Question 1

Although there are many variables affecting the exchange rate of currencies,applications of fundamental forecasting using multiple regression and ANOVA readily overcome the problem of having all these variables.

Accepted Answer

A) True 
 B)False

Question 2

As a theory of exchange rate determination,the Fisher effect

Accepted Answer

A)  holds that exchange rates should reflect the price differences of each and every product between countries. 
B)  reflects the Big Mac Index. 
C)  links the forward exchange rate of a foreign currency to its spot rate. 
D)  All of the above 
E)  None of the above

Question 3

SWIFT stands for

Accepted Answer

A)  Swiss Worldwide International Funding Transactions. 
B)  Standard Worldwide International Futures Telecom. 
C)  Society for Worldwide Interbank Financial Telecommunications. 
D)  Southwestern International Fund Transferring. 
E)  None of the above

Question 4

The stated goal of the European Union is to eventually transform the euro to be a challenger to the U.S.dollar in its role as a preferred third-country currency.

Accepted Answer

A) True 
 B)False

Question 5

Historical exchange rate data can easily be obtained from

Accepted Answer

A)  the Friday Wall Street Journal. 
B)  the Bank of Canada. 
C)  the Sunday New York Times. 
D)  the January edition of Forbes. 
E)  None of the above

Question 6

A characteristic of options hedging is that options are commonly traded for many different currencies.

Accepted Answer

A) True 
 B)False

Question 7

As a theory of exchange rate determination,Purchasing Power Parity is the observation that exchange rates reflect the differences between nominal interest rates in different countries.

Accepted Answer

A) True 
 B)False

Question 8

The International Fisher effect is the observation that exchange rates reflect the differences between nominal interest rates in different countries.

Accepted Answer

A) True 
 B)False

Question 9

The risk resulting from possible fluctuations in currency exchange rates is called

Accepted Answer

A)  hedging. 
B)  transaction exposure. 
C)  the direct quote. 
D)  floating. 
E)  None of the above

Question 10

Technical forecasting methods are essentially based upon time-series analysis.

Accepted Answer

A) True 
 B)False

Question 11

For an exporter,there is a strategic advantage in quoting prices in the importer's currency and reducing the currency fluctuation risk with a forward market hedge or a money market hedge.

Accepted Answer

A) True 
 B)False

Question 12

The International Bank for Reconstruction

Accepted Answer

A)  is called the Bretton Woods. 
B)  was developed to manage Germany's World War I reparations. 
C)  is also known as the World Bank. 
D)  All of the above 
E)  None of the above

Question 13

In fundamental forecasting methods,the exchange rate of a specific currency is the dependent variable.

Accepted Answer

A) True 
 B)False

Question 14

When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction

Accepted Answer

A)  it will use an SDR. 
B)  it is exposed to a certain amount of risk. 
C)  it will use the services of the Ex-Im Bank. 
D)  All of the above 
E)  None of the above.

Exam 8: Currency of Payment (Managing Transaction Risks)

Although there are many variables affecting the exchange rate of currencies,applications of fundamental forecasting using multiple regression and ANOVA readily overcome the problem of having all these variables.

As a theory of exchange rate determination,the Fisher effect

SWIFT stands for

The stated goal of the European Union is to eventually transform the euro to be a challenger to the U.S.dollar in its role as a preferred third-country currency.

Historical exchange rate data can easily be obtained from

A characteristic of options hedging is that options are commonly traded for many different currencies.

As a theory of exchange rate determination,Purchasing Power Parity is the observation that exchange rates reflect the differences between nominal interest rates in different countries.

The International Fisher effect is the observation that exchange rates reflect the differences between nominal interest rates in different countries.

The risk resulting from possible fluctuations in currency exchange rates is called

Technical forecasting methods are essentially based upon time-series analysis.

For an exporter,there is a strategic advantage in quoting prices in the importer's currency and reducing the currency fluctuation risk with a forward market hedge or a money market hedge.

The International Bank for Reconstruction

In fundamental forecasting methods,the exchange rate of a specific currency is the dependent variable.

When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction