IF Seminar – Multiple Choices
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1. The ________ is the rate at which one currency is converted in another.
A)exchange rate
B)currency market
C)foreign exchange market
D)currency swap rate
2. If a company expects the ________ relative to the ¥, the company might invest $10 million and receive ¥1.2 billion. (Assume an exchange rate of $1= ¥120).
A)dollar to appreciate
B)dollar to depreciate
C)dollar to be undervalued
D)yen to be overvalued
3. When foreign exchange dealers expect the dollar to appreciate against another currency, the dollar
A)the dollar is lling at a discount
B)the dollar is lling at a premium
C)the dealers expect the dollar to depreciate relative to the foreign currency
D)the dollar will buy less foreign exchange
4. When two parties agree to exchange currency and execute the deal at some specific date in the future a ___ occurs.
A)spot transaction
B)currency swap
C)forward exchange
D)currency speculation
5. The increa of demand for a currency relative to others
A)caus the currency to depreciate
B)caus the currency to appreciate
C)caus the currency to go down in value
D)creates a volatile currency situation
6. Which of the following is not an important vehicle currency?
A)the Japane yen B) the Swiss franc
C) the British pound D) the Euro
7. If Japan is experiencing rampant price inflation, and European Union nations are experiencing a low inflation rate, then
A)the yen would be expected to depreciate relative to the euro
B)the yen would be expected to appreciate relative to the euro
C)PPP would suggest that Japan would e prices fall
D)PPP would suggest that Japan would e prices ri
8. PPP theory predicts that exchange rates are determined by
A)inflation rates
B)relative prices
C)supply and demand
D)government
9. The formula i = r +πis known as
A)PPP
B)the Efficient Market Theory
C)the International Fisher Effect
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D)the Fisher Effect
10. The _______ school of thought does not believe that forward exchange rates are the best possible predictors of future spot rates.
A)efficient market
B)inefficient market
C)Fisher effect
D)International Fisher effect
11. A country's currency is said to be ______ when the country's government allows both residents and nonresidents to purcha unlimited amounts of a foreign currency with it.
A)externally convertible B) freely convertible
C) internally convertible D) nonconvertible
12. When neither residents nor nonresidents are allowed to convert a currency into a foreign currenc
y, the currency is said to be
A)internally convertible B) externally convertible
C) freely convertible D) nonconvertible
13. PPP is a strong indicator of .
A) exchange rates
B) short-run movements
C) long run predictions of exchange rates
D) differentials in inflation rates
14. PPP fails in part becau it assumes away .
A) inflationary cost-push prices
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B) transportation costs and trade barriers
C) equalization of prices by arbitrage
D) none of the above
15. The Fisher Effect affects .
A) suspension systems for automobiles
B) price equilibrium for inelasticity of demand
C) why nations experience decline in their money
D) nominal interest rates and inflation trends
16. The Inefficient Market School states that the following is inefficient:
A) price predictors
B) surplus commodity deficiencies
C) foreign exchange market
D) none of the above
17. Fundamental Analysis draws on theory for predictions.
A) economic B) market C) exchange D) multivariate
18. Technical Analysis draws on data to make predictions.
A) rate of return B) consumer price C) price and volume D) profit and loss
19. The foreign exchange market is referred to as a market where one country's currency is exchanged for another currency. The currency exchange is usually made through the following methods .
A) buyers and llers of foreign exchange meet at a physical location.
B) buyers and llers of foreign exchange meet through a telephone network
C) buyers and llers of foreign exchange meet through computer communications
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D) A and B
E) B and C
20. Which of the following is not a characteristic of speculation .
A) profit motive B) exchange rate fluctuation
railway是什么意思C) hedging D) risk taking
E) deliberate uncovered position
21. A cross rate is an exchange rate between ___ and ___.
A) The US dollar and the Japane yen
B) any two non-home currencies
C) the Mexican peso and the euro
D) the domestic currency and a foreign currency
E) the euro and the Japane yen
22. Foreign exchange markets are efficient if .
A) good information is available at no or little cost
B) you have inside information
C) markets are highly regulated
D) market information is cretive
E) most foreign exchange dealers are speculators
23. The Fisher Effect assumes that the .
A) real interest rate is equal to the nominal interest rate
B) nominal interest rate is equal to the real interest rate plus the inflation rate
C) inflation rate is equal to the real interest rate
D) nominal interest rate is equal to the inflation rate
E) nominal interest rate is lower than the inflation rate
24. The International Fisher Effect says that the .
A) exchange rate difference reflects the inflation rate difference between two countries
B) future spot rate should move in an amount equal to, but in the opposite direction from,
the difference in interest rates between two countries
C) future spot rate reflects the forward rate
D) interest rate is greater than the inflation rate
E) all of the above
commissioned25. The theory of interest rate parity means that the .
