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Ten Multiple Choice Questions Set




Question;QUESTION 1Which of the following statements is most CORRECT?One advantage of forward contracts is that they are default free.Futures contracts generally trade on an organized exchange and are marked to market daily.Goods are never delivered under forward contracts, but are almost always delivered under futures contracts.There are futures contracts for currencies but no forward contracts for currencies.Futures contracts don't have any margin requirements but forward contracts do.QUESTION 2When the value of the U.S. dollar appreciates against another country's currency, we may purchase more of the foreign currency with a dollar.TrueFalseQUESTION 3The United States and most other major industrialized nations currently operate under a system of floating exchange rates.TrueFalseQUESTION 4A foreign currency will, on average, depreciate against the U.S. dollar at a percentage rate approximately equal to the amount by which its inflation rate exceeds that of the United States.TrueFalseQUESTION 5If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy?0.500.711.001.412.81QUESTION 6Suppose 144 yen could be purchased in the foreign exchange market for one U.S. dollar today. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?155.5 yen144.0 yen133.5 yen78.0 yen72.0 yenQUESTION 7Suppose that currently, 1 British pound equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc?1 British pound equals 3.2400 Swiss francs1 British pound equals 2.6244 Swiss francs1 British pound equals 1.8588 Swiss francs1 British pound equals 1.0000 Swiss francs1 British pound equals 0.3810 Swiss francsQUESTION 8A product sells for $750 in the United States. The exchange rate is $1 to 1.65 Swiss francs. If purchasing power parity (PPP) holds, what is the price of the product in Switzerland?123.75 Swiss francs454.55 Swiss francs750.00 Swiss francs1,237.50 Swiss francs1,650.00 Swiss francsQUESTION 98. A cheap Yuan value gives China?s __________ an advantage in the global economy.importerssubsidiesbankersexportersQUESTION 10In a forward market hedge, a company that has foreign currency receivables will _______ the foreign currency forward, whereas a company that has foreign currency payables will _______ the currency, sellsell, buyborrow, selllend, buy


Paper#49071 | Written in 18-Jul-2015

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