南理工國際金融題庫(英文版)

ReviewMaterialforInternationalFinance(2009)

FirstPart:

A.ConceptExplanation:(select6,18points)

1.LondonInterbankOfferedRate(LIBOR)

2.SpecialDrawingRights(SDR)

3.BrettonWoodsSystem

4.CurrentAccount

5.Euro

6.EuropeanOption

7.InternationalFisherEffect

8.LawofOnePrice

9.PurchasingPowerParity(PPP)

10.Option

11.Foreignexchange

12.Euro-bond

13.BalanceofPayments

14.Gresham'sLaw

15.ForwardDiscount

16.Jcurve'seffect

17.Premium

18.Officialreserveassets

19.OpenInterest

20.OTC

21.CDS

22.NDF

23.Swapagreement

24.Unilateraltransfer

25.FXexposure

26.Coverposition

27.IPO

28.QFII

29.QDII

30.OptionalForwardExchange

B.Multiple-choicetest(onlyoneiscorrect):

1.Gresham'sLawstatesthat

a)Badmoneydrivesgoodmoneyoutofcirculation.

b)Goodmoneydrivesbadmoneyoutofcirculation

c)Ifacountrybasesitscurrencyonbothgoldandsilver,atanofficialexchangerate,it

willbethe

morevaluableofthetwometalsthatcirculate.

d)Noneoftheabove.

2.Balanceofpayments

a)isdefinedasthestatisticalrecordofacountry'sinternationaltransactionsovera

certainperiodof

timepresentedintheformofadouble-entrybookkeeping

b)providesdetailedinformationconcerningthedemandandsupplyofacountry's

currency

c)canbeusedtoevaluatetheperformanceofacountryininternationaleconomic

competition

d)alloftheabove

3.IftheUnitedStatesimportsmorethanitexports,then

a)Thesupplyofdollarsislikelytoexceedthedemandintheforeignexchangemarket,

ceteris

paribus.

b)OnecaninferthattheU.S.dollarwouldbeunderpressuretodepreciateagainst

othercurrencies

c)a)andb)

d)Noneoftheabove

4.Thecurrentspotexchangerateis$1.55/￡andthethree-monthforwardrateis

$1.50/￡.Youenterintoa

shortpositionon￡1,000.Atmaturity,thespotexchangerateis$1.60/￡,Howmuch

haveyoumadeor

lost?

a)Lost$100

b)Made￡100

c)Lost$50

d)Made$150

5.Thesensitivityof''realizedz,domesticcurrencyvaluesofthefirm'scontractualcash

flowsdenominated

inforeigncurrencytounexpectedchangesintheexchangerateis:

a)Transactionexposure

b)Translationexposure

c)Economicexposure

d)Noneoftheabove

6.Threedaysago,youenteredintoafuturescontracttosell€62,500at$1.20per€.

Overthepastthree

daysthecontracthassettledat$1,20,$1.22,and$1.24.Howmuchhaveyoumadeor

lost?

a)Lost$0.04per€or$2,500

b)Made$0.04per€or$2,500

c)Lost$0.06per€or$3,750

d)Noneoftheabove

7.Aswapbank

a)Canactasabroker,bringingtogethercounterpartiestoaswap

b)Canactasadealer,standingreadytobuyandsellswaps

c)Botha)andb)

d)Onlysometimesa)butnevereverb)

8.Supposethattheone-yearinterestrateis5.0percentintheUnitedStates,thespot

exchangerateis

$1.20/€,andtheone-yearforwardexchangerateis$1.16/€.Whatmustone-year

interestratebeinthe

eurozone?

a)5.0%

b)1.09%

c)8.62%

d)Noneoftheabove.

