FINA 4500 Exam 2 Rated A+
11. Given a home country and a foreign country, purchasing power parity suggests that:
- ANSWER-d. none of the above
12. If interest rate parity exists, then, _______ is not feasible. - ANSWER-c. covered
interest arbitrage
13. Compared to the forward market, in the foreign currency futures market, transaction
costs are
based on: - ANSWER-b. brokerage fees
14. Compared to the forward market, in the foreign currency futures market, trading is
done via: - ANSWER-b. an exchange
2. A US firm is expecting to pay 100,0000,000 Euros (EUR) to one of its suppliers three
months
from now. This firm can hedge by taking a _____ position in the ____ market for EUR -
ANSWER-c. long, forward
33. Which one of the above plots belongs to the buyer of a call option? - ANSWER-a.
Plot A
34. Which one of the above plots belongs to the seller of a put option? - ANSWER-b.
Plot B
35. Which one of the above plots belongs to the buyer of a put option? - ANSWER-c.
Plot C
36. Which one of the above plots belongs to the seller of a call option? - ANSWER-d.
Plot D
37. If a US firm is expecting to receive a payment of 80 million Japanese yen (JPY)
three months
from now, the best way to hedge against exchange rate risk would be to: - ANSWER-d.
Buy JPY put
38. If a US firm is expecting to make a payment of 10 million Swiss francs (CHF) six
months from
now, the best way to hedge against exchange rate risk would be to: - ANSWER-b. Buy
CHF futures
39. If you expect the Japanese yen (JPY) to appreciate over the next three months, the
best way to
take advantage of this would be to: - ANSWER-b. Buy JPY call
11. Given a home country and a foreign country, purchasing power parity suggests that:
- ANSWER-d. none of the above
12. If interest rate parity exists, then, _______ is not feasible. - ANSWER-c. covered
interest arbitrage
13. Compared to the forward market, in the foreign currency futures market, transaction
costs are
based on: - ANSWER-b. brokerage fees
14. Compared to the forward market, in the foreign currency futures market, trading is
done via: - ANSWER-b. an exchange
2. A US firm is expecting to pay 100,0000,000 Euros (EUR) to one of its suppliers three
months
from now. This firm can hedge by taking a _____ position in the ____ market for EUR -
ANSWER-c. long, forward
33. Which one of the above plots belongs to the buyer of a call option? - ANSWER-a.
Plot A
34. Which one of the above plots belongs to the seller of a put option? - ANSWER-b.
Plot B
35. Which one of the above plots belongs to the buyer of a put option? - ANSWER-c.
Plot C
36. Which one of the above plots belongs to the seller of a call option? - ANSWER-d.
Plot D
37. If a US firm is expecting to receive a payment of 80 million Japanese yen (JPY)
three months
from now, the best way to hedge against exchange rate risk would be to: - ANSWER-d.
Buy JPY put
38. If a US firm is expecting to make a payment of 10 million Swiss francs (CHF) six
months from
now, the best way to hedge against exchange rate risk would be to: - ANSWER-b. Buy
CHF futures
39. If you expect the Japanese yen (JPY) to appreciate over the next three months, the
best way to
take advantage of this would be to: - ANSWER-b. Buy JPY call
