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IBUS 401 - EXAM 1 2026
QUESTIONS AND ANSWERS| ACE
YOUR GRADES.
Recently, the US experienced an annual balance of trade
representing a ________.
a. large surplus (exceeding $100 billion)
b. small surplus
c. level of zero
d. deficit - correct answer -D.
The primary component of the current account is the:
a. balance of trade
b. balance of money market flows
c. balance of capital market flows
d. unilateral transfers - correct answer -A.
The demand for US exports tends to increase when:
a. economic growth in foreign countries decreases
b. the currencies of foreign countries strengthen against the dollar
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c. US inflation rises
d. none of the above - correct answer -B.
In recent years, the US has had a relatively (compared to other
countries) _______ balance of trade _________ with China.
a. small; surplus
b. large; surplus
c. small; deficit
d. large; deficit - correct answer -D.
Assume that a bank's bid rate on Swiss francs is $.45 and its ask
rate is $.47. Its bid-ask percentage spread is: - correct answer -
(.47-.45)/.47 = about 4.26%
The international money market primarily concentrates on:
a. short-term lending (one year or less)
b. medium-term lending
c. long-term lending
d. placing bonds with investors
e. placing newly issued stock in foreign markets - correct answer -
A.
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If a US firm desires to avoid the risk from exchange rate
fluctuations, and it is receiving 100,000 euros in 90 days, it could:
a. obtain a 90-day forward purchase contract on euros
b. obtain a 90-day forward sale contract on euros
c. purchase euros 90 days from now at the spot rate
d. sell euros 90 days from now at the spot rate - correct answer -
B.
A out option is the amount or percentage by which the existing
spot rate exceeds the forward rate. T/F? - correct answer -False
An increase in US interest rates relative to German interest rates
would likely ____ the US demand for euros and ____ the supply
of euros for sale. - correct answer -reduce; increase
If US inflation suddenly increased while European inflation stayed
the same, there would be:
a. an increased US demand for euros and an increased supply of
euros for sale
IBUS 401 - EXAM 1 2026
QUESTIONS AND ANSWERS| ACE
YOUR GRADES.
Recently, the US experienced an annual balance of trade
representing a ________.
a. large surplus (exceeding $100 billion)
b. small surplus
c. level of zero
d. deficit - correct answer -D.
The primary component of the current account is the:
a. balance of trade
b. balance of money market flows
c. balance of capital market flows
d. unilateral transfers - correct answer -A.
The demand for US exports tends to increase when:
a. economic growth in foreign countries decreases
b. the currencies of foreign countries strengthen against the dollar
, Page | 2
c. US inflation rises
d. none of the above - correct answer -B.
In recent years, the US has had a relatively (compared to other
countries) _______ balance of trade _________ with China.
a. small; surplus
b. large; surplus
c. small; deficit
d. large; deficit - correct answer -D.
Assume that a bank's bid rate on Swiss francs is $.45 and its ask
rate is $.47. Its bid-ask percentage spread is: - correct answer -
(.47-.45)/.47 = about 4.26%
The international money market primarily concentrates on:
a. short-term lending (one year or less)
b. medium-term lending
c. long-term lending
d. placing bonds with investors
e. placing newly issued stock in foreign markets - correct answer -
A.
, Page | 3
If a US firm desires to avoid the risk from exchange rate
fluctuations, and it is receiving 100,000 euros in 90 days, it could:
a. obtain a 90-day forward purchase contract on euros
b. obtain a 90-day forward sale contract on euros
c. purchase euros 90 days from now at the spot rate
d. sell euros 90 days from now at the spot rate - correct answer -
B.
A out option is the amount or percentage by which the existing
spot rate exceeds the forward rate. T/F? - correct answer -False
An increase in US interest rates relative to German interest rates
would likely ____ the US demand for euros and ____ the supply
of euros for sale. - correct answer -reduce; increase
If US inflation suddenly increased while European inflation stayed
the same, there would be:
a. an increased US demand for euros and an increased supply of
euros for sale
