1.

if the interest rate differential is constant, when the expected rate increases; the
spot rate
a. Decrease
b. No change
c. Another answer
d. Increase
2. If the Japanese yen was worth $0.027 six months ago and is worth $0.044 today,
how much has the yen appreciated or depreciated?
a. depreciated, about -28.57%
b. appreciated, about 62.96%
c. depreciated, about -38.64%
d. appreciated, about 28.57%
3. Assuming the US annual Interest rate = 4%; the Malaysian annual interest rate
= 12%; and the current spot rate for the Malaysian ringgit = $0.3985. At what
one year forward rate will interest rate parity hold?
A. 0.3700
a. 0.3347
b. 0.3752 O
c. 0.4291
4. A multinational company wants to use a currency put option to hedge 8 million
Singapore dollars in accounts receivable. The premium of the currency option
with a strike price of $0.77 us is $0.03 us. When the option is exercised, if the spot
rate is $0.85, what is the total amount of US dollars MNC received after
accounting for the premium payment?
A. 6.56 millions
a. 7.04 mitions
b. 5.92 milions
c.6.8 milions
5. Economic exposure measures the impact of actual exchange conversion involving
the following cases except
a. none of the above W
b. a foreign subsidiary imports raw materials
c. cash flows from a foreign investment
d. local wages go up
e. a foreign subsidiary borrows money in international financial markets
6. The inflation rate in the US is 6%, in Vietnam is 15%, the difference in USD
exchange rate follows the approximate form of PPP W
a.-12.5%
b. 8.49%
C-7.83%
d. 14.29%
7. The theory of interest rate parity means that the
a, interest rates are equal in two countries
 b. difference between the spot rate and the future spot rate reflects the interest rate
difference between two countries
c. future spot rate reflects the inflation difference between two countries
d. difference between a forward rate and a spat rate equals the difference
between a domestic interest rate and a foreign interest rate
e. all of the above
8. Inflation in the US is 8% and in the UK is 3% Assuming the PPP assumption
exists, the exchange rate of GBP/USD would be
a. Premium 4.85%
b. Premium 1.94% O
c. Discount 4.6%
d. Discount 1.9%
9. Other factors are held constant and the USD/VND exchange rate is free to
fluctuate, how would the value of VND against USD change if the commodity
prices in Vietnam and the US increase equally?
a. Does not change
b. Increases
c. Other answers
d. Decreases

10. A forward rate is equal to a future spot rate if foreign exchange markets are:
a. efficient
b. controlled by the government
c. are partially controlled by the International Monetary Fund
d. none of the above
E. controlled by speculators
The correct answer is: efficient
11. When the VND deposit interest rate is lower than the interest rate invested in
USD en convert into VND, the investor should
a. All wrong
b. Do not invest
c. Invest in USD and then convert to VND
d. invest in VND
12. A strike price in currency options markets is the specified exchange rate at which
a. futures options can be sold
b. none of the above
c. option can be sold
d. option can be bought
e. option can be exercised
13. The bid price is $0.69 for the Canadian dollar and the ask price is $0.76 for the
Canadian dollar. What is the bid-ask spread for the Canadian dollar?
a. 9.21%
b. 7.00% O
c. 10.14%
d. 7.00%
14. When will investors invest in VND instead of investing in USD then convert to
VND?
a. The VND interest rate is higher than the interest rate invested in USD then convert
into VND
b. The VND interest rate is lower than the interest rate invested in USD then convert into
VND
c. The VND interest rate is higher than those of USD
d. The VND interest rate is lower than those of USD
15. Other factors are held constant and the USD/VND exchange rate is free to fluctuate,
how would the value of VND against USD change if the inflation in Vietnam is higher
than that of the US?
a. Other answers
b. Increases
c. Does not change
d. Decreases
16. Inflation in the US is 8% and in the UK is 3%. Assuming the PPP assumption exists,
the exchange rate of GBP/USD would be:
a. Premium 4.85%
b. Premium 1.94%
c. Discount 4.6%
d. Discount 1.9%
17. If the Canadian dollar is equal to $0.84 - $0.94 and the Brazilian real is equal to
$0.35 - $0.39, what is the value of the Canadian dollar in terms of Brazilian real?
a. 2.4103-2.4
b. 2.4-2.4103
c. 2.1538-2.6857
d. 2.4-2.6857
18. If the VND borrowing interest rate is higher than the borrowing interest rate in
USD then convert into VND, the borrower should
a. Borrow USD and convert to VND
b. Do not borrow
c. All wrong
d. Borrow VND
19. If a foreign currency depreciates , exchange losses will occur when exposed:
a. receipts and exposed payments are the same
b receipts payments are greater than exposed
c. receipts are greater than exposed net worth
d. none of the above
e. receipts are greater than exposed payments
20. The inflation rate in the US is 6% in Vietnam is 15%, the difference in USD
exchange rate follows the approximate form of PPP
a.-12.5%
b. 14.29%
c.-7.83%
d. 8.49%