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.Management Sciences
Category: Foreign Exchange
Under a system of floating exchange rates the pound would depreciate in value if there occurs ?
A. Price inflation in the United States
B. an increase in U.S real income
C. a decrease in the British money supply
D. falling interest rates in Britain
Suppose there occurs an increase in the Canadian demand for Japanese computers This results in a (an) ?
A. increase in the demand for yen
B. decrease in the demand for yen
C. increase in the supply of yen
D. decrease in the Supply of yen
The largest volume of foreign exchange trading takes place in ?
A. China
B. Germany
C. United Kingdom
D. USA
The J-curve effect refers to the observation that ?
A. GDP usually decreases before it increases after a currency depreciation
B. the trade balance usually gets worse before it improves after a currency depreciation
C. the trade balance usually gets better before it gets worse after a currency appreciation
D. GDP usually decreases before it increases after a currency appreciation
In a supply and demand diagram for Japanese yen, with the exchange rate in dollars per yen on the vertical axis, the demand schedule for yen is drawn sloping ?
A. upward
B. vertical
C. downward
D. horizontal
Speculators in foreign exchange markets do all of the following except ?
A. attempt to profit by trading on expectations about future currency prices
B. bear risk as they attempt to ____ beat the market||
C. attempt to buy currency at a low price and later resell that currency at a higher price
D. Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit
The real effective exchange rate for the U.S dollar ?
A. reflects only the influences of merchandise or real trade on the dollar’s exchange value
B. reflects only transactions in the currency futures market
C. is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?
D. is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners unadjusted for inflation?
The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?
A. forward discount
B. forward premium
C. forward spread
D. None of these
Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called ?
A. differential actions
B. cash transaction
C. arbitrage
D. forward transactions
The price of one country’s currency in terms of another country’s currency is the ?
A. exchange rate
B. balance of trade
C. terms of trade
D. currency valuation
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