
D) correspondent banks,in order to reduce shipment of gold between countries 
E) none of the above 
A) travel agencies 
B) individuals traveling abroad 
C) importers' banks 
D) correspondent banks,in order to reduce shipment of gold between countries 
E) none of the above

Question 11

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

Accepted Answer

A) the Fed then maintained a neutral liquidity,stable 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 neutral liquidity,stable 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

Question 12

If the U.S.inflation rate is expected to be 3 percent next year,the European inflation rate is expected to be 4% next year,and the spot rate between the euro and dollar is $1.30,then according to purchasing power parity,we would expect the dollar to _________ against the euro from $1.30 to __________:

Accepted Answer

A) appreciate,$1.2875 
B) appreciate,$1.3126 
C) depreciate,$1.2875 
D) depreciate,$1.3126 
A) appreciate,$1.2875 
B) appreciate,$1.3126 
C) depreciate,$1.2875 
D) depreciate,$1.3126

Question 13

The European Economic Organization (EEO)is an organization of twelve European countries that agreed to have a common overall monetary policy and the euro as their common currency.

Accepted Answer

A) True 
 B)False

Question 14

Intervention by central banks in the flexible exchange rate system is called a dirty float.

Accepted Answer

A) True 
 B)False

Question 15

Foreign exporters are usually quite willing to accept U.S.dollars in payment for goods and services because:

Accepted Answer

A) of the importance of the dollar in international trade 
B) the value of the dollar does not fluctuate 
C) they have little alternative 
D) it is customary to receive payment denominated in the currency of the importer's country 
A) of the importance of the dollar in international trade 
B) the value of the dollar does not fluctuate 
C) they have little alternative 
D) it is customary to receive payment denominated in the currency of the importer's country

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

A clean draft is accompanied by an order bill of lading along with other papers such as insurance receipts,certificates of sanitation,and consular invoices.

Accepted Answer

A) True 
 B)False

Question 19

The firm that enters into a futures contract with respect to foreign exchange does so:

Accepted Answer

A) to speculate on the movement in the value of the currency 
B) in anticipation of an increase in the value of the currency of the country for which the contract is established 
C) to decrease the cost of their sales transactions 
D) to eliminate a loss in the collection process of their accounts receivable in that country 
E) none of the above 
A) to speculate on the movement in the value of the currency 
B) in anticipation of an increase in the value of the currency of the country for which the contract is established 
C) to decrease the cost of their sales transactions 
D) to eliminate a loss in the collection process of their accounts receivable in that country 
E) none of the above

Question 20

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

Accepted Answer

A) create disparity among the rates of various currencies 
B) eliminate or reduce exchange rate quotation differentials 
C) hinder the otherwise smooth functioning of the exchange markets 
D) create wide swings in quotations from period to period 
A) create disparity among the rates of various currencies 
B) eliminate or reduce exchange rate quotation differentials 
C) hinder the otherwise smooth functioning of the exchange markets 
D) create wide swings in quotations from period to period

A documentary draft is a draft that is accompanied by an order bill of lading and other documents.

Which of the following statements is most correct?

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

The firm that enters into a futures contract with respect to foreign exchange does so:

Foreign exchange hedging by a multinational corporation is:

Key factors that influence currency exchange rates include all of the following EXCEPT:

A stronger U.S.dollar generally

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

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

The traveler's letter of credit is usually used by:

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

If the U.S.inflation rate is expected to be 3 percent next year,the European inflation rate is expected to be 4% next year,and the spot rate between the euro and dollar is $1.30,then according to purchasing power parity,we would expect the dollar to _ against the euro from $1.30 to __:

The European Economic Organization (EEO)is an organization of twelve European countries that agreed to have a common overall monetary policy and the euro as their common currency.

Intervention by central banks in the flexible exchange rate system is called a dirty float.

Foreign exporters are usually quite willing to accept U.S.dollars in payment for goods and services because:

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

Foreign exchange markets may be described as:

A clean draft is accompanied by an order bill of lading along with other papers such as insurance receipts,certificates of sanitation,and consular invoices.

The firm that enters into a futures contract with respect to foreign exchange does so:

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

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

Exam 6: International Finance and Trade

A documentary draft is a draft that is accompanied by an order bill of lading and other documents.

Which of the following statements is most correct?

An order bill of lading is a document given by a transportation company that lists goods to be transported and terms of the shipping agreement.

The firm that enters into a futures contract with respect to foreign exchange does so:

Foreign exchange hedging by a multinational corporation is:

Key factors that influence currency exchange rates include all of the following EXCEPT:

A stronger U.S.dollar generally

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

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

The traveler's letter of credit is usually used by:

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

The European Economic Organization (EEO)is an organization of twelve European countries that agreed to have a common overall monetary policy and the euro as their common currency.

Intervention by central banks in the flexible exchange rate system is called a dirty float.

Foreign exporters are usually quite willing to accept U.S.dollars in payment for goods and services because:

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

Foreign exchange markets may be described as:

A clean draft is accompanied by an order bill of lading along with other papers such as insurance receipts,certificates of sanitation,and consular invoices.

The firm that enters into a futures contract with respect to foreign exchange does so:

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

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