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International Business, 8e (Griffin/Pustay)
Chapter 8 Foreign Exchange and International Financial Markets

1) The rising value of the Canadian dollar relative to the U.S. dollar has which of the following
effects?
A) Canadian imports to the U.S. are down.
B) Canadian vacationers pay higher costs for trips to the U.S.
C) Canadian consumers pay higher prices for U.S.-made goods.
D) Canadian retailers in border towns lose customers to U.S. stores.
Answer: D
Diff: 2
AACSB: Dynamics of the global economy
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

2) What most likely happens when the price of yen falls?

A) the quantity of yen demanded goes down
B) the demand curve slopes downward
C) the demand curve slopes upward
D) the value of yen fluctuates
Answer: C
Diff: 2
AACSB: Dynamics of the global economy
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

3) Which of the following is not an example of a participant in the foreign exchange market?
A) Pakistani tourists exchanging rupees for British pounds at a bank in London
B) British retailer Marks and Spenser purchasing appliances from a British supplier
C) the U.S. government arranging a multimillion-dollar loan to Mexico
D) Toyota exporting cars to Canada from factories in Japan
Answer: B
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

1
Copyright © 2015 Pearson Education, Inc.
4) A call option ________.
A) is a privately traded currency vehicle available only through stockbrokers
B) grants the right to buy a specified amount of foreign currency at a set price
C) allows the holder to buy foreign exchange at the wholesale rate
D) is another term for currency future
Answer: B
Diff: 2
Skill: Concept
Objective: 1

5) ________ is a commodity that consists of currencies issued by countries other than one's own.
A) Eurozone
B) Foreign exchange
C) Floating exchange
D) International monetary fund
Answer: B
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

6) If the British pound is selling at $1.5212 spot on September 3, and at a 90-day forward rate of
$1.5203, then ________.
A) the pound is selling at a forward premium
B) the pound is selling at a forward discount
C) an investor should buy a call option
D) speculators should buy put options
Answer: B
Diff: 3
Skill: Application
Objective: 3

7) The price of foreign exchange is set by ________.

A) the international monetary fund
B) the gold standard
C) demand and supply in the marketplace
D) administrators of the World Bank
Answer: C
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

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8) A(n)________ shows the demand for a currency that is derived from foreigners' desire to
acquire the country's goods, services, and assets.
A) direct quote
B) indirect quote
C) derived demand curve
D) upward sloping curve
Answer: C
Diff: 2
Skill: Concept
Objective: 1

9) Which term refers to the price of the foreign currency in terms of the home currency?
A) direct exchange rate
B) indirect quote
C) indirect exchange rate
D) direct spot price
Answer: A
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

10) Tyler, a U.S. citizen, received a quote on the dollar/yen relationship of ¥108.21/$1. Tyler
most likely received a(n) ________ quote.
A) indirect
B) direct
C) yen
D) dollar
Answer: A
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

11) A(n) ________ is the price of the home currency in terms of the foreign currency.
A) direct exchange rate
B) direct quote
C) indirect exchange rate
D) indirect rate price
Answer: C
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

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12) Carol, an American banker, received a quote between the U.S. dollar and the Japanese yen of
$.00924/¥1. Carol most likely received a(n) ________ quote.
A) indirect
B) direct
C) dollar
D) yen
Answer: B
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

13) Worldwide volume of foreign exchange trading is about ________ per day.
A) $2 billion
B) $50 billion
C) $2 trillion
D) $4 trillion
Answer: D
Diff: 1
Skill: Concept
Objective: 1

14) The world's largest trading markets include which one of the following?
A) London
B) Frankfurt
C) Dallas
D) Peking
Answer: B
Diff: 2
Skill: Concept
Objective: 1

15) What percentage of all foreign-exchange trading involves the U.S. dollar?
A) 25%
B) 47%
C) 70%
D) 85%
Answer: D
Diff: 2
Skill: Concept
Objective: 1

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16) ________ assume exchange rate risks by acquiring positions in a currency and hoping that
they can correctly predict changes in the currency's market value.
A) Commercial customers
B) Speculators
C) Arbitrageurs
D) Individuals
Answer: B
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

17) ________ attempt to exploit small differences in the price of a currency between markets by
buying currencies in lower-priced markets and selling in higher-priced markets.
A) Commercial customers
B) Speculators
C) Arbitrageurs
D) Individuals
Answer: C
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

18) Currencies that are freely tradable are called ________.