9.Supposethespotaskexchangerate,Sa($|￡),is$1.90=￡1.00andthespotbid

exchangerate,Sb($|￡),is

$1.89=￡1.00.Ifyouweretobuy$10,000,000worthofBritishpoundsandthensell

themfiveminutes

later,howmuchofyour$10,000,000wouldbe"eaten"bythebid-askspread?

a)$1,000,000

b)$52,910.05

c)$100,000

d)$52,631.58

10.Underthegoldstandard,internationalimbalancesofpaymentwillbecorrected

automaticallyunder

the

a)GreshamExchangeRateregime

b)EuropeanMonetarySystem

c)Price-specie-flowmechanism

d)BrettonWoodsAccord

11.Withanyhedge

a)Yourlossesononesideshouldaboutequalyourgainsontheotherside

b)Youshouldtrytomakemoneyonbothsidesofthetransaction:thatwayyoumake

money

comingandgoing

c)Youshouldspendatleastasmuchtimeworkingthehedgeasworkingtheunderlying

dealitself

d)Youshouldagreetoanythingyourbankerputsinfrontofyourface

12.Comparing"forward"and"futures“exchangecontracts,wecansaythat:

a)Theyareboth''marked-to-market,/daily.

b)Theirmajordifferenceisinthewaytheunderlyingassetispricedforfuturepurchase

orsale:

futuressettledailyandforwardssettleatmaturity.

c)Afuturescontractisnegotiatedbyopenoutcrybetweenfloorbrokersortradersand

istradedon

organizedexchanges,whileforwardcontractistailor-madebyaninternationalbankfor

itsclients

andistradedOTC.

d)b)andc)

13.An"option"is

a)acontractgivingtheseller(writer)theright,butnottheobligation,tobuyorsella

givenquantity

ofanassetataspecifiedpriceatsometimeinthefuture

b)acontractgivingtheowner(buyer)theright,butnottheobligation,tobuyorsella

given

quantityofanassetataspecifiedpriceatsometimeinthefuture

c)notaderivative,noracontingentclaim,security

d)unlikeafuturesorforwardcontract

14.Economicexposurerefersto

a)thesensitivityofrealizeddomesticcurrencyvaluesofthefirm'scontractualcash

flows

denominatedinforeigncurrenciestounexpectedexchangeratechanges

b)theextenttowhichthevalueofthefirmwouldbeaffectedbyunanticipatedchanges

inexchange

rate

c)thepotentialthatthefirmzsconsolidatedfinancialstatementcanbeaffectedby

changesin

exchangerates

d)expostandexantecurrencyexposures

15.Underapurelyflexibleexchangeratesystem

a)Supplyanddemandsettheexchangerates

b)Governmentscansettheexchangeratebybuyingorsellingreserves

c)Governmentscansetexchangerateswithfiscalpolicy

b)andc)arecorrect.

16.Generallyspeaking,anytransactionthatresultsinapaymenttoforeigners

a)Willberecordedasadebit,withanegativesign,intheU.S.balanceofpayments

b)Willberecordedasadebit,withapositivesign,intheU.S.balanceofpayments

c)Willberecordedasacredit,withanegativesign,intheU.S.balanceofpayments

d)Willberecordedasacredit,withapositivesign,intheU.S.balanceofpayments

17.Factorincome

a)Consistslargelyofinterest,dividends,andotherincomeonforeigninvestments.

b)Isatheoreticalconstructofthefactorsofproduction,land,labor,capital,and

entrepreneurial

ability.

c)Isgenerallyaveryminorpartofnationalincomeaccounting,smallerthanthe

statistical

discrepancy.

d)Noneoftheabove

18.Acountry'sinternationaltransactionscanbegroupedintothefollowingthreemain

types:

a)currentaccount,mediumtermaccount,andlongtermcapitalaccount

b)currentaccount,longtermcapitalaccount,andofficialreserveaccount

c)currentaccount,capitalaccount,andofficialreserveaccount

d)capitalaccount,officialreserveaccount,tradeaccount

19.Whenacountrymustmakeanetpaymenttoforeignersbecauseofabalance-of-

paymentsdeficit,the

centralbankofthecountry

a)Shoulddonothing

b)Shouldrundownitsofficialreserveassets(e.g.gold,foreignexchanges,andSDRs)

c)Shouldborrowanewfromforeigncentralbanks.

d)b)orc)willwork

20.Assumethatthebalance-of-paymentsaccountsforacountryarerecordedcorrectly.

balanceonthecurrentaccount=BCA=$130billion

balanceonthecapitalaccount=BKA=-$86billion

balanceonthereservesaccount=BRA=?

