Question 1

Why would a central bank buy or sell foreign currency?

Accepted Answer

When a central bank buys (sell

Question 2

Identify the most important components of the official international reserves of a central bank?

Accepted Answer

Official reserves consist of three major

Question 3

In the ________ exchange rate system,the currency has limited flexibility and the rate is kept within a fixed band.

Accepted Answer

A)  currency board 
B)  floating exchange rate 
C)  target zone 
D)  pegged exchange rate system 
A)  currency board 
B)  floating exchange rate 
C)  target zone 
D)  pegged exchange rate system

Question 4

What is the name of the value of the real resources that the central bank obtains through the creation of base money?

Accepted Answer

A)  seigniorage 
B)  sterilized intervention 
C)  dollarization 
D)  target zone 
A)  seigniorage 
B)  sterilized intervention 
C)  dollarization 
D)  target zone

Question 5

When countries have pegged exchange rate systems,they often set up ________ to improve the credibility of the system in the eyes of the global traders.

Accepted Answer

A)  target zone systems 
B)  futures markets for currencies 
C)  currency board systems 
D)  sterilized interventions 
A)  target zone systems 
B)  futures markets for currencies 
C)  currency board systems 
D)  sterilized interventions

Question 6

What is the name of the account in which many central banks require their banks to hold a percentage of the deposits as reserves at the central bank?

Accepted Answer

A)  retained earnings 
B)  excess reserves 
C)  margin account 
D)  required reserves 
A)  retained earnings 
B)  excess reserves 
C)  margin account 
D)  required reserves

Question 7

What is the name of the unit of account created by the IMF which is sometimes 	used to denominate contracts?

Accepted Answer

A)  European currency unit 
B)  special drawing right 
C)  floating currencies 
D)  basket of currencies 
A)  European currency unit 
B)  special drawing right 
C)  floating currencies 
D)  basket of currencies

Question 8

What are the three major components of the official reserves account?

Accepted Answer

A)  foreign exchange reserves, gold, and IMF-related reserve assets 
B)  foreign exchange reserves, foreign government bonds, gold 
C)  IMF-related reserve assets, gold, and U.S. Dollars 
D)  gold, IMF-related reserves assets, and government-owned land 
A)  foreign exchange reserves, gold, and IMF-related reserve assets 
B)  foreign exchange reserves, foreign government bonds, gold 
C)  IMF-related reserve assets, gold, and U.S. Dollars 
D)  gold, IMF-related reserves assets, and government-owned land

Question 9

The phenomenon of foreign currency driving out local currencies as a means of payment and a savings vehicle is known as ________.

Accepted Answer

A)  seigniorage 
B)  dollarization 
C)  sterilization 
D)  devaluation 
A)  seigniorage 
B)  dollarization 
C)  sterilization 
D)  devaluation

Question 10

How would a target zone system or a pegged exchange rate system that has been in place mask the true currency risk?

Accepted Answer

If the peg or target zone holds for a lo

Question 11

Why are pegged exchange rates often overvalued and difficult to governments to maintain?

Accepted Answer

Governments that maintain a pegged excha

Question 12

Which one of the following is not one of the three main currency systems in practice today?

Accepted Answer

A)  currency boards 
B)  floating exchange rates 
C)  target zones 
D)  pegged exchange rate systems 
A)  currency boards 
B)  floating exchange rates 
C)  target zones 
D)  pegged exchange rate systems

Why would a central bank buy or sell foreign currency?

Identify the most important components of the official international reserves of a central bank?

In the ________ exchange rate system,the currency has limited flexibility and the rate is kept within a fixed band.

What is the name of the value of the real resources that the central bank obtains through the creation of base money?

When countries have pegged exchange rate systems,they often set up ________ to improve the credibility of the system in the eyes of the global traders.

What is the name of the account in which many central banks require their banks to hold a percentage of the deposits as reserves at the central bank?

What is the name of the unit of account created by the IMF which is sometimes used to denominate contracts?

What are the three major components of the official reserves account?

The phenomenon of foreign currency driving out local currencies as a means of payment and a savings vehicle is known as ________.

How would a target zone system or a pegged exchange rate system that has been in place mask the true currency risk?

Why are pegged exchange rates often overvalued and difficult to governments to maintain?

Which one of the following is not one of the three main currency systems in practice today?

Globalization and the Multinational Corporation

The Foreign Exchange Market

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

Country and Political Risk

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

Filters

Exam 5: Exchange Rate Systems

Why would a central bank buy or sell foreign currency?

Identify the most important components of the official international reserves of a central bank?

In the ________ exchange rate system,the currency has limited flexibility and the rate is kept within a fixed band.

What is the name of the value of the real resources that the central bank obtains through the creation of base money?

When countries have pegged exchange rate systems,they often set up ________ to improve the credibility of the system in the eyes of the global traders.

What is the name of the account in which many central banks require their banks to hold a percentage of the deposits as reserves at the central bank?

What is the name of the unit of account created by the IMF which is sometimes used to denominate contracts?

What are the three major components of the official reserves account?

The phenomenon of foreign currency driving out local currencies as a means of payment and a savings vehicle is known as ________.

How would a target zone system or a pegged exchange rate system that has been in place mask the true currency risk?

Why are pegged exchange rates often overvalued and difficult to governments to maintain?

Which one of the following is not one of the three main currency systems in practice today?

Globalization and the Multinational Corporation

The Foreign Exchange Market

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

Country and Political Risk

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

Filters