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.Management Sciences
Category: Foreign Exchange
A depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is ?
A. constant
B. inelastic
C. elastic
D. Unitary elastic
Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years ?
A. letter a credit
B. foreign currency option
C. cable transfer
D. bill of exchange
A fiscal expansion in the UK ?
A. has no predictable effect on the price of the pound sterling?
B. does not affect the price of the pound sterling
C. tends to appreciate the pound sterling
D. tends to depreciate the pound sterling
If the exchange rate is 11 Mexican pesos per U.S dollar, then it takes _______ to buy 1 peso?
A. $0.0909
B. $0.1002
C. $0.2826
D. $1.1024
Under a system of floating exchange rates there is a general tendency for ?
A. exchange rates to be insensitive to the differential rates of inflation between countries
B. the currencies of relatively high-inflation countries to depreciate
C. the currencies of relatively high inflation countries to appreciate
D. the currencies of relatively low inflation countries to depreciate
The supply of foreign currency tends to be ?
A. upward sloping
B. downward sloping
C. vertical
D. any of the above
The agreements that were reached at the Bretton Woods conferences in 1944 established a system ?
A. of essentially fixed exchange rates under which each country agreed to intervene in the foreign exchange market when necessary to maintain the agreed upon value of its currency
B. in which the value of currencies was fixed in terms of a specific number of ounces of gold, which in turn determined their values in international trading
C. of floating exchange rates determined of the supply and demand of one nation’s currency relative to the currency of other nations
D. That prohibited governments from intervening in the foreign exchange markets
Suppose that Boeing is to receive payment in euros in 6 month and wants to engage in hedging the firm would _______ euros on the 6-month forward market in order to protect itself from a/an of the euro?
A. sell; appreciation
B. sell; depreciation
C. buy; depreciation
D. buy; appreciation
Exchange rates that are determined by the unregulated forces of supply and demand are ?
A. floating exchange rates
B. pegged exchange rates
C. managed exchange rates
D. fixed exchange rates
During the era of dollar appreciation from 1981 to 1985 a main reason why the dollar did not fall in value was ?
A. flows of foreign investment into the United States
B. rising price inflation in the United States
C. a substantial decrease in U.S imports
D. a substantial increase in U.S exports
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