Thebalanceonthereservesaccount(BRA)Zunderthefixedexchangeregimeis

a)-$44billion

b)$44billion

c)$216billion

d)noneoftheabove

21.The''J-curveeffect"shows:

a)theinitialdeteriorationandtheeventualimprovementofacountry'stradebalance

followinga

currencydepredation

b)theinitialimprovementandtheeventualdepreciationofacountry'stradebalance

followinga

currencydepreciation

c)thetradebalance'slackofresponsivenesstotheexchangesratechanges

d)noneoftheabove

22.Theworld'slargestforeignexchangetradingcenteris:

a)NewYork

b)Tokyo

c)London

d)HongKong

23.Supposethatthecurrentexchangerateis€0.80=$1,00.Thedirectquote,fromthe

U.S.perspectiveis

a)€1.00=$1.25

b)€0.80=$1.00

c)￡1.00=$1.80

d)Noneoftheabove

24.Theforwardmarket

a)Involvescontractingtodayforthefuturepurchaseofsaleofforeignexchangeatthe

spotratethat

willprevailatthematurityofthecontract.

b)Involvescontractingtodayforthefuturepurchaseofsaleofforeignexchangeata

priceagreed

upontoday.

c)Involvescontractingtodayfortherightbutnotobligationtothefuturepurchaseof

saleofforeign

exchangeatapriceagreedupontoday.

d)Noneoftheabove

25.UndertheBrettonWoodssystem

a)therewasanexplicitsetofrulesabouttheconductofinternationalmonetarypolicies

b)eachcountrywasresponsibleformaintainingitsexchangeratewithin1percentof

theadopted

parvaluebybuyingorsellingforeignexchangesasnecessary

c)theU.S.dollarwastheonlycurrencythatwasfullyconvertibletogold

d)alloftheabove

26.WithregardtothecurrentexchangeratearrangementbetweentheU.S.andthe

U.K.,itisbest

characterizedas

a)Independentfloating(marketdetermined)

b)Managedfloat

c)Currencyboard

a)Peggedexchangeratewithinahorizontalband.

27.The$/CDspotbid-askratesare$0.7560-$0.7625.The3-monthforwardpointsare

12-16.

Determinethe$/CD3-monthforwardbid-askrates.

a)$0.7548-$0.7609

b)$0.7572-$0.7641

c)$0.7512-$0.7616

d)cannotbedeterminedwiththeinformationgiven

28.PurchasingPowerParity(PPP)theorystatesthat:

a)Theexchangeratebetweencurrenciesoftwocountriesshouldbeequaltotheratio

ofthe

countries7pricelevels.

b)Asthepurchasingpowerofacurrencysharplydeclines(duetohyperinflation)that

currencywill

depreciateagainststablecurrencies.

c)Thepricesofstandardcommoditybasketsintwocountriesarenotrelated.

d)a)andb)

29.Internationalreserveassetsinclude''foreignexchanges,z.Theseare

a)SpecialDrawingRights(SDRs)attheIMF

b)reservepositionsintheInternationalMonetaryFund(IMF)

c)Foreigncurrencyheldbyacountry'scentralbank

d)Noneoftheabove

30.Thecapitalaccountmaybedividedintothreecategories:

a)Cross-bordermergersandacquisitions,portfolioinvestment,andotherinvestment

b)Directinvestment,portfolioinvestment,andCross-bordermergersandacquisitions

c)Directinvestment,mergersandacquisitions,andotherinvestment

d)Directinvestment,portfolioinvestment,andotherinvestment

31.AU.S.-basedcurrencydealerhasgoodcreditandcanborrow$1,000,000forone

year.Theone-year

interestrateintheU.S.isi$=2%andintheeurozonetheone-yearinterestrateisi€

=6%.Thespot

exchangerateis$1.25=€1.00andtheone-yearforwardexchangerateis$1.20=

€1.00.Showhowto

realizeacertaindollarprofitviacoveredinterestarbitrage.

a)Borrow$1,000,000at2%.Trade$1,000,000for€800,000;investati€=6%;

translateproceeds

backatforwardrateof$1.20=€1.00,grossproceeds=$1,017,600.

b)Borrow€800,000ati€=6%;translatetodollarsatthespot,investintheU.S.ati

$=2%forone

year;translate€848,000backintoeuroattheforwardrateof$1.20=€1.00.Netprofit

$2,400.

c)Borrow€800,000ati€=6%;translatetodollarsatthespot,investintheU.S.ati

$=2%forone

year;translate€850,000backintoeuroattheforwardrateof$1.20=€1.00.Netprofit

€2,000.

