Q121: When the U.S. exchange rate rises, foreign goods become___and U.S. imports___
- A. more expensive; decrease
- B. less expensive; decrease
- C. more expensive; increase
- D. less expensive; increase
Answer
Answer D. less expensive; increase
Q122: “If the exchange rate between the dollar and Japanese yen is below the equilibrium exchange rate, there will be a___of dollars, and the exchange rate will___”
- A. shortage; change only when the supply curve shifts leftward
- B. shortage; rise to the equilibrium level
- C. surplus; fall to the equilibrium level
- D. surplus; rise to the equilibrium level
Answer
Answer B. shortage; rise to the equilibrium level
Q123: “Important factors that change the demand for dollars and shift the demand curve for dollars include which of the following?
I. Interest rates around the world
II. The current exchange rate
III. The expected future exchange rate.”
A. II only
B. I, II, and III
C. I and III
D. I and II
Answer
Answer C. I and III
Q124: “Which of the following exchange rate policies uses a target exchange rate, but allows the target to change?”
- A. fixed exchange rate
- B. flexible exchange rate
- C. crawling peg
- D. moving target
Answer
Answer C. crawling peg
Q125: Which of the following best explains the fact that interest rates on the euro are lower than those on the pound?
- A. Unemployment is higher in the eurozone than in the UK
- B. Inflationary expectations are higher in the UK than in the eurozone
- C. British markets are offshore from mainland Europe
- D. The euro is a weaker currency than sterling
Answer
Answer B. Inflationary expectations are higher in the UK than in the eurozone
Q126: The balance of payments accounts includes the
- A. non-performing account
- B. export bank account
- C. current account
- D. exim bank account
Answer
Answer C. current account
Q127: In part, a country’s current account measures
- A. its current debt as opposed to its long-term debt
- B. “receipts from the sale of goods and services to foreigners and payments for goods and services bought from foreigners.”
- C. net increases and decreases in a country’s holdings of foreign currency
- D. borrowing and lending activity between the country’s residents and foreigners
Answer
Answer B. “receipts from the sale of goods and services to foreigners and payments for goods and services bought from foreigners.”
Q128: “In the foreign exchange market, the___of one country is traded for the___of another country.”
- A. currency; currency
- B. currency; financial instruments
- C. currency; goods
- D. goods; goods
Answer
Answer A. currency; currency
Q129: “Which of the following apply to exchange rates?
I. The exchange rate is a price
II. The exchange rate for a currency depends on which foreign exchange market you use
III. The foreign exchange rate is different from other prices because it is NOT determined by supply and demand.”
A. I
B. II and III
C. I, II, and III
D. I and II
Answer
Answer A. I
Q130: “The foreign exchange rate is the price at which the___of one country exchanges for the___of another country.”
- A. currency; goods
- B. currency; financial instruments
- C. currency; currency
- D. goods; goods
Answer
Answer C. currency; currency
Q131: “In the foreign exchange market, which of the following results in a movement along the supply curve of dollars?”
- A. a change in the U.S. interest rate
- B. a change in the expected future exchange rate
- C. a change in the current exchange rate
- D. None of the above answers are correct
Answer
Answer C. a change in the current exchange rate
Q132: “Which of the following is a factor that determines the amount of dollars supplied in the foreign exchange market?”
- A. the exchange rates
- B. interest rates in foreign countries
- C. U.S. interest rate
- D. All of the above affect the number of dollars supplied in the foreign exchange market
Answer
Answer D. All of the above affect the number of dollars supplied in the foreign exchange market
Q133: Global bond market consists of all bonds sold by issued companies, governments, or other firms
- A. within their own countries
- B. outside their own countries
- C. to London banks
- D. to developing nations only
Answer
Answer B. outside their own countries
Q134: More instability in currency is called as
- A. country risk
- B. financial risk
- C. currency risk
- D. liquidity risk
Answer
Answer C. currency risk
Q135: Foreign bonds issued in Japan are known
- A. bulldog bonds
- B. dragon bonds
- C. Yankee bonds
- D. samurai bonds
Answer
Answer D. samurai bonds
Q136: Largest number of buyers and sellers, greater the
- A. liquidity
- B. speculation
- C. hedging
- D. forward rate
Answer
Answer A. liquidity
Q137: Differences in nominal interest rates are removed in exchange rate is
- A. fisher effect
- B. Leontief paradox
- C. Combined equilibrium theory
- D. purchasing power parity
Answer
Answer A. fisher effect
Q138: Simplicity with which bondholders and shareholders can change their investments into cash is known
- A. barter
- B. hedging
- C. arbitrage
- D. liquidity
Answer
Answer D. liquidity
Q139: Bid quote is for
- A. seller
- B. buyer
- C. hedger
- D. speculator
Answer
Answer B. buyer
Q140: Bid-ask spread in foreign exchange market is the
- A. price of currency in foreign exchange market
- B. difference between bid and ask quotes for a currency
- C. price at which a bank will buy a currency
- D. price a bank will pay for a currency
Answer
Answer B. difference between bid and ask quotes for a currency
Q141: Not aim of international capital market is
- A. preserving hard currencies to finance trade deficits
- B. reducing cost of money to borrowers
- C. reducing investor risk
- D. expanding money supply for borrowers
Answer
Answer A. preserving hard currencies to finance trade deficits
Q142: Which of following causes do investors employ foreign exchange market?