A) interest rates are equal in two countries
B) difference between a forward rate and a spot rate equals the difference between a domestic interest rate and a foreign interest rate
C) difference between the spot rate and the future spot rate reflects the interest rate difference between two countries
D) future spot rate reflects the inflation difference between two countries
E) all of the above
26. A forward rate is an unbiad predictor of the future spot rate if foreign exchange markets are .
A) controlled by the government
B) efficient
C) controlled by speculators
D) are partially controlled by the International Monetary Fund
E) none of the above
27. Actual exchange market participants include .
A) banks B) companies
turn offC) individuals D) governments
E) all of the above
28. Central banks __ _.
A) attempt to control the growth of the money supply within their jurisdictions
B) rve as their governments’ banker for domestic and international payments
C) strive to maintain the value of their own currency against any foreign currency
D) A and C
E) all of the above
29. The following will shift the demand schedule for Australian dollars to the right:
i) A reduction in the cost of air travel
ii)An increa in Australian interest rates
iii) A poor wheat harvest in the US
Which of the following is correct?
A)I only
B)II only
C)I and III only
D)I, II and III
30. Which of the following will shift the demand for US dollar denominated asts to the right?
A)A decrea in the foreign exchange demand for US products
B)A fall in US imports
C)The dollar is expected to appreciate
D)An increa in European interest rates
31. Which of the following is correct? The most common type of transaction in the foreign exchange market is
A)Forward transaction.
B)Spot transaction.
C)Futures transaction.
D)Taking an option.
32. Which of the following is correct? If dollars were cheaper in London than in New York,
A)A dealer would buy dollars in London and then ll them in New York
yoxiB) A dealer would buy dollars in New York and then ll them in London
C) A dealer would ll dollars in London and in New York
D)A dealer would buy dollars in London and in New York
33. Which of the following is correct? If the price of Yen in Singapore ro above the price of yen in Hong Kong then:
A)The demand for yen would be higher in Singapore and lower in Hong Kong than
would have been the ca.
B)The supply for yen would be higher in Singapore and lower in Hong Kong than
would have been the ca.
C)The supply for yen would be higher in Singapore and the demand for yen would
be lower in Hong Kong than would have been the ca.
D)The demand for yen would be higher in Hong Kong and the supply of yen would
be higher in Singapore than would have been the ca.
34. A company that simultaneously buys and lls a given amount of foreign exchange for two different value dates is engaged in .
A. a multilateral transaction
B. a forward transaction
C. a future transaction
D. a currency swap
35. The extent to which the income from individual transactions is affected by fluctuations in the foreign exchange values is known as .
A) translation exposure
B) economic exposure
C) transaction exposure
D)geographic exposure
36. Translation Exposure refers to on the reported financial statements of a company.
A. changes on balance sheets
B. changes in currency exchange rates
C. changes in foreign accounting procedures
D. changes on foreign shareholder holdings
37. A US company is expected to receive £100,000 in 120 days. If the company wants to minimize the risk of foreign exchange, then it would .
A. buy British pounds forward
B. ll British pounds forward
C. buy British pounds 120 days from now
D. ll British pounds 120 days from now
E. ll British pounds in the current spot market
38. Speculation in foreign exchange markets entails .
A. covering in the forward market
B. covering in the money market
C. hedging in the option market
D. buying in the current spot market and lling in the future spot market
E. covering in the futures market
39. Which of the following is not one of advantages for a flexible exchange rate system?
A. countries can maintain independent monetary policy
reali是什么意思
B. exchange rates under a flexible system are unstable
C. countries can maintain independent fiscal policy
D. flexible exchange rates permit a smooth adjustment to external shocks
E. Central banks do not need to maintain large rerves
40. Which of the following is not directly attributable to the collap of the fixed exchange rate system?
A. U.S. balance of payments deficits
B. the decrea in the U.S. dollar value
C. the decline of international rerves
D. Japan's trade surplus
E. none of the above
41. The exchange rate system under the Bretton Woods Agreement was a ________ regime.
A. fixed
工程施工管理B. floating
C. pegged
D. dirty float
42. The key strength of the gold standard was
A)that it maintained a managed float system
B)that it maintained a dirty float system
C)that it was a mechanism for achieving balance of payments equilibrium by all countries
D)that all countries of the world maintained a stable currency
