Question 1

The value of a currency expressed in dollars is called its par value.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Accepted Answer

A) revaluation 
B) devaluation 
C) currency hedging 
D) currency arbitrage 
A) revaluation 
B) devaluation 
C) currency hedging 
D) currency arbitrage

Question 3

Predictable exchange rates increase the need for currency hedging.

Accepted Answer

A) True 
 B)False

Question 4

The primary disadvantage of the gold standard was that it increased exchange-rate risk.

Accepted Answer

A) True 
 B)False

Question 5

Fundamental analyses used for forecasting exchange rates estimate the timing,magnitude,and direction of future exchange rate changes.

Accepted Answer

A) True 
 B)False

Question 6

In order to capture the gains from currency translation,managers prefer exchange rates that are volatile and unpredictable.

Accepted Answer

A) True 
 B)False

Question 7

Explain how movement in a currency's exchange rate affects the activities of both domestic and international companies.Discuss how companies can export successfully despite having a strong currency.

Accepted Answer

Movement in a currency's exchange rate a

Question 8

The efficient market view holds that ________.

Accepted Answer

A) companies can search for new pieces of information to improve forecasting 
B) forward exchange rates provide the least accurate forecasts of future exchange rates 
C) companies must spend time and money collecting and examining information believed to affect future exchange rates 
D) prices of financial instruments reflect all publicly available information at any given time 
A) companies can search for new pieces of information to improve forecasting 
B) forward exchange rates provide the least accurate forecasts of future exchange rates 
C) companies must spend time and money collecting and examining information believed to affect future exchange rates 
D) prices of financial instruments reflect all publicly available information at any given time

Question 9

When a country's currency is weak,the price of its ________.

Accepted Answer

A) exports and imports on world markets declines 
B) exports and imports on world markets increases 
C) exports on world markets declines and the price of its imports increases 
D) exports on world markets increases and the price of its imports declines 
A) exports and imports on world markets declines 
B) exports and imports on world markets increases 
C) exports on world markets declines and the price of its imports increases 
D) exports on world markets increases and the price of its imports declines

Question 10

The ________ called for large-scale reduction of the debt owed by poorer nations,the exchange of old loans for new low-interest loans,and the making of debt instruments that would be tradable on world financial markets.

Accepted Answer

A) Brady Plan 
B) Louvre Accord 
C) Bretton Woods Agreement 
D) Smithsonian Agreement 
A) Brady Plan 
B) Louvre Accord 
C) Bretton Woods Agreement 
D) Smithsonian Agreement

Question 11

According to Fisher effect,real interest rate is the sum of the nominal interest rate and the expected rate of inflation over a specific period.

Accepted Answer

A) True 
 B)False

Question 12

According to the efficient market view for forecasting exchange rates,forward exchange rates are perfect predictors of future exchange rates.

Accepted Answer

A) True 
 B)False

Question 13

The intentional raising of the value of a currency by a nation's government is called ________.

Accepted Answer

A) revaluation 
B) securitization 
C) fundamental disequilibrium 
D) currency hedging 
A) revaluation 
B) securitization 
C) fundamental disequilibrium 
D) currency hedging

Question 14

Explain how exchange rates adjust to inflation.

Accepted Answer

An important component of the concept of

Question 15

Inflation is a result of the supply and demand for a currency.

Accepted Answer

A) True 
 B)False

Question 16

The ________ is an IMF asset whose value is based on a weighted basket of four currencies,including the U.S.dollar,European Union euro,Japanese yen,and British pound.

Accepted Answer

A) special drawing right 
B) gold standard 
C) Eurobond 
D) currency board 
A) special drawing right 
B) gold standard 
C) Eurobond 
D) currency board

Question 17

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

Accepted Answer

A) True 
 B)False

Question 18

The value of a currency expressed in terms of gold is called its ________.

Accepted Answer

A) book value 
B) net asset value 
C) par value 
D) carrying value 
A) book value 
B) net asset value 
C) par value 
D) carrying value

Question 19

The French government buying its own securities on the open market is part of the ________ of France.