d)Answersc)andb)arebothcorrect

32.SupposetheU.S.dollarsubstantiallydepreciatesagainsttheJapaneseyen.The

changeinexchange

rate

a)Willtendtoweakenthecompetitivepositionofimport-competingU.S.carmakers.

b)Willtendtostrengthenthecompetitivepositionofimport-competingU.S.carmakers.

c)WilltendtostrengthenthecompetitivepositionofJapanesecarmakersatthe

expenseofU.S.

makers.

d)Noneoftheabove

33.Swaptransactions

a)Involvethesimultaneoussale(orpurchase)ofspotforeignexchangeagainsta

forwardpurchase

(orsale)ofapproximatelyanequalamountoftheforeigncurrency.

b)AccountforabouthalfofInterbankFXtrading.

c)Alloftheabove

d)InvolvetradesofoneforeigncurrencyforanotherwithoutgoingthroughtheU.S.

dollar

34.Ifyouhavealongpositioninaforeigncurrency,youcanhedgewith:

a)Ashortpositioninanexchange-tradedfuturesoption

b)Ashortpositioninacurrencyforwardcontract

c)Ashortpositioninforeigncurrencywarrants

d)borrowing(notlending)inthedomesticandforeignmoneymarkets

35.PurchasingPowerParity(PPP)theorystatesthat:

a)Theexchangeratebetweencurrenciesoftwocountriesshouldbeequaltotheratio

ofthe

countries7pricelevels.

b)Asthepurchasingpowerofacurrencysharplydeclines(duetohyperinflation)that

currencywill

depreciateagainststablecurrencies.

c)Thepricesofstandardcommoditybasketsintwocountriesarenotrelated.

d)a)andb)

36.Mostforeignexchangetransactionsarefor:

a)Interventionbycentralbanks

b)Interbanktradesbetweeninternationalbanksornonbankdealers

c)retailtrade

d)purchaseofhardcurrencies

37.Relativetothespotpricetheforwardpricewillbe

a)Usuallylessthanthespotprice

b)Usuallymorethanthespotprice

c)Usuallyequaltothespotprice

d)Usuallylessthanormorethanthespotpricemoreoftenthanitisequaltothespot

price.

38.Ifthe$/￡bidandaskpricesare$1.50and$1.51,respectively,thecorresponding

￡/$bidandask

pricesare:

a)￡0.6667and￡0.6623

b)$1.51and$1.50

c)￡0.6623and￡0.6667

d)cannotbedeterminedwiththeinformationgiven

39.Followingtheintroductionoftheeuro,thenationalcentralbanksoftheeuro-12

nations

a)disbanded

b)FormedtheESCB,whichisanalogoustotheFederalReserveSystemintheUnited

States

c)Continuetoperformimportantfunctionsintheirjurisdictions

d)b)andc)arecorrect.

40.Inthelongrun,bothexportsandimportstendtobe

a)Unresponsivetochangesinexchangerates

b)Responsivetochangesinexchangerates

c)Botha)andb)

d)Noneoftheabove

41.Theeuro

a)isthecommoncurrencyofEurope

b)isdivisibleinto100cents,justliketheU.S.dollar

c)mayeventuallyhaveatransactiondomainlargerthantheU.S.dollar

d)Alloftheabove

42.UndertheBrettonWoodssystem

a)therewasanexplicitsetofrulesabouttheconductofinternationalmonetarypolicies

b)eachcountrywasresponsibleformaintainingitsexchangeratewithin1percentof

theadopted

parvaluebybuyingorsellingforeignexchangesasnecessary

c)theU.S.dollarwastheonlycurrencythatwasfullyconvertibletogold

d)alloftheabove

43.SpecialDrawingRights(SDR)are:

a)anartificialinternationalreserveallottedtothemembersoftheInternational

MonetaryFund

(IMF),whocanthenuseitfortransactionsamongthemselvesorwiththeIMF

b)a''portfolioz,ofcurrencies,anditsvaluetendstobemorestablethanthecurrencies

thatitis

comprisedof

c)usedinadditiontogoldandforeignexchanges,tomakeinternationalpayments

d)alloftheabove

44.Underthegoldstandard,internationalimbalancesofpaymentwillbecorrected

automaticallyunder

the

a)GreshamExchangeRateregime

b)EuropeanMonetarySystem

c)Price-specie-flowmechanism

d)BrettonWoodsAccord

45.Underapurelyflexibleexchangeratesystem

a)Supplyanddemandsettheexchangerates

b)Governmentscansettheexchangeratebybuyingorsellingreserves

c)Governmentscansetexchangerateswithfiscalpolicy

d)B)andc)arecorrect.