A) hard currencies
B) soft currencies
C) foreign currencies
D) inconvertible currencies
Answer: A
Diff: 1
Skill: Concept
Objective: 2

19) Which of the following would be considered a soft currency?

A) Swiss franc
B) Mexican peso
C) Canadian dollar
D) U.S. dollar
Answer: B
Diff: 2
Skill: Concept
Objective: 2

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20) An inconvertible currency ________.
A) is a foreign exchange transaction that is consummated immediately
B) is a foreign exchange transaction that occurs sometime in the future
C) involves currencies that are not freely tradable
D) involves a transaction in which the same currency is bought and sold simultaneously
Answer: C
Diff: 2
Skill: Concept
Objective: 2

21) The ________ consists of foreign-exchange transactions that are to be consummated

immediately.
A) soft currency market
B) spot market
C) hard currency market
D) forward market
Answer: B
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

22) The ________ consists of foreign-exchange transactions that are to occur sometime in the
future.
A) soft currency market
B) spot market
C) hard currency market
D) forward market
Answer: D
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

23) In the world of spot markets, what is the meaning of immediately?

A) two days after the trade date
B) four business days after the trade date
C) on the trade date
D) simultaneous due to electronic transfers
Answer: A
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

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24) What percentage of all foreign exchange transactions take place in the spot market?
A) 10 percent
B) 24 percent
C) 33 percent
D) 47 percent
Answer: C
Diff: 3
Skill: Concept
Objective: 3

25) A spot transaction ________.

A) is a foreign exchange transaction that is consummated immediately
B) is a foreign exchange transaction that occurs sometime in the future
C) involves currencies that are not freely tradeable
D) involves a transaction in which the same currency is bought and sold simultaneously
Answer: A
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

26) A forward transaction ________.

A) is a foreign exchange transaction that is consummated immediately
B) is a foreign exchange transaction that occurs sometime in the future
C) involves currencies that are not freely tradeable
D) involves a transaction in which the same currency is bought and sold simultaneously
Answer: B
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

27) A swap transaction ________.

A) is a foreign exchange transaction that is consummated immediately
B) is a foreign exchange transaction that occurs sometime in the future
C) involves currencies that are not freely tradeable
D) involves a transaction in which the same currency is bought and sold simultaneously
Answer: D
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

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28) A ________ is a contract for a standard amount on a standard delivery date.
A) forward contract
B) currency future
C) currency option
D) call option
Answer: B
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

29) What is a currency selling at if the forward price is less than the spot price?
A) forward premium
B) forward discount
C) par value
D) swap price
Answer: B
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

30) A ________ allows, but does not require, a firm to buy or sell a specified amount of foreign
currency at a specified price on a specified date.
A) forward swap
B) currency option
C) call option
D) discount put
Answer: B
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

31) Apex Enterprises wants the right to buy a foreign currency at a specified price at any time up
to a specified date. Apex most likely needs a ________.
A) forward premium
B) forward discount
C) call option
D) put option
Answer: C
Diff: 2
Skill: Application
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

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32) Moffet Manufacturing wants the right to sell a foreign currency at a specified price at any
time up to a specified date. Moffet most likely needs a ________.
A) forward premium
B) forward discount
C) call option
D) put option
Answer: D
Diff: 2
Skill: Application
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

33) What is a currency selling at if the forward price is higher than the spot price?
A) forward premium
B) forward discount
C) par value
D) swap value
Answer: A
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

