Question 1

As the dollar's exchange value appreciates against the pound,U.S.residents tend to import more British goods and thus demand more pounds.

Accepted Answer

A) True 
 B)False  True

Question 2

"Futures" currency contracts are issued by commercial banks and are tailored in size to the needs of the exporter or importer,while "forward" currency contracts are issued by the International Monetary Market in standardized round lots.

Accepted Answer

A) True 
 B)False  False

Question 3

In the interbank market for foreign exchange,the ____ refers to the price for which a bank is willing to sell a unit of foreign currency.

Accepted Answer

A)  Offer rate 
B)  Option rate 
C)  Futures rate 
D)  Bid rate 
A)  Offer rate 
B)  Option rate 
C)  Futures rate 
D)  Bid rate A

Question 4

An increase in the trade-weighted value of the dollar indicates a dollar appreciation relative to the currencies of its major trading partners and a worsening of U.S.international competitiveness.

Accepted Answer

A) True 
 B)False

Question 5

In the forward market,the exchange rate is agreed on at the time of the currency contract,but payment is not made until the future delivery of the currency actually takes place.

Accepted Answer

A) True 
 B)False

Question 6

Figure 11.1 illustrates the supply and demand schedules for the Swiss franc. Assume that exchange rates are flexible.
Figure 11.1. Supply and Demand Schedules of Francs
  
-Refer to Figure 11.1.Suppose the exchange rate is $.30 per franc.At this exchange rate there is an ____ of francs which leads to a ____ in the dollar price of the franc,a (an)____ in the quantity of francs supplied,and a (an)____ in the quantity of francs demanded.

Accepted Answer

A)  Excess demand, rise, increase, decrease 
B)  Excess demand, rise, decrease, increase 
C)  Excess supply, fall, decrease, increase 
D)  Excess supply, fall, increase, decrease 
A)  Excess demand, rise, increase, decrease 
B)  Excess demand, rise, decrease, increase 
C)  Excess supply, fall, decrease, increase 
D)  Excess supply, fall, increase, decrease

Question 7

Table 11.4. Forward Exchange Rates
  
-Refer to Table 11.4.On Wednesday,the 30-day forward franc was selling at a:

Accepted Answer

A)  1 percent premium per annum against the dollar 
B)  2 percent premium per annum against the dollar 
C)  1 percent discount per annum against the dollar 
D)  2 percent discount per annum against the dollar 
A)  1 percent premium per annum against the dollar 
B)  2 percent premium per annum against the dollar 
C)  1 percent discount per annum against the dollar 
D)  2 percent discount per annum against the dollar

Question 8

An appreciation in the value of the U.S.dollar against the British pound would tend to:

Accepted Answer

A)  Discourage the British from buying American goods 
B)  Discourage Americans from buying British goods 
C)  Increase the number of dollars that could be bought with a pound 
D)  Discourage U.S. tourists from traveling to Britain 
A)  Discourage the British from buying American goods 
B)  Discourage Americans from buying British goods 
C)  Increase the number of dollars that could be bought with a pound 
D)  Discourage U.S. tourists from traveling to Britain

Question 9

If the Swiss demand for dollars is inelastic,a depreciation of the dollar against the franc will lead to a greater quantity of francs being supplied to the foreign exchange market to obtain dollars.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would not induce the U.S.demand curve for foreign exchange to shift backward to the left?

Accepted Answer

A)  Worsening American tastes for goods produced overseas 
B)  Increasing interest rates in the U.S. compared to those overseas 
C)  A fall in the level of U.S. income 
D)  A depreciation in the U.S. dollar against foreign currencies 
A)  Worsening American tastes for goods produced overseas 
B)  Increasing interest rates in the U.S. compared to those overseas 
C)  A fall in the level of U.S. income 
D)  A depreciation in the U.S. dollar against foreign currencies

Question 11

A "call" option gives General Motors the right to sell pounds at a specified price,while a put option gives General Motors the right to buy pounds at a specified price.

Accepted Answer

A) True 
 B)False

Question 12

Movements along the demand schedule for pounds are caused by changes in the pound's exchange rate.

Accepted Answer

A) True 
 B)False

Question 13

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc,whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Accepted Answer

A)  Spot exchange rates 
B)  Forward exchange rates 
C)  Cross exchange rates 
D)  Option exchange rates 
A)  Spot exchange rates 
B)  Forward exchange rates 
C)  Cross exchange rates 
D)  Option exchange rates

Question 14

Is it possible to trade foreign exchange in the futures market? How does such trading differ from the forward market?

Accepted Answer

Yes.In the futures market,contracting pa

Question 15

Stabilizing speculation reinforces market forces by intensifying an appreciation or a depreciation in a currency's exchange value.

Accepted Answer

A) True 
 B)False

Question 16

Suppose researchers discover that Swiss beer causes cancer when given in large amounts to British mice.This finding would likely result in a (an):

Accepted Answer

A)  Increase in the demand for Swiss francs 
B)  Decrease in the demand for Swiss francs 
C)  Increase in the supply of Swiss francs 
D)  Decrease in the supply of Swiss francs 
A)  Increase in the demand for Swiss francs 
B)  Decrease in the demand for Swiss francs 
C)  Increase in the supply of Swiss francs 
D)  Decrease in the supply of Swiss francs

Question 17

If Citibank quoted bid and offer rates for the Swiss franc at $.4850/$.4854,the bank would be prepared to buy,say,1 million francs for $485,000 and sell them for $485,400.

Accepted Answer

A) True 
 B)False

Question 18

In the interbank market for foreign exchange,the ____ refers to the price that a bank is willing to pay for a unit of foreign currency.