46.Generallyspeaking,anytransactionthatresultsinareceipttoforeigners

a)Willberecordedasadebit,withanegativesign,intheU.S.balanceofpayments

b)Willberecordedasadebit,withapositivesign,intheU.S.balanceofpayments

c)Willberecordedasacredit,withanegativesign,intheU.S.balanceofpayments

d)Willberecordedasacredit,withapositivesign,intheU.S.balanceofpayments

47.Acountry'sinternationaltransactionscanbegroupedintothefollowingthreemain

types:

a)currentaccount,mediumtermaccount,andlongtermcapitalaccount

b)currentaccount,longtermcapitalaccount,andofficialreserveaccount

c)currentaccount,capitalaccount,andofficialreserveaccount

d)capitalaccount,officialreserveaccount,tradeaccount

48.Invisibletraderefersto:

a)servicesthatavoidtaxpayments

b)undergroundeconomy

c)legal,consulting,andengineeringservices

d)touristexpenditures,only

49.Thecapitalaccountmaybedividedintothreecategories:

a)Cross-bordermergersandacquisitions,portfolioinvestment,andotherinvestment

b)Directinvestment,portfolioinvestment,andCross-bordermergersandacquisitions

c)Directinvestment,mergersandacquisitions,andotherinvestment

d)Directinvestment,portfolioinvestment,andotherinvestment

50.Whenexchangerateschange,

a)U.S.firmsthatsellonlytodomesticcustomerswillbeunaffected.

b)U.S.firmsthatsellonlytodomesticcustomerscanbeaffectediftheycompete

against

imports.

c)U.S.firmsthatsellonlytodomesticcustomerswillbeaffected,butonlyifthey

borrow

inforeigncurrencytofinancetheirdomesticoperations.

d)Botha)andb)

51.Mostforeignexchangetransactionsarefor:

a)Interventionbycentralbanks

b)Interbanktradesbetweeninternationalbanksornonbankdealers

c)retailtrade

d)purchaseofhardcurrencies

52.Internationalreserveassetsinclude''foreignexchanges".Theseare

a)SpecialDrawingRights(SDRs)attheIMF

b)reservepositionsintheInternationalMonetaryFund(IMF)

c)Foreigncurrencyheldbyacountry'scentralbank

d)Noneoftheabove

53.Supposethatthecurrentexchangerateis€0.80=$1.00.Thedirectquote,fromthe

U.S.perspectiveis

a)€1.00=$1.25

b)€0.80=$1.00

c)￡1.00=$1.80

d)Noneoftheabove

54.Supposethespotaskexchangerate,Sa($|￡),is$1.90=￡1.00andthespotbid

exchangerate,Sb($|￡),

is$1.89=￡1.00.Ifyouweretobuy$10,000,000worthofBritishpoundsandthensell

themfiveminutes

later,howmuchofyour$10,000,000wouldbe"eaten"bythebid-askspread?

a)$1,000,000

b)$52,910.05

c)$100,000

d)$52,631.58

55.Relativetothespotpricetheforwardpricewillbe

a)Usuallylessthanthespotprice

b)Usuallymorethanthespotprice

c)Usuallyequaltothespotprice

d)Usuallylessthanormorethanthespotpricemoreoftenthanitisequaltothespot

price.