34) The ________ represents the marketplace's aggregate prediction of the spot price of the
currency rate in the future.
A) forward price
B) spot price
C) exchange rate
D) par value
Answer: A
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

35) The currencies of countries suffering from balance of payment trade deficits or high inflation
rates are more likely to sell at a ________.
A) spot discount
B) spot premium
C) forward discount
D) forward premium
Answer: C
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

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36) If a currency is selling at a forward premium it most likely means that the foreign-exchange
market believes that the ________.
A) currency will depreciate over time
B) country's economy is weak
C) currency will appreciate over time
D) country's economy is strong
Answer: C
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

37) The currencies of countries enjoying BOP trade surpluses or low inflation rates are more
likely to sell at a ________.
A) spot discount
B) spot premium
C) forward discount
D) forward premium
Answer: D
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

38) If a currency is selling at a forward discount it means that the foreign-exchange market most
likely believes that the ________.
A) currency will depreciate over time
B) country's economy is weak
C) currency will appreciate over time
D) country's economy is strong
Answer: A
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

39) ________ is the riskless purchase of a product in one market for immediate resale in a
second market in order to profit from a price discrepancy.
A) Commercial exchange
B) Foreign exchange
C) Arbitrage
D) Parity
Answer: C
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

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40) The theory of ________ states that the prices of tradable goods, when expressed in a
common currency, will tend to equalize across countries as a result of exchange rate changes.
A) supply and demand
B) purchasing power parity
C) arbitrage
D) competitive advantage
Answer: B
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

41) ________ suggests that arbitrage activities will continue until the price of the good is
identical in both markets.
A) Purchasing power parity
B) The law of one price
C) Equilibrium pricing
D) Two-point arbitrage
Answer: B
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

42) Euroloans are often quotes at which of the following rates?

A) LIBOR
B) the euro rate
C) prime plus 2 percent
D) prime plus .5 percent
Answer: A
Diff: 2
Skill: Concept
Objective: 5

43) Which of the following is a common form of foreign exchange arbitrage?

A) two-point arbitrage
B) long-distance arbitrage
C) internet arbitrage
D) uncovered interest
Answer: D
Diff: 2
Skill: Concept
Objective: 4

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44) Which form of arbitrage involves profiting from price differences in two distinct markets?
A) geographic arbitrage
B) three-point arbitrage
C) covered interest
D) arbitrage of goods
Answer: A
Diff: 2
Skill: Concept
Objective: 4

45) Suppose £1 is trading for $2.00 in New York City and $1.80 in London. A foreign exchange
trader could take $1.80 and buy £1 in London's financial exchange market and then sell it for
$2.00 in New York's financial exchange market. What is this an example of?
A) two-point arbitrage
B) three-point arbitrage
C) covered interest
D) arbitrage of goods
Answer: A
Diff: 2
Skill: Application
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

46) Two-point arbitrage is also known as ________.

A) equilibrium arbitrage
B) forward arbitrage
C) discount arbitrage
D) geographic arbitrage
Answer: D
Diff: 1
Skill: Concept
Objective: 4

47) ________ is profitable whenever the cost of buying a currency directly differs from the cross
rate of exchange.
A) Two-point arbitrage
B) Three-point arbitrage
C) Covered interest
D) Arbitrage of goods
Answer: B
Diff: 2
Skill: Concept
Objective: 4

12
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48) The ________ is an exchange rate between two currencies calculated through the use of a
third currency.
A) forward rate
B) call rate
C) cross rate
D) covered interest rate
Answer: C
Diff: 1
Skill: Concept
Objective: 4

49) The ________ is the primary third currency used in calculating cross rates.
A) euro
B) U.S. dollar
C) Japanese yen
D) Swiss franc
Answer: B
Diff: 1
Skill: Concept
Objective: 4

50) What kind of arbitrage occurs when the difference between two countries' interest rates is not
equal to the forward discount/premium on their currencies?
A) two-point arbitrage
B) three-point arbitrage
C) covered interest
D) geographic arbitrage
Answer: C
Diff: 2
Skill: Concept
Objective: 4

