Quiz
Chapter 7 - Exchange rates
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Questions in this quiz (14)
1Under fixed exchange rates, investors do not face exchange risk
- ATrue
- BFalse
2Under floating exchange rates, interest rate differences influence the movement of exchange rates
- ATrue
- BFalse
3The gold standard in operation between 1870 and 1914 provided a world-wide system of fixed exchange rates
- ATrue
- BFalse
4Counter party risk increases when engaging in financial hedging of foreign exchange risk
- ATrue
- BFalse
5The hypothesis that in the long run, a basket of tradable goods would cost the same in all countries is called
- Apurchasing power parity hypothesis
- Brelative PPP hypothesis
- Cinterest rate parity hypothesis
- Dmonetary policy parity hypothesis
6The 1-year forward rate for a currency can be estimated from
- Athe spot market rate, and the 1-year monetary supply in both currency areas
- Bthe swap market rate, and the 1-year monetary supply in both currency areas
- Cthe swap market rate, and the 1-year interest rates in both currency areas
- Dthe spot market rate, and the 1-year interest rates in both currency areas
- Enone of the above
7Which transactions are recorded in the balance of the payments?
- Adonations to charities based in another country
- Bpayments of membership dues in international organizations
- Ctransfers from citizens working abroad to their parents
- Dall of the above
8Banks trading foreign exchange rates earn revenues from the spread which is
- Athe difference between the spot rate and the forward rate
- Bthe difference between the spot rate and the bid rate
- Cthe difference between the offer rate and the forward rate
- Dthe difference between the offer rate and the bid rate
9If a country has a "balance of payment deficit", this means
- Ait exports less goods than it imports
- Bit exports less goods and services than it imports
- Cits transfers send abroad exceeds the transfers received
- Dthe sum of its goods exports, service exports, and transfers received is less than the goods imports, service imports, and transfers send
10What was established in the "Bretton Woods agreement" of 1944?
- Athe international monetary fund and world bank
- Bthe european exchange rate system and the european central bank
- Cthe united nations
- Dnone of the above institutions
11The relationship between European countried and the US$ after 197 can best be describes as
- Aa free float
- Ba fixed exchange rate
- Ca managed float
- Da currency abroad
12A crawling band is a currency agreement that
- Aallows no fluctuations of exchange rates
- Ballows free fluctuations of exchange rates
- Callows fluctuations within certain limits that are fixed for a long time
- Dallows adjustment of an exchange rate at a pre-set rate
13Which of the following activities would reduce a company's exposure to exchange rate risk
- Abuying supplies in the country to which it exports
- Binvoicing for services in one's own currency
- Cexporting to a wide range og different currency areas
- Dall of the above
14When Toyota decided to set up a plant in France rather than the UK to produce cars to be sold in the euro-zone,
- Athis increased exposure to exchange rate risk
- Bthis reduced exposure to exchange rate risk
- Chad no effect on its exposure to exchange rate risk
- Dit engaged in a form of financial hedging
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- 5 International Business Quiz on Chapter 7 - Exchange rates, created by Silje Ris on 13/02/2024.
- Author
- Silje Ris
- Language
- English
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