56.Ifonehasagreedtobuyforeignexchangeforward

a)Youhaveashortpositionintheforwardcontract

b)Youhavealongpositionintheforwardcontract

c)Untiltheexchangeratemoves,youhaven'tmademoney,soyou'reneithershortnor

long

d)Youhavealongpositioninthespotmarket

57.Thecurrentspotexchangerateis$1.55/￡andthethree-monthforwardrateis

$1.50/￡.Youenterintoa

shortpositionon￡1,000.Atmaturity,thespotexchangerateis$1.60/￡,Howmuch

haveyoumadeor

lost?

a)Lost$100

b)Made￡100

c)Lost$50

d)Made$150

58.Swaptransactions

a)Involvethesimultaneoussale(orpurchase)ofspotforeignexchangeagainsta

forwardpurchase

(orsale)ofapproximatelyanequalamountoftheforeigncurrency.

b)AccountforabouthalfofInterbankFXtrading.

c)Alloftheabove

d)InvolvetradesofoneforeigncurrencyforanotherwithoutgoingthroughtheU.S.

dollar

59.Theforwardmarket

a)Involvescontractingtodayforthefuturepurchaseofsaleofforeignexchangeatthe

spotratethat

willprevailatthematurityofthecontract.

b)Involvescontractingtodayforthefuturepurchaseofsaleofforeignexchangeata

priceagreed

upontoday.

c)Involvescontractingtodayfortherightbutnotobligationtothefuturepurchaseof

saleofforeign

exchangeatapriceagreedupontoday.

d)Noneoftheabove

60.TheSF/$spotexchangerateisSF1.25/$andthe180forwardpremiumis8percent.

Whatisthe

outright180dayforwardexchangerate?

SF1.30/$

a)SF1.35/$

b)SF6.25/$

c)Noneoftheabove

67.Comparing"forward"and"futures"exchangecontracts,wecansaythat

a)Deliveryoftheunderlyingassetisseldommadeinfuturescontracts

b)Deliveryoftheunderlyingassetisusuallymadeinforwardcontracts

c)Deliveryoftheunderlyingassetisseldommadeineithercontract—theyaretypically

cash

settledatmaturity.

d)a)andb)

e)a)andc).

68.Yesterday,youenteredintoafuturescontracttobuy€62,500at$1.20per€.Your

initialperformance

bondis$1,500andyourmaintenancelevelis$500.Atwhatsettlepricewillyougeta

demandfor

additionalfundstobeposted?

a)$1.2160per€.

b)$1,208per€.

c)$1.1920per€.

d)$1.1840per€.

69.AEuropeanoptionisdifferentfromanAmericanoptioninthat

a)OneistradedinEuropeandoneintradedintheUnitedStates

b)Europeanoptionscanonlybeexercisedatmaturity;Americanoptionscanbe

exercised

priortomaturity.

c)EuropeanoptionstendtobeworthmorethanAmericanoptions,ceterisparibus.

d)Americanoptionshaveafixedexerciseprice;Europeanoptions7exercisepriceisset

at

theaveragepriceoftheunderlyingassetduringthelifeoftheoption.

70.Withcurrencyfuturesoptionstheunderlyingassetis

a)Foreigncurrency

b)Acallorputoptionwrittenonforeigncurrency

c)Afuturescontractontheforeigncurrency

d)Noneoftheabove

71.Thecurrentspotexchangerateis$1.25=€1.00andthethree-monthforwardrate

is$1.30=€1.00.

Considerathree-monthAmericancalloptionon€62,500.Forthisoptiontobe

consideredat-the-money,

thestrikepricemustbe:

a)$1.30=€1.00

b)$1.25=€1.00

c)$1.25x(1+i$)3/12=€1.00x(1+i€)3/12

d)noneoftheabove

72.Themostdirectandpopularwayofhedgingtransactionexposureisby:

a)exchange-tradedfuturesoptions

b)currencyforwardcontracts

c)foreigncurrencywarrants

d)borrowingandlendinginthedomesticandforeignmoneymarkets

73.Thesensitivityof''realizedz,domesticcurrencyvaluesofthefirm'scontractualcash

flows

denominatedinforeigncurrencytounexpectedchangesintheexchangerateis:

a)Transactionexposure

b)Translationexposure

c)Economicexposure

d)Noneoftheabove

74.Withanyhedge

a)Yourlossesononesideshouldaboutequalyourgainsontheotherside.

b)Youshouldtrytomakemoneyonbothsidesofthetransaction:thatwayyoumake

money

comingandgoing.

c)Youshouldspendatleastasmuchtimeworkingthehedgeasworkingtheunderlying

dealitself.

d)Hedgingonemightinvolveincreasingtheother

Youshouldagreetoanythingyourbankerputsinfrontofyourface.

