Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

Accepted Answer

A) very little borrowing by business firms, financial institutions, and individuals. 
B) a large increase in overseas investments by business firms, financial institutions, and individuals. 
C) a massive divestment of assets by business firms, financial institutions, and individuals. 
D) a massive reduction of inventory levels by business firms. 
E) none of the above 
A) very little borrowing by business firms, financial institutions, and individuals. 
B) a large increase in overseas investments by business firms, financial institutions, and individuals. 
C) a massive divestment of assets by business firms, financial institutions, and individuals. 
D) a massive reduction of inventory levels by business firms. 
E) none of the above

Question 3

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 4

A draft requiring immediate payment is called a (n)

Accepted Answer

A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft 
A) bill of exchange 
B) sight draft 
C) time draft 
D) documentary draft

Question 5

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 6

The Board of Governors of the Federal Reserve System considers bankers' acceptances used in international trade to be: Not in chapter

Accepted Answer

A) advantageous, but does not enter in bankers' acceptance financing 
B) outside the Fed's realm of influence, neither encouraging nor discouraging their use 
C) a hindrance to domestic monetary control efforts 
D) very desirable and actually purchases and holds them in supporting the market for such securities 
A) advantageous, but does not enter in bankers' acceptance financing 
B) outside the Fed's realm of influence, neither encouraging nor discouraging their use 
C) a hindrance to domestic monetary control efforts 
D) very desirable and actually purchases and holds them in supporting the market for such securities

Question 7

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.

Question 8

The current account balance shows the flow of income into and out of the United States during a specified time period.

Accepted Answer

A) True 
 B)False

Question 9

The price that an individual must pay when purchasing claims to foreign exchange:

Accepted Answer

A) is always higher than the basic quotation rate 
B) is readily available in financial publications 
C) is relatively constant from day to day 
D) varies widely among sources of foreign exchangeall of the above are true 
A) is always higher than the basic quotation rate 
B) is readily available in financial publications 
C) is relatively constant from day to day 
D) varies widely among sources of foreign exchangeall of the above are true

Question 10

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 11

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 imports from 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 
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 imports from 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

Question 12

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might:

Accepted Answer

A) buy pounds in New York 
B) sell dollars in London 
C) simultaneously sell pounds in New York and buy dollars in London 
D) simultaneously buy pounds in New York and sell dollars in London 
A) buy pounds in New York 
B) sell dollars in London 
C) simultaneously sell pounds in New York and buy dollars in London 
D) simultaneously buy pounds in New York and sell dollars in London

Question 13

Traveler's letters of credit are:

Accepted Answer

A) issued by a bank and addressed to a list of banks in other countries 
B) especially popular with tourists 
C) convertible into cash at most large banks 
D) of special value to exporters 
A) issued by a bank and addressed to a list of banks in other countries 
B) especially popular with tourists 
C) convertible into cash at most large banks 
D) of special value to exporters

Question 14

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 15

The direct quotation method indicates the amount of a foreign currency necessary to purchase one unit of the home country's currency.

Accepted Answer

A) True 
 B)False

Question 16

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 17

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

Accepted Answer

A) True 
 B)False

Question 18

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 19

A purchasing agent for a domestic art gallery touring foreign countries for possible acquisitions might find it convenient to have:

Accepted Answer

A) travelers' checks 
B) a commercial letter of credit 
C) regular checkbook drafts 
D) a traveler's letter of credit 
A) travelers' checks 
B) a commercial letter of credit 
C) regular checkbook drafts 
D) a traveler's letter of credit

Question 20

An indirect exchange rate quotation is simply the reciprocal of a direct exchange rate quotation.

Accepted Answer

A) True 
 B)False

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

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

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.

A draft requiring immediate payment is called a (n)

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

The Board of Governors of the Federal Reserve System considers bankers' acceptances used in international trade to be: Not in chapter

Which of the following statements is false?

The current account balance shows the flow of income into and out of the United States during a specified time period.

The price that an individual must pay when purchasing claims to foreign exchange:

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

The Export-Import Bank:

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might:

Traveler's letters of credit are:

A stronger U.S.dollar generally

The direct quotation method indicates the amount of a foreign currency necessary to purchase one unit of the home country's currency.

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

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

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

A purchasing agent for a domestic art gallery touring foreign countries for possible acquisitions might find it convenient to have:

An indirect exchange rate quotation is simply the reciprocal of a direct exchange rate quotation.

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

For most of the remainder of the decade after the September 11th terrorist attacks the Fed maintained a high liquidity, low interest rate environment, which was accompanied by:

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.

A draft requiring immediate payment is called a (n)

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

The Board of Governors of the Federal Reserve System considers bankers' acceptances used in international trade to be: Not in chapter

Which of the following statements is false?

The current account balance shows the flow of income into and out of the United States during a specified time period.

The price that an individual must pay when purchasing claims to foreign exchange:

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

The Export-Import Bank:

If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might:

Traveler's letters of credit are:

A stronger U.S.dollar generally

The direct quotation method indicates the amount of a foreign currency necessary to purchase one unit of the home country's currency.

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

The order bill of lading represents the written acceptance of goods for shipment by a transportation company and the terms under which the goods are to be transported to their destination.

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

A purchasing agent for a domestic art gallery touring foreign countries for possible acquisitions might find it convenient to have:

An indirect exchange rate quotation is simply the reciprocal of a direct exchange rate quotation.

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