INTB 3080 Final Exam questions well
answered to pass
Firms should only rely on what four things to predict exchange rate movements? - correct
answer ✔✔- Monthly foreign exchange exposure reports
- Establishing good reporting systems
- Forecasting future exchange rates
- Transaction and translation exposure
________ exposure is the risk, faced by companies involved in international trade, that currency
exchange rates will change after the companies have already entered into financial obligations.
Such exposure to fluctuating exchange rates can lead to major losses for firms. - correct answer
✔✔Transaction
A(n) ______ convertible currency allows only nonresidents to convert it into a foreign currency
without any limitations. - correct answer ✔✔Externally
_____ exposure involves the present measurement of past events using currency exchange rate
changes on a company's financial statements. - correct answer ✔✔Translation
A foreign exchange market is where one country's ______ is converted into that of another
country. - correct answer ✔✔currency
Able Appliances needs to convert the pounds it earns from selling products in Great Britain to
dollars. What mechanism allows the company to make this conversion? - correct answer
✔✔Foreign Exchange Market
, What are the two main functions of the foreign exchange market? - correct answer ✔✔Provide
insurance against foreign exchange risk
Currency conversion
If the exchange rate is 1 British pound to $1.35, an American in London will need ______ to
purchase a purse priced at 20 pounds. - correct answer ✔✔$27
A(n) ______ exchange rate is the price to exchange one currency for another for immediate
delivery. - correct answer ✔✔spot
What are the two schools of thought regarding the prediction of future exchange rates? -
correct answer ✔✔Inefficient market school
Efficient market school
What is the key way a company can reduce economic exposure? - correct answer ✔✔Distribute
production facilities and assets to various locations
The text suggests that as a way to take control of exchange rate risk, firms should produce
_____ foreign exchange reports. - correct answer ✔✔monthly
The extent to which income from individual transactions is affected by fluctuations in foreign
exchange values is known as transaction ______. - correct answer ✔✔exposure
In an efficient market, prices are said to - correct answer ✔✔fully reflect all available
information.
A(n) ______ is based on the theory that prices don't reveal all available information and more is
needed to predict future spot exchange rates. - correct answer ✔✔inefficient
answered to pass
Firms should only rely on what four things to predict exchange rate movements? - correct
answer ✔✔- Monthly foreign exchange exposure reports
- Establishing good reporting systems
- Forecasting future exchange rates
- Transaction and translation exposure
________ exposure is the risk, faced by companies involved in international trade, that currency
exchange rates will change after the companies have already entered into financial obligations.
Such exposure to fluctuating exchange rates can lead to major losses for firms. - correct answer
✔✔Transaction
A(n) ______ convertible currency allows only nonresidents to convert it into a foreign currency
without any limitations. - correct answer ✔✔Externally
_____ exposure involves the present measurement of past events using currency exchange rate
changes on a company's financial statements. - correct answer ✔✔Translation
A foreign exchange market is where one country's ______ is converted into that of another
country. - correct answer ✔✔currency
Able Appliances needs to convert the pounds it earns from selling products in Great Britain to
dollars. What mechanism allows the company to make this conversion? - correct answer
✔✔Foreign Exchange Market
, What are the two main functions of the foreign exchange market? - correct answer ✔✔Provide
insurance against foreign exchange risk
Currency conversion
If the exchange rate is 1 British pound to $1.35, an American in London will need ______ to
purchase a purse priced at 20 pounds. - correct answer ✔✔$27
A(n) ______ exchange rate is the price to exchange one currency for another for immediate
delivery. - correct answer ✔✔spot
What are the two schools of thought regarding the prediction of future exchange rates? -
correct answer ✔✔Inefficient market school
Efficient market school
What is the key way a company can reduce economic exposure? - correct answer ✔✔Distribute
production facilities and assets to various locations
The text suggests that as a way to take control of exchange rate risk, firms should produce
_____ foreign exchange reports. - correct answer ✔✔monthly
The extent to which income from individual transactions is affected by fluctuations in foreign
exchange values is known as transaction ______. - correct answer ✔✔exposure
In an efficient market, prices are said to - correct answer ✔✔fully reflect all available
information.
A(n) ______ is based on the theory that prices don't reveal all available information and more is
needed to predict future spot exchange rates. - correct answer ✔✔inefficient