75.Buyingacurrencyoptionprovides

a)aflexiblehedgeagainstexchangeexposure

b)limitsthedownsideriskwhilepreservingtheupsidepotential

c)aright,butnotanobligation,tobuyorsellacurrency

d)alloftheabove

76.Whenexchangerateschange,

a)U.S.firmsthatsellonlytodomesticcustomerswillbeunaffected.

b)U.S.firmsthatsellonlytodomesticcustomerscanbeaffectediftheycompete

againstimports.

c)U.S.firmsthatsellonlytodomesticcustomerswillbeaffected,butonlyifthey

borrowin

foreigncurrencytofinancetheirdomesticoperations.

d)Botha)andb)

77.Economicexposurerefersto

a)thesensitivityofrealizeddomesticcurrencyvaluesofthefirm'scontractualcash

flows

denominatedinforeigncurrenciestounexpectedexchangeratechanges

b)theextenttowhichthevalueofthefirmwouldbeaffectedbyunanticipatedchanges

inexchange

rate

c)thepotentialthatthefirm'sconsolidatedfinancialstatementcanbeaffectedby

changesin

exchangerates

d)expostandexantecurrencyexposures

78.Thedifferencebetweenaccountingexposureandtranslationexposure

a)Translationisaboutgoingfromonelanguagetoanother,accountingisjustaboutthe

numbers.

b)Accountingexposureandtranslationexposurearethesamething.

c)Hedgingonealwaysinvolvesincreasingtheother

d)Hedgingonemightinvolveincreasingtheother

79.Aninterest-onlysinglecurrencyinterestrateswap

a)Isalsoknownasaplainvanillaswap

b)Isalsoknownasaninterestrateswap

c)Isaboutassimpleasswapscanget

d)Alloftheabove

80.Aforwardrateagreement(FRA)isacontractbetweentwobanks

a)thatallowstheEurobanktohedgetheinterestrateriskinmismatcheddepositsand

credits

b)inwhichthebuyeragreestopaythesellertheincreasedinterestcostonanotional

amountif

interestratesfallbelowanagreedrate,andtheselleragreestopaythebuyerthe

increased

interestcostifinterestratesincreaseabovetheagreedrate

c)thatisstructuredtocapturethematuritymismatchinstandard-lengthEurodeposits

andcredits

d)Alloftheabove

81.The''J-curveeffect"shows:

a)theinitialdeteriorationandtheeventualimprovementofacountry'stradebalance

followinga

currencydepreciation

b)theinitialimprovementandtheeventualdepreciationofacountry'stradebalance

followinga

currencydepreciation

c)hetradebalance'slackofresponsivenesstotheexchangesratechanges

d)noneoftheabove

82.Inthelongrun,bothexportsandimportstendtobe

a)Unresponsivetochangesinexchangerates

b)Responsivetochangesinexchangerates

c)Botha)andb)

d)Noneoftheabove

83.IftheinterestraterisesintheU.S.whileothervariablesremainconstant

a)CapitalinflowsintotheU.S.willincrease

b)CapitalinflowsintotheU.S.maynotmaterialize

c)CapitalwillflowoutoftheU.S.

d)Noneoftheabove

84.Thecapitalaccountmeasures

a)ThesumofU.S.salesofassetstoforeignersandU.S.purchasesofforeignassets.

b)ThedifferencebetweenU.S.salesofassetstoforeignersandU.S.purchasesof

foreignassets.

c)ThedifferencebetweenU.S.salesofmanufacturedgoodstoforeignersandU.S.

purchasesof

foreignproducts.

d)Noneoftheabove

85.Whenacountrymustmakeanetpaymenttoforeignersbecauseofabalance-of-

paymentsdeficit,the

centralbankofthecountry

a)Shoulddonothing

b)Shouldrundownitsofficialreserveassets(e.g.gold,foreignexchanges,andSDRs)

c)Shouldborrowanewfromforeigncentralbanks.

d)b)orc)willwork

86.Mostforeignexchangetransactionsarefor:

a)Interventionbycentralbanks

b)Interbanktradesbetweeninternationalbanksornonbankdealers

c)retailtrade

d)purchaseofhardcurrencies

87.ConsideraU.S.importerdesiringtopurchasemerchandisefromaDutchexporter

invoice