AGB 302 MODUE 5 HW EXAM WITH
COMPLETE SOLUTIONS
___ are exchange rates governing some specific future date foreign exchange
transactions - ANSWER-forward exchange rates
a ___ has no barriers to trade between member countries includes a common external
trade policy and allows factors of production to move freely between members -
ANSWER-common market
an ___ entails even closer economic integration and cooperation than a common
market - ANSWER-economic union
assume that an american company today invests some of its spare cash in a hungarian
money market account that will earn 8 percent for a period of two months. which of the
following if it happens during the next two months would imply that the company will
earn less than 8 percent on its investment? - ANSWER-the dollar appreciates against
the hungarian forint
assume that the current exchange rate is 1 = $1.50. if you exchange 1,000 euros for
dollars yo will receive ___ - ANSWER-$1,500
assume that the law of one price holds. a shirt that retails for the $120 in new york sells
for 60 euros in london. the exchange rate between the british pound and the dollar is 1
euro = $1.50. assuming away transportation costs and trade barriers this creates a
profit-making opportunity called___ - ANSWER-arbitrage
assuming the 30-day forward exchange rate was $1 = x130 and the spot exchange rate
was $1 = x120 the dollar is selling at a ___ on the 30-day forward market - ANSWER-
premium
country X and country Y reach an agreement to boost bilateral trade. the agree to
remove all barriers to the trade of goods and services. they however are free to
determine their own trade policies with regard to nonmembers. which level of economic
integration is this an example of? - ANSWER-a free trade area
if the demand for dollars outstrips its supply and if the supply of japanese yen is greater
than the demand for it what will happen? - ANSWER-the dollar will appreciate against
the yen
COMPLETE SOLUTIONS
___ are exchange rates governing some specific future date foreign exchange
transactions - ANSWER-forward exchange rates
a ___ has no barriers to trade between member countries includes a common external
trade policy and allows factors of production to move freely between members -
ANSWER-common market
an ___ entails even closer economic integration and cooperation than a common
market - ANSWER-economic union
assume that an american company today invests some of its spare cash in a hungarian
money market account that will earn 8 percent for a period of two months. which of the
following if it happens during the next two months would imply that the company will
earn less than 8 percent on its investment? - ANSWER-the dollar appreciates against
the hungarian forint
assume that the current exchange rate is 1 = $1.50. if you exchange 1,000 euros for
dollars yo will receive ___ - ANSWER-$1,500
assume that the law of one price holds. a shirt that retails for the $120 in new york sells
for 60 euros in london. the exchange rate between the british pound and the dollar is 1
euro = $1.50. assuming away transportation costs and trade barriers this creates a
profit-making opportunity called___ - ANSWER-arbitrage
assuming the 30-day forward exchange rate was $1 = x130 and the spot exchange rate
was $1 = x120 the dollar is selling at a ___ on the 30-day forward market - ANSWER-
premium
country X and country Y reach an agreement to boost bilateral trade. the agree to
remove all barriers to the trade of goods and services. they however are free to
determine their own trade policies with regard to nonmembers. which level of economic
integration is this an example of? - ANSWER-a free trade area
if the demand for dollars outstrips its supply and if the supply of japanese yen is greater
than the demand for it what will happen? - ANSWER-the dollar will appreciate against
the yen
