Question 1

The Bretton Woods system used the gold standard as the common denominator for all currencies.

Accepted Answer

A) True 
 B)False

Question 2

The foreign exchange market has no central physical location and is the largest and most active market in the world.

Accepted Answer

A) True 
 B)False

Question 3

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

Accepted Answer

A) True 
 B)False

Question 4

A weak dollar makes it more expensive for US tourists when traveling abroad.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following was true of the Bretton Woods system?

Accepted Answer

A)  All currencies in the system had floating exchange rates. 
B)  All currencies were pegged at a fixed rate to the dollar. 
C)  All currencies were maintained by fixing their prices in terms of gold. 
D)  All currencies in the system were required to be gold convertible. 
A)  All currencies in the system had floating exchange rates. 
B)  All currencies were pegged at a fixed rate to the dollar. 
C)  All currencies were maintained by fixing their prices in terms of gold. 
D)  All currencies in the system were required to be gold convertible.

Question 6

_____ allow participants to buy and sell currencies now for future delivery.

Accepted Answer

A)  Currency Swaps 
B)  Direct transactions 
C)  Spot transactions 
D)  Forward transactions 
A)  Currency Swaps 
B)  Direct transactions 
C)  Spot transactions 
D)  Forward transactions

Question 7

Governments adopting the floating exchange rate policy tend to set the exchange rate of a currency relative to other currencies.

Accepted Answer

A) True 
 B)False

Question 8

An appreciation is an increase in the value of the currency whereas a depreciation is a loss in the value of the currency.

Accepted Answer

A) True 
 B)False

Question 9

Proponents of fixed exchange rates believe that market forces should take care of supply,demand,and price of any currency.

Accepted Answer

A) True 
 B)False

Question 10

_____ is defined as the conversion of one currency into another at Time 1,with an agreement to revert it back to the original currency at a specific Time 2 in the future.

Accepted Answer

A)  Currency swap 
B)  Currency hedging 
C)  Spot transaction 
D)  Forward transaction 
A)  Currency swap 
B)  Currency hedging 
C)  Spot transaction 
D)  Forward transaction

Question 11

A floating exchange rate allows each country to make its own monetary policy.

Accepted Answer

A) True 
 B)False

Question 12

A manager arguing against currency hedging would most likely argue that _____.

Accepted Answer

A)  currency hedging eats into company profits 
B)  currency hedging leaves firms at the mercy of the spot market 
C)  currency hedging decreases stability of cash flows and earnings 
D)  currency hedging is mainly a practice of very large MNEs 
A)  currency hedging eats into company profits 
B)  currency hedging leaves firms at the mercy of the spot market 
C)  currency hedging decreases stability of cash flows and earnings 
D)  currency hedging is mainly a practice of very large MNEs

Question 13

Compare and contrast the three primary strategies companies use to cope with currency risks.

Accepted Answer

There are three primary strategies: (1)

Question 14

A foreign exchange rate refers to the price of buying and selling commodities for future delivery.

Accepted Answer

A) True 
 B)False

Question 15

Capital flight is a phenomenon in which a large number of individuals and companies exchange _____.

Accepted Answer

A)  domestic goods for gold 
B)  gold for domestic goods 
C)  foreign currency for a domestic currency 
D)  domestic currency for a foreign currency 
A)  domestic goods for gold 
B)  gold for domestic goods 
C)  foreign currency for a domestic currency 
D)  domestic currency for a foreign currency

Question 16

The bandwagon effect is an example of the way _____ directly affects foreign exchange rates.

Accepted Answer

A)  exchange rate policy 
B)  investor psychology 
C)  purchasing power parity 
D)  balance of payments 
A)  exchange rate policy 
B)  investor psychology 
C)  purchasing power parity 
D)  balance of payments

Question 17

Which of the following characterizes the peg policy in foreign exchange rates?

Accepted Answer

A)  It links a developed country's currency to the gold standard. 
B)  It stabilizes the import and export prices for developing countries. 
C)  It is a type of floating exchange rate policy. 
D)  It is primarily used by developed countries to control inflation. 
A)  It links a developed country's currency to the gold standard. 
B)  It stabilizes the import and export prices for developing countries. 
C)  It is a type of floating exchange rate policy. 
D)  It is primarily used by developed countries to control inflation.

Question 18

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

Accepted Answer

A) True 
 B)False

The Bretton Woods system used the gold standard as the common denominator for all currencies.

The foreign exchange market has no central physical location and is the largest and most active market in the world.

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

A weak dollar makes it more expensive for US tourists when traveling abroad.

Which of the following was true of the Bretton Woods system?

_____ allow participants to buy and sell currencies now for future delivery.

Governments adopting the floating exchange rate policy tend to set the exchange rate of a currency relative to other currencies.

An appreciation is an increase in the value of the currency whereas a depreciation is a loss in the value of the currency.

Proponents of fixed exchange rates believe that market forces should take care of supply,demand,and price of any currency.

_____ is defined as the conversion of one currency into another at Time 1,with an agreement to revert it back to the original currency at a specific Time 2 in the future.

A floating exchange rate allows each country to make its own monetary policy.

A manager arguing against currency hedging would most likely argue that _____.

Compare and contrast the three primary strategies companies use to cope with currency risks.

A foreign exchange rate refers to the price of buying and selling commodities for future delivery.

Capital flight is a phenomenon in which a large number of individuals and companies exchange _____.

The bandwagon effect is an example of the way _____ directly affects foreign exchange rates.

Which of the following characterizes the peg policy in foreign exchange rates?

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

Globalizing Business

Understanding Formal Institutions: Politics, laws, and Economics

Emphasizing Informal Institutions: Cultures, ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,structuring,and Learning Around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

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Exam 7: Dealing With Foreign Exchange

The Bretton Woods system used the gold standard as the common denominator for all currencies.

The foreign exchange market has no central physical location and is the largest and most active market in the world.

Balance of payments and exchange rate policies usually determine long-run movements of a currency.

A weak dollar makes it more expensive for US tourists when traveling abroad.

Which of the following was true of the Bretton Woods system?

_____ allow participants to buy and sell currencies now for future delivery.

Governments adopting the floating exchange rate policy tend to set the exchange rate of a currency relative to other currencies.

An appreciation is an increase in the value of the currency whereas a depreciation is a loss in the value of the currency.

Proponents of fixed exchange rates believe that market forces should take care of supply,demand,and price of any currency.

_____ is defined as the conversion of one currency into another at Time 1,with an agreement to revert it back to the original currency at a specific Time 2 in the future.

A floating exchange rate allows each country to make its own monetary policy.

A manager arguing against currency hedging would most likely argue that _____.

Compare and contrast the three primary strategies companies use to cope with currency risks.

A foreign exchange rate refers to the price of buying and selling commodities for future delivery.

Capital flight is a phenomenon in which a large number of individuals and companies exchange _____.

The bandwagon effect is an example of the way _____ directly affects foreign exchange rates.

Which of the following characterizes the peg policy in foreign exchange rates?

In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

Globalizing Business

Understanding Formal Institutions: Politics, laws, and Economics

Emphasizing Informal Institutions: Cultures, ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,structuring,and Learning Around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

Filters