MULTINATIONAL BUSINESS FINANCE
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS FULL SOLUTION
STUDY GUIDE
●● Gold Standard
Answer: Each currency was convertible into gold at a specified rate.
When World War I began in 1914, the gold standard was suspended.
●● Agreements on Fixed Exchange Rates
Answer: a. Bretton Woods Agreement
b. Smithsonian Agreement
●● Floating Exchange Rate System
Answer: Widely traded currencies were allowed to fluctuate in
accordance with market forces.
●● Over-the-counter market
Answer: The telecommunications network where companies normally
exchange one currency for another.
●● Foreign exchange dealers
, Answer: Serve as intermediaries in the foreign exchange market.
●● Spot market
Answer: A foreign exchange transaction for immediate exchange.
-USD is the commonly accepted medium of exchange.
●● Spot rate
Answer: The exchange rate in the spot market.
●● Interbank market
Answer: Trading between banks.
●● Spot market time zones
Answer: Foreign exchange trading is conducted only during normal
business hours in a given location. Thus, at any given time on a
weekday, somewhere around the world a bank is open and ready to
accommodate foreign exchange requests.
●● Spot market liquidity
Answer: More buyers and sellers means more liquidity.
●● Attributes of banks that provide foreign exchange
Answer: 1. competitiveness of quote
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS FULL SOLUTION
STUDY GUIDE
●● Gold Standard
Answer: Each currency was convertible into gold at a specified rate.
When World War I began in 1914, the gold standard was suspended.
●● Agreements on Fixed Exchange Rates
Answer: a. Bretton Woods Agreement
b. Smithsonian Agreement
●● Floating Exchange Rate System
Answer: Widely traded currencies were allowed to fluctuate in
accordance with market forces.
●● Over-the-counter market
Answer: The telecommunications network where companies normally
exchange one currency for another.
●● Foreign exchange dealers
, Answer: Serve as intermediaries in the foreign exchange market.
●● Spot market
Answer: A foreign exchange transaction for immediate exchange.
-USD is the commonly accepted medium of exchange.
●● Spot rate
Answer: The exchange rate in the spot market.
●● Interbank market
Answer: Trading between banks.
●● Spot market time zones
Answer: Foreign exchange trading is conducted only during normal
business hours in a given location. Thus, at any given time on a
weekday, somewhere around the world a bank is open and ready to
accommodate foreign exchange requests.
●● Spot market liquidity
Answer: More buyers and sellers means more liquidity.
●● Attributes of banks that provide foreign exchange
Answer: 1. competitiveness of quote
