Question 1

_________________________ was an international monetary system in which the U.S.dollar was valued in gold and other exchange rates were pegged to the dollar.

Accepted Answer

A) The gold standard 
B) The flexible exchange rate system 
C) The Bretton Woods System 
D) none of the above 
A) The gold standard 
B) The flexible exchange rate system 
C) The Bretton Woods System 
D) none of the above

Question 2

Economic Risk is the risk associated with the possibility that a national government might confiscate or expropriate assets held by foreigners.

Accepted Answer

A) True 
 B)False

Question 3

The Federal Reserve System:

Accepted Answer

A) permits member banks to accept drafts, but restricts the time period involved only for exports. In chapter? 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts 
A) permits member banks to accept drafts, but restricts the time period involved only for exports. In chapter? 
B) actively encourages member banks to assist in financing international transactions 
C) discourages its member banks from accepting foreign drafts 
D) limits the type of international transactions for which member banks may accept drafts

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The banker's sight draft provides an exchange rate that is lower than either the banker's time draft or cable rate.
Not in chapter

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) commercial loan 
B) trust receipt 
C) sight draft 
D) time draft 
E) none of the above 
A) commercial loan 
B) trust receipt 
C) sight draft 
D) time draft 
E) none of the above

Question 8

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

Accepted Answer

A) The World Bank 
B) The International Monetary Fund 
C) The International Bank for Reconstruction and Development 
D) none of the above 
A) The World Bank 
B) The International Monetary Fund 
C) The International Bank for Reconstruction and Development 
D) none of the above

Question 9

A banker's sight draft differs from an ordinary bank check in that: Not clear in the chapter

Accepted Answer

A) ordinary bank checks can be used only for domestic transactions 
B) ordinary bank checks are not guaranteed 
C) they cost more 
D) they are drawn by one bank on another bank 
A) ordinary bank checks can be used only for domestic transactions 
B) ordinary bank checks are not guaranteed 
C) they cost more 
D) they are drawn by one bank on another bank

Question 10

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

Question 11

The capital account balance includes all foreign private and government investment in the United States netted against U.S.investments in foreign countries.

Accepted Answer

A) True 
 B)False

Question 12

The exporter's bank may offer considerable assistance to the exporter by:

Accepted Answer

A) accepting a bill of lading as security for a loan 
B) arranging credit with the import's bank 
C) allowing the exporter to borrow against the security of a documentary draft 
D) issuing a letter of credit to the exporter 
A) accepting a bill of lading as security for a loan 
B) arranging credit with the import's bank 
C) allowing the exporter to borrow against the security of a documentary draft 
D) issuing a letter of credit to the exporter

Question 13

All of the following affect the balance of the capital account except:

Accepted Answer

A) Bank deposits 
B) Purchases of government and corporate securities 
C) Purchases of goods and services 
D) Loans 
E) Direct investment in land and buildings 
A) Bank deposits 
B) Purchases of government and corporate securities 
C) Purchases of goods and services 
D) Loans 
E) Direct investment in land and buildings

Question 14

Slow economic growth in investments in another country would be an example of political risk.

Accepted Answer

A) True 
 B)False

Question 15

Foreign exchange hedging by a multinational corporation is:

Accepted Answer

A) a normal responsibility of foreign exchange specialists 
B) not ordinarily considered to be prudent business 
C) usually described in speculative terms 
D) permitted only for defensive purposes 
A) a normal responsibility of foreign exchange specialists 
B) not ordinarily considered to be prudent business 
C) usually described in speculative terms 
D) permitted only for defensive purposes

Question 16

A nation with relatively lower interest rate levels than other countries will have a relatively stronger currency.

Accepted Answer

A) True 
 B)False

Question 17

The benefits of specialization of effort among nations depend primarily upon: Not in chapter

Accepted Answer

A) geographical locations 
B) market research 
C) the existence of adequate financial facilities 
D) accommodating laws and regulations 
A) geographical locations 
B) market research 
C) the existence of adequate financial facilities 
D) accommodating laws and regulations

Question 18

If someone needs to make a payment in the currency of another country, they must have actual possession of that currency.
Tricky.Especially in the day of electronic funds transfer, credit cards, etc.

Accepted Answer

A) True 
 B)False

Question 19

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a (n)

Accepted Answer

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

Question 20

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

Accepted Answer

A) a bankers' brokers' acceptance Make this clearly incorrect 
B) a traveler's letter of credit 
C) a commercial letter of credit 
D) travelers' checks 
A) a bankers' brokers' acceptance Make this clearly incorrect 
B) a traveler's letter of credit 
C) a commercial letter of credit 
D) travelers' checks

_________________________ was an international monetary system in which the U.S.dollar was valued in gold and other exchange rates were pegged to the dollar.

Economic Risk is the risk associated with the possibility that a national government might confiscate or expropriate assets held by foreigners.

The Federal Reserve System:

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.

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

The banker's sight draft provides an exchange rate that is lower than either the banker's time draft or cable rate. Not in chapter

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

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

A banker's sight draft differs from an ordinary bank check in that: Not clear in the chapter

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

The capital account balance includes all foreign private and government investment in the United States netted against U.S.investments in foreign countries.

The exporter's bank may offer considerable assistance to the exporter by:

All of the following affect the balance of the capital account except:

Slow economic growth in investments in another country would be an example of political risk.

Foreign exchange hedging by a multinational corporation is:

A nation with relatively lower interest rate levels than other countries will have a relatively stronger currency.

The benefits of specialization of effort among nations depend primarily upon: Not in chapter

If someone needs to make a payment in the currency of another country, they must have actual possession of that currency. Tricky.Especially in the day of electronic funds transfer, credit cards, etc.

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a (n)

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

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

_________________________ was an international monetary system in which the U.S.dollar was valued in gold and other exchange rates were pegged to the dollar.

Economic Risk is the risk associated with the possibility that a national government might confiscate or expropriate assets held by foreigners.

The Federal Reserve System:

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.

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

The banker's sight draft provides an exchange rate that is lower than either the banker's time draft or cable rate. Not in chapter

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

_________________________ was created to promote world trade through monitoring and maintaining fixed exchange rates and by making loans to countries with payments problems.

A banker's sight draft differs from an ordinary bank check in that: Not clear in the chapter

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

The capital account balance includes all foreign private and government investment in the United States netted against U.S.investments in foreign countries.

The exporter's bank may offer considerable assistance to the exporter by:

All of the following affect the balance of the capital account except:

Slow economic growth in investments in another country would be an example of political risk.

Foreign exchange hedging by a multinational corporation is:

A nation with relatively lower interest rate levels than other countries will have a relatively stronger currency.

The benefits of specialization of effort among nations depend primarily upon: Not in chapter

If someone needs to make a payment in the currency of another country, they must have actual possession of that currency. Tricky.Especially in the day of electronic funds transfer, credit cards, etc.

A statement by a bank guaranteeing acceptance and payment of a draft up to a stated amount is called a (n)

A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:

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