Accepted Answer

A) fiscal policy 
B) monetary policy 
C) industrial policy 
D) investment policy 
A) fiscal policy 
B) monetary policy 
C) industrial policy 
D) investment policy

Question 20

Why do managers prefer that movements in exchange rates be predictable? How does the Big Mac index help determine whether a currency is overvalued or undervalued,and what are its drawbacks?

Accepted Answer

Managers prefer that movements in exchan

The value of a currency expressed in dollars is called its par value.

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Predictable exchange rates increase the need for currency hedging.

The primary disadvantage of the gold standard was that it increased exchange-rate risk.

Fundamental analyses used for forecasting exchange rates estimate the timing,magnitude,and direction of future exchange rate changes.

In order to capture the gains from currency translation,managers prefer exchange rates that are volatile and unpredictable.

Explain how movement in a currency's exchange rate affects the activities of both domestic and international companies.Discuss how companies can export successfully despite having a strong currency.

The efficient market view holds that ________.

When a country's currency is weak,the price of its ________.

The ________ called for large-scale reduction of the debt owed by poorer nations,the exchange of old loans for new low-interest loans,and the making of debt instruments that would be tradable on world financial markets.

According to Fisher effect,real interest rate is the sum of the nominal interest rate and the expected rate of inflation over a specific period.

According to the efficient market view for forecasting exchange rates,forward exchange rates are perfect predictors of future exchange rates.

The intentional raising of the value of a currency by a nation's government is called ________.

Explain how exchange rates adjust to inflation.

Inflation is a result of the supply and demand for a currency.

The ________ is an IMF asset whose value is based on a weighted basket of four currencies,including the U.S.dollar,European Union euro,Japanese yen,and British pound.

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

The value of a currency expressed in terms of gold is called its ________.

The French government buying its own securities on the open market is part of the ________ of France.

Why do managers prefer that movements in exchange rates be predictable? How does the Big Mac index help determine whether a currency is overvalued or undervalued,and what are its drawbacks?

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

International Trade

Business-Government Trade Relations

Foreign Direct Investment

Regional Economic Integration

International Financial Markets

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters

Exam 10: International Money System

The value of a currency expressed in dollars is called its par value.

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Predictable exchange rates increase the need for currency hedging.

The primary disadvantage of the gold standard was that it increased exchange-rate risk.

Fundamental analyses used for forecasting exchange rates estimate the timing,magnitude,and direction of future exchange rate changes.

In order to capture the gains from currency translation,managers prefer exchange rates that are volatile and unpredictable.

Explain how movement in a currency's exchange rate affects the activities of both domestic and international companies.Discuss how companies can export successfully despite having a strong currency.

The efficient market view holds that ________.

When a country's currency is weak,the price of its ________.

The ________ called for large-scale reduction of the debt owed by poorer nations,the exchange of old loans for new low-interest loans,and the making of debt instruments that would be tradable on world financial markets.

According to Fisher effect,real interest rate is the sum of the nominal interest rate and the expected rate of inflation over a specific period.

According to the efficient market view for forecasting exchange rates,forward exchange rates are perfect predictors of future exchange rates.

The intentional raising of the value of a currency by a nation's government is called ________.

Explain how exchange rates adjust to inflation.

Inflation is a result of the supply and demand for a currency.

The ________ is an IMF asset whose value is based on a weighted basket of four currencies,including the U.S.dollar,European Union euro,Japanese yen,and British pound.

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

The value of a currency expressed in terms of gold is called its ________.

The French government buying its own securities on the open market is part of the ________ of France.

Why do managers prefer that movements in exchange rates be predictable? How does the Big Mac index help determine whether a currency is overvalued or undervalued,and what are its drawbacks?

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

International Trade

Business-Government Trade Relations

Foreign Direct Investment

Regional Economic Integration

International Financial Markets

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters