Question 1 of 30 1 Point ~~ allow participants to buy and sell currencies now for future delivery. Select the correct response: O Forward transactions Swaps Spot transactions Direct transactions Question 2 of 30 1 Point Currency hedging is a transaction that protects traders and investors from, exposure to the fluctuations af the Select the correct response O Spotrate Forward transaction. Currency swap. Forward discount. tinuQuestion 3 of 30 1 Point ~- are the specified upper and lower bounds within which the exchange rate is allowed to fluctuate Select the correct response O Target exchange rates Dirty exchange rates Fixed exchange rates Floating exchange rates Question 4 of 30 1 Point Which of the following is not one of the campanents of the balance of payments? Select the correct response: © Currency trade Merchandise trade Capital movement Service wadeQuestion 5 of 30 1 Point Which of the following is the benefit of pegging @ country’s currency to a key currency? Select the correct response: It stabilizes import prices for developing countries. It stabilizes import prices for developing countries; it stabilizes © export prices for developing countries, and domestic inflation could be restrained Domestic inflation could be restrained, It stabilizes export prices for developing countries. Question 6 of 30 1 Point A country experiencing @ current account surplus will see its currency ~, while @ country experiencing a current account deficit will see its currency ~ Select the correct response Depreciate ... depreciate Depreciate ... Appreciate © Appreciate depreciate Appreciate .... appreciate Ez leQuestion 7 of 30 1 Point Forward transaction is a type of spot transaction. ‘Select the correct response: True O False Question 8 of 30 1 Point Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate. Select the correct response: True O False Question 9 of 30 1 Point Alarge number of individuals and companies exchanging domestic currencies for US dollars to exit their home country is referred to as capital flight Select the correct response. O Tre FalseQuestion 10 of 30 1 Point The bandwagon effect is an example of ~- that affects foreign exchange rates. Select the correct response: Purchasing power parity Exchange rate policy Balance of payments CO Investor psychologyQuestion 11 of 30 1 Point Governments that believe in a free market approach usually adopt floating exchange rate policies. Select the correct response. O True False Question 12 of 30 1 Point In the trade relationship with China, why is the US dollar in more demand than the Chinese yuan? Select the correct response: The yuan is peaged to the US dollar. More people demand the yuan domestically in China, so it is not used for imports and exports. Formal institutions and regulations demand the trade be conducted in the dollar. ° The dollar is the common transaction currency between the two. countries.Question 13 of 30 1 Point What is the “law of one price’ where the price for identical products in different countries should be the same if trade barriers are absent? Select the correct response Currency swap © Purchasing power parity Balance of payments Fixed exchange rate policy Question 14 of 30 1 Point The bandwagon effect refers to the effect of investors investing in opposite directions Select the correct response: True O FalseQuestion 15 of 30 1 Point ‘Theis defined as the difference between the offered price end the bid price. Select the correct response: O Spread Offer rate Discount Premium Question 16 of 30 1 Point While theories on PPP, interest rates, and money supply give often accurate predictions about long-term movements, investor psychology is regarded as the determinant behind short-term movements. Select the correct response: O True FalseQuestion 17 of 30 1 Point Which of the following is most focused on currency diversification? Select the correct response: ‘Spot transactions O Strategic hedging Trading risk Currency hedging Question 18 of 30 1 Point Capital flight is a phenomenon in which a large number of individuals and companies exchange ~~ far — Select the correct response Foreign properties ... domestic properties Domestic properties ... foreign properties Foreign currencies ... domestic currencies © Domestic currencies ... foreign currenciesQuestion 19 of 30 1 Point Investors may mave like a “herd” at the same time in the same direction, resulting in a: Select the correct response: © Bandwagon effect. Stabilized effect Big Mac effect. Capital flight effect Question 20 of 30 1 Point The rise of a country's productivity is usually accompanied by increased demand for its home currency Select the correct response O True FalseQuestion 21 of 30 1 Point Which of the following is best defined by “the conversion of one currency into another at Time 1, with an agreement to revert it to the original currency at a specific Time 2 in the future"? Select the correct response: © Currency swap Spot currency transaction Direct currency transaction Forward currency transaction Question 22 of 30 1 Point Which of the following best describes a rate where selective government intervention works hand-in-hand with allowing markets the freedom to work themselves out? ‘Select the correct response: Fixed-rate Target exchange rate Floating rate O Dirty float rateQuestion 23 of 30 1 Point The foreign exchange market has no central physical location but operates 24/7 and is the largest and most active market in the world. Select the correct response O Tne False Question 24 of 30 1Point Purchasing power parity is the price of one currency in terms of another. Select the correct response: True O False Question 25 of 30 1 Point Which is not one of the primary types of foreign exchange transactions? Select the correct response © Direct transactions Forward transactions ‘Swaps Spot transactionsQuestion 26 of 30 1 Point Traders and investors trading in a forward transactions market are most concemed about Select the correct response: Political and social stability of the foreign country Currency hedging Regulation from the International Monetary Fund © Fluctuations of the spot rate Question 27 of 30 1 Point —- is an international organization of 185 member countries established to promote monetary cooperation, exchange stability, and provide temporary financial assistance to countries. Select the correct response Grameen Bank World Bank © International Monetary Fund Bretton Woods SystemQuestion 28 of 30 1 Point If 2 country’s interest rate is high relative to other countries, the country will Select the correct response Experience depreciation in its home currency. Develop a trade deficit © Attract foreign funds. Discourage foreign investing Question 29 of 30 1 Point ‘Since foreign exchange is such a unique commodity, its markets are influenced only by economic factors and free from the effect of social or political pressures Select the correct response True O FalseQuestion 30 of 30 1 Point Which of the following is not one of the three primary activities of the International Monetary Fund? Select the correct response Providing technical assistance to developing countries Monitoring the global economy © Peaging exchange rates Lending