MBA 620 Exam 1 2026 | All Questions and
Correct Answers | Verified Answers |
Complete Exam | Brand New Version!
The value of euro was $1.30 last week. During last week the euro depreciated by
5%. What is the value of euro today? ---------CORRECT ANSWER-----------------
$1.235
If U.S. inflation suddenly increased while European inflation stayed the same,
there would be: ---------CORRECT ANSWER-----------------an increased U.S. demand
for euros and a decreased supply of euros for sale.
Illiquid currencies tend to exhibit ____ volatile exchange rate movements, as the
equilibrium prices of their currencies adjust to ____ changes in supply and
demand conditions. ---------CORRECT ANSWER-----------------more; even minor
If a currency's spot market is ____, its exchange rate is likely to be ____ to a single
large purchase or sale transaction. ---------CORRECT ANSWER-----------------liquid;
insensitive
The real interest rate adjusts the nominal interest rate for: ---------CORRECT
ANSWER-----------------inflation
, The phrase "the dollar was mixed in trading" means that: ---------CORRECT
ANSWER-----------------the dollar strengthened against some currencies and
weakened against others.
When you own ____, there is no obligation on your part; however, when you own
____, there is an obligation on your part. ---------CORRECT ANSWER-----------------
put options; forward contracts
The premium on a euro call option is $.02. The exercise price is $1.32. The break-
even point is ____ for the buyer of the call, and ____ for the seller of the call.
(Assume zero transactions costs and that the buyer and seller of the put option
are speculators.) ---------CORRECT ANSWER-----------------$1.34; $1.34
The 180-day forward rate for the euro is $1.34, while the current spot rate of the
euro is $1.29. What is the annualized forward premium or discount of the euro? --
-------CORRECT ANSWER-----------------7.75% premium
The annualized forward premium on the euro is 7%. What is the 90-day forward
rate on the euro if the spot rate today is $1.25? ---------CORRECT ANSWER-----------
------$1.27
Correct Answers | Verified Answers |
Complete Exam | Brand New Version!
The value of euro was $1.30 last week. During last week the euro depreciated by
5%. What is the value of euro today? ---------CORRECT ANSWER-----------------
$1.235
If U.S. inflation suddenly increased while European inflation stayed the same,
there would be: ---------CORRECT ANSWER-----------------an increased U.S. demand
for euros and a decreased supply of euros for sale.
Illiquid currencies tend to exhibit ____ volatile exchange rate movements, as the
equilibrium prices of their currencies adjust to ____ changes in supply and
demand conditions. ---------CORRECT ANSWER-----------------more; even minor
If a currency's spot market is ____, its exchange rate is likely to be ____ to a single
large purchase or sale transaction. ---------CORRECT ANSWER-----------------liquid;
insensitive
The real interest rate adjusts the nominal interest rate for: ---------CORRECT
ANSWER-----------------inflation
, The phrase "the dollar was mixed in trading" means that: ---------CORRECT
ANSWER-----------------the dollar strengthened against some currencies and
weakened against others.
When you own ____, there is no obligation on your part; however, when you own
____, there is an obligation on your part. ---------CORRECT ANSWER-----------------
put options; forward contracts
The premium on a euro call option is $.02. The exercise price is $1.32. The break-
even point is ____ for the buyer of the call, and ____ for the seller of the call.
(Assume zero transactions costs and that the buyer and seller of the put option
are speculators.) ---------CORRECT ANSWER-----------------$1.34; $1.34
The 180-day forward rate for the euro is $1.34, while the current spot rate of the
euro is $1.29. What is the annualized forward premium or discount of the euro? --
-------CORRECT ANSWER-----------------7.75% premium
The annualized forward premium on the euro is 7%. What is the 90-day forward
rate on the euro if the spot rate today is $1.25? ---------CORRECT ANSWER-----------
------$1.27
