Introduction to International Finance

A vibrant illustration of global currencies interacting in a dynamic financial market, showcasing concepts of foreign exchange, hedging strategies, and international trade.

Introduction to International Finance Quiz

Test your knowledge of international finance with this engaging quiz! Dive into key concepts such as currency exchange, hedging, and market dynamics.

Assess your understanding of foreign exchange markets
Learn about currency appreciation and depreciation
Explore the fundamentals of risk management in finance

11 Questions3 MinutesCreated by TradingTree487

1) If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with

) international monetary credits

Dollars.

Yuan, the Chinese currency.

Euros, or any other third currency.

2) In the foreign exchange market, the ________ of one country is traded for the ________ of another country.

) currency; currency

Currency; financial instruments

Currency; goods

Goods; goods

3) By definition, currency appreciation occurs when

The value of all currencies falls relative to gold.

) the value of all currencies rises relative to gold.

The value of one currency rises relative to another currency.

The value of one currency falls relative to another currency.

4) Which of the following examples definitely illustrates a depreciation of the U.S. dollar?

The dollar exchanges for 1 pound and then exchanges for 1.2 pounds.

The dollar exchanges for 250 yen and then exchanges for 275 francs.

The dollar exchanges for 100 francs and then exchanges for 120 yen.

The dollar exchanges for 120 francs and then exchanges for 100 francs

5) Hedging is used by companies to:

Decrease the variability of tax paid

Decrease the spread between spot and forward market quotes

Increase the variability of expected cash flows

Decrease the variability of expected cash flows

Increase the variability of tax paid

6) Which of the methods below may be viewed as most effective in protecting against economic exposure?

Futures market hedging

Forward contract hedges

Geographical diversification

) Money market hedges

7) When an enterprise has an unhedged receivable or payable denominated in a foreign currency and settlement of the obligation has not yet taken place, that firm is said to have:

) Tax exposure

Operating exposure

Accounting exposure

Transaction exposure

8) The exchange rate is the

Total yearly amount of money changed from one country’s currency to another country’s currency

Total monetary value of exports minus imports

Amount of country’s currency which can exchanged for one ounce of gold

Price of one country’s currency in terms of another country’s currency

9) Exchange rates

Are always fixed

Fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied

Fluctuate to equate imports and exports

Fluctuate to equate rates of interest in various countries

10) An arbitrageur in foreign exchange is a person who

Earns illegal profit by manipulating foreign exchange

Causes differences in exchange rates in different geographic markets

Simultaneously buys large amounts of a currency in one market and sell it in another market

None of the above

11) A speculator in foreign exchange is a person who

Buys foreign currency, hoping to profit by selling it a higher exchange rate at some later date

Earns illegal profit by manipulation foreign exchange

Causes differences in exchange rates in different geographic markets

None of the above

Introduction to International Finance

Introduction to International Finance Quiz

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