IBUS 401 QUIZ 2 BULLINGTON
CORRECT 100%
Due to ____, market forces should realign the cross exchange rate between two foreign
currencies based on the spot exchange rates of the two currencies against the US
dollar. - ANSWER Triangular Aribtrage
If interest rate parity exists, then ____ is not feasible. - ANSWER Covered Interest
Arbitrage
Due to ______, market forces should realign the relationship between the interest rate
differential of two currencies and the forward premium (or discount) on the forward
exchange rate between the two currencies. - ANSWER Covered Interest Arbitrage
Assume a two-country world: Country A and Country B. Which of the following is correct
about purchasing power parity (PPP)? - ANSWER If Country A's inflation rate exceeds
Country B's, Country A's currency will weaken.
According to the IFE, if British Interest Rates exceed US interest rates: - ANSWER The
British Pound will depreciate against the dollar
Which of the following forecasting techniques would best represent the use of today's
forward exchange rates to forecast the future exchange rate? - ANSWER Market-based
forecasting
Which of the following forecasting techniques would best represent the use of
relationships between economic factors and exchange rate movements to forecast the
future exchange rates. - ANSWER Fundamental Forecasting
Economic Exposure refers to - ANSWER The exposure of a firm's cash flows to
exchange rate fluctuations.
When the dollar strengthens, the reported consolidated earnings of US-based MNC's
are _____ affected by translation exposure. When the dollar weakens, the reported
consolidated earnings are ______ affected. - ANSWER unfavorably affected, favorably
affected
Due to ____, market forces should realign the cross exchange rate between two foreign
currencies based on the spot exchange rates of the two currencies against the US
dollar. - ANSWER Triangular Aribtrage
If interest rate parity exists, then ____ is not feasible. - ANSWER Covered Interest
Arbitrage
CORRECT 100%
Due to ____, market forces should realign the cross exchange rate between two foreign
currencies based on the spot exchange rates of the two currencies against the US
dollar. - ANSWER Triangular Aribtrage
If interest rate parity exists, then ____ is not feasible. - ANSWER Covered Interest
Arbitrage
Due to ______, market forces should realign the relationship between the interest rate
differential of two currencies and the forward premium (or discount) on the forward
exchange rate between the two currencies. - ANSWER Covered Interest Arbitrage
Assume a two-country world: Country A and Country B. Which of the following is correct
about purchasing power parity (PPP)? - ANSWER If Country A's inflation rate exceeds
Country B's, Country A's currency will weaken.
According to the IFE, if British Interest Rates exceed US interest rates: - ANSWER The
British Pound will depreciate against the dollar
Which of the following forecasting techniques would best represent the use of today's
forward exchange rates to forecast the future exchange rate? - ANSWER Market-based
forecasting
Which of the following forecasting techniques would best represent the use of
relationships between economic factors and exchange rate movements to forecast the
future exchange rates. - ANSWER Fundamental Forecasting
Economic Exposure refers to - ANSWER The exposure of a firm's cash flows to
exchange rate fluctuations.
When the dollar strengthens, the reported consolidated earnings of US-based MNC's
are _____ affected by translation exposure. When the dollar weakens, the reported
consolidated earnings are ______ affected. - ANSWER unfavorably affected, favorably
affected
Due to ____, market forces should realign the cross exchange rate between two foreign
currencies based on the spot exchange rates of the two currencies against the US
dollar. - ANSWER Triangular Aribtrage
If interest rate parity exists, then ____ is not feasible. - ANSWER Covered Interest
Arbitrage