- A. currency hedging
- B. currency speculation
- C. currency conversion
- D. all of above
Answer
Answer D. all of above
Q143: In 1944 international accord is recognized as
- A. Breton Wood Agreement
- B. Exchange Agreement
- C. International Trade
- D. Fisher Effect
Answer
Answer A. Breton Wood Agreement
Q144: If a company agreement today for several future date of real currency exchange, they will be building use of a
- A. stock rate
- B. stock rate
- C. futures rate
- D. forward rate
Answer
Answer D. forward rate
Q145: International Money Market is for about
- A. 2 years
- B. 3 years
- C. 5 years
- D. 1 years
Answer
Answer D. 1 years
Q146: Case of foreign exchange
- A. Exchange of claims denominated in another currency
- B. exchange of bank deposits
- C. Exchange of cash issued by a foreign central bank
- D. All of above
Answer
Answer D. All of above
Q147: Gold standard introduced in
- A. 1913
- B. 1990
- C. 1876
- D. 1944
Answer
Answer C. 1876
Q148: International capital market
- A. innovative financial instruments
- B. information technology
- C. deregulation
- D. foreign exchange rates
Answer
Answer A. innovative financial instruments
Q149: A firm that purpose to connect sellers and buyers of foreign currency denominated bank deposits is entitled
- A. a wholesaler
- B. a broker
- C. a bank
- D. an investor
Answer
Answer B. a broker
Q150: Governments enforce currency limitations to
- A. protect a currency from speculators
- B. keep resident individuals and businesses from investing in other nations
- C. preserve hard currencies to finance trade deficits or repay debts
- D. all of above
Answer
Answer D. all of above
Q151: In primary markets, the first time issued shares to be publicly traded, in stock markets is considered as
- A. traded offering
- B. public markets
- C. issuance offering
- D. initial public offering
Answer
Answer D. initial public offering
Q152: The exchange markets and over the counter markets are considered as two types of
- A. floating market
- B. risky market
- C. secondary market
- D. primary market
Answer
Answer C. secondary market
Q153: The current market price of common stock is $15 and the conversion rate received on conversion is $320 to calculate
- A. $3,800
- B. $2,800
- C. $4,800
- D. $5,800
Answer
Answer C. $4,800
Q154: The bonds that are backed by cash flow from project and are sold to finance particular project are classified as
- A. finance bonds
- B. revenue bonds
- C. financing bonds
- D. project bonds
Answer
Answer B. revenue bonds
Q155: The equation that shows the relationship between expected inflation, real interest rates, and nominal interest rates is called the
- A. interest rate parity equation
- B. Fisher equation
- C. GDP deflator
- D. net inflation index
Answer
Answer B. Fisher equation
Q156: Which of the following is not an example of a frequently used Euro-instrument?
- A. Eurobond
- B. Euro note
- C. Euro stock
- D. Euro commercial paper
Answer
Answer C. Euro stock
Q157: When was IMF established?
- A. Dec. 27, 1945
- B. Jan. 30, 1947
- C. Jan.1, 1946
- D. Sept. 24, 1947
Answer
Answer A. Dec. 27, 1945
Q158: Export of goods is called trade in
- A. Visible goods
- B. Invisible goods
- C. Basic goods
- D. Non-real good
Answer
Answer B. Invisible goods
Q159: It helps countries to meet deficit in balance of payments
- A. IMF
- B. WTO
- C. World Bank
- D. UNO
Answer
Answer A. IMF
Q160: Balance of payments of a country includes
- A. Balance of trade
- B. Capital receipts and payments
- C. Saving and investment account
- D. Both (a) and (b)
Answer
Answer D. Both (a) and (b)
