Introduction to International Finance
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
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
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