Accepted Answer

A)  Offer rate 
B)  Bid rate 
C)  Spread rate 
D)  Transaction rate 
A)  Offer rate 
B)  Bid rate 
C)  Spread rate 
D)  Transaction rate

Question 19

Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?

Accepted Answer

A)  Forward transaction 
B)  Futures transaction 
C)  Spot transaction 
D)  Swap transaction 
A)  Forward transaction 
B)  Futures transaction 
C)  Spot transaction 
D)  Swap transaction

Question 20

If Canadian speculators believed the Swiss franc was going to appreciate against the U.S.dollar,they would:

Accepted Answer

A)  Purchase Canadian dollars 
B)  Purchase U.S. dollars 
C)  Purchase Swiss francs 
D)  Sell Swiss francs 
A)  Purchase Canadian dollars 
B)  Purchase U.S. dollars 
C)  Purchase Swiss francs 
D)  Sell Swiss francs

As the dollar's exchange value appreciates against the pound,U.S.residents tend to import more British goods and thus demand more pounds.

"Futures" currency contracts are issued by commercial banks and are tailored in size to the needs of the exporter or importer,while "forward" currency contracts are issued by the International Monetary Market in standardized round lots.

In the interbank market for foreign exchange,the ____ refers to the price for which a bank is willing to sell a unit of foreign currency.

An increase in the trade-weighted value of the dollar indicates a dollar appreciation relative to the currencies of its major trading partners and a worsening of U.S.international competitiveness.

In the forward market,the exchange rate is agreed on at the time of the currency contract,but payment is not made until the future delivery of the currency actually takes place.

Table 11.4. Forward Exchange Rates -Refer to Table 11.4.On Wednesday,the 30-day forward franc was selling at a:

An appreciation in the value of the U.S.dollar against the British pound would tend to:

If the Swiss demand for dollars is inelastic,a depreciation of the dollar against the franc will lead to a greater quantity of francs being supplied to the foreign exchange market to obtain dollars.

Which of the following would not induce the U.S.demand curve for foreign exchange to shift backward to the left?

A "call" option gives General Motors the right to sell pounds at a specified price,while a put option gives General Motors the right to buy pounds at a specified price.

Movements along the demand schedule for pounds are caused by changes in the pound's exchange rate.

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc,whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Is it possible to trade foreign exchange in the futures market? How does such trading differ from the forward market?

Stabilizing speculation reinforces market forces by intensifying an appreciation or a depreciation in a currency's exchange value.

Suppose researchers discover that Swiss beer causes cancer when given in large amounts to British mice.This finding would likely result in a (an):

If Citibank quoted bid and offer rates for the Swiss franc at $.4850/$.4854,the bank would be prepared to buy,say,1 million francs for $485,000 and sell them for $485,400.

In the interbank market for foreign exchange,the ____ refers to the price that a bank is willing to pay for a unit of foreign currency.

Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?

If Canadian speculators believed the Swiss franc was going to appreciate against the U.S.dollar,they would:

the International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

the Balance of Payments

Exchange-rate Determination

Balance-of-payments Adjustments

Exchange-rate Adjustments and the Balance of Payments

Exchange-rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, debt, and Risk

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Exam 11: Foreign Exchange

As the dollar's exchange value appreciates against the pound,U.S.residents tend to import more British goods and thus demand more pounds.

"Futures" currency contracts are issued by commercial banks and are tailored in size to the needs of the exporter or importer,while "forward" currency contracts are issued by the International Monetary Market in standardized round lots.

In the interbank market for foreign exchange,the ____ refers to the price for which a bank is willing to sell a unit of foreign currency.

An increase in the trade-weighted value of the dollar indicates a dollar appreciation relative to the currencies of its major trading partners and a worsening of U.S.international competitiveness.

In the forward market,the exchange rate is agreed on at the time of the currency contract,but payment is not made until the future delivery of the currency actually takes place.

Table 11.4. Forward Exchange Rates -Refer to Table 11.4.On Wednesday,the 30-day forward franc was selling at a:

An appreciation in the value of the U.S.dollar against the British pound would tend to:

If the Swiss demand for dollars is inelastic,a depreciation of the dollar against the franc will lead to a greater quantity of francs being supplied to the foreign exchange market to obtain dollars.

Which of the following would not induce the U.S.demand curve for foreign exchange to shift backward to the left?

A "call" option gives General Motors the right to sell pounds at a specified price,while a put option gives General Motors the right to buy pounds at a specified price.

Movements along the demand schedule for pounds are caused by changes in the pound's exchange rate.

A corporation dealing in foreign exchange may desire to obtain an exchange quote between the pound and franc,whose values are both expressed relative to the dollar.____ are used to determine such a relationship.

Is it possible to trade foreign exchange in the futures market? How does such trading differ from the forward market?

Stabilizing speculation reinforces market forces by intensifying an appreciation or a depreciation in a currency's exchange value.

Suppose researchers discover that Swiss beer causes cancer when given in large amounts to British mice.This finding would likely result in a (an):

If Citibank quoted bid and offer rates for the Swiss franc at $.4850/$.4854,the bank would be prepared to buy,say,1 million francs for $485,000 and sell them for $485,400.

In the interbank market for foreign exchange,the ____ refers to the price that a bank is willing to pay for a unit of foreign currency.

Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?

If Canadian speculators believed the Swiss franc was going to appreciate against the U.S.dollar,they would:

the International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

the Balance of Payments

Exchange-rate Determination

Balance-of-payments Adjustments

Exchange-rate Adjustments and the Balance of Payments

Exchange-rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

International Banking: Reserves, debt, and Risk

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