51) Which form of arbitrage is considered the most important in the foreign-exchange market?
A) two-point arbitrage
B) three-point arbitrage
C) covered interest
D) arbitrage of goods
Answer: C
Diff: 2
Skill: Concept
Objective: 4

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52) ________ suggests that national differences in expected inflation rates yield differences in
nominal interest rates among countries.
A) Two-point arbitrage
B) Three-point arbitrage
C) The international Fisher effect
D) The law of one market price
Answer: C
Diff: 1
Skill: Concept
Objective: 4

53) When an overseas banking operation is separately incorporated from the parent bank, what is
it called?
A) subsidiary bank
B) branch bank
C) affiliated bank
D) correspondent bank
Answer: A
Diff: 2
Skill: Concept
Objective: 2

54) When an overseas banking operation is incorporated within the parent bank, what is it
called?
A) subsidiary bank
B) branch bank
C) affiliated bank
D) correspondent bank
Answer: B
Diff: 2
Skill: Concept
Objective: 2

55) When an overseas banking operation is jointly owned by a parent bank and a local or foreign
partner, what is it called?
A) subsidiary bank
B) branch bank
C) affiliated bank
D) correspondent bank
Answer: C
Diff: 2
Skill: Concept
Objective: 2

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56) What is a Eurodollar?
A) a euro held by an American
B) a U.S. dollar deposited in a European bank
C) a euro deposited in a U.S. bank.
D) any currency deposited in a country other than the country of issue
Answer: B
Diff: 2
Skill: Concept
Objective: 2

57) What term refers to a currency on deposit outside its country of issue?
A) Eurocurrency
B) Eurodollar
C) Euroyen
D) Europound
Answer: A
Diff: 1
Skill: Concept
Objective: 2

58) Which of the following is a true statement about the Euroloan market?
A) It is extremely competitive and lenders operate on razor-thin margins.
B) It is extremely competitive but lenders still receive substantial margins.
C) It is monopolistic, yet lenders operate on razor-thin margins.
D) It is monopolistic and lenders receive substantial margins.
Answer: A
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

59) On the basis of which interest rate are Euroloans often quoted?
A) United States Prime Rate
B) European Central Bank Offer Rate
C) London Interbank Offer Rate
D) International Monetary Fund Interest Rate
Answer: C
Diff: 1
Skill: Concept
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

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60) The international bond market is a major source of debt financing for which of the
following?
A) world governments
B) regional organizations
C) small firms
D) small businesses
Answer: A
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

61) A(n) ________ is a large, liquid financial asset that can be traded anywhere at any time.
A) international stock
B) global bond
C) global equity
D) Eurodollar
Answer: B
Diff: 1
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

62) ________ focus on offering banking and other financial services to nonresident customers.
A) Subsidiary banks
B) Branch banks
C) Affiliated banks
D) Offshore financial centers
Answer: D
Diff: 2
Skill: Concept
Objective: 2

63) A bond that is issued by Nestle, a Swiss company, that is denominated in yen and sold to
residents of Japan is most likely a ________.
A) Eurobond
B) global bond
C) foreign bond
D) country fund
Answer: C
Diff: 2
Skill: Application
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

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64) Which of the following countries is an important offshore financial center?
A) Turks and Caicos
B) Mexico
C) South Korea
D) Bermuda
Answer: D
Diff: 2
Skill: Concept
Objective: 5

65) Which of the following is a characteristic of most offshore financial centers?

A) political stability
B) services for residents
C) accounting scandals
D) a lack of legal expertise
Answer: A
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

66) A ________ is a mutual fund that specializes in investing in a given country's firms.
A) country fund
B) global equity fund
C) high-risk fund
D) localization fund
Answer: A
Diff: 1
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

67) The primary purpose of the foreign-exchange market is to ________.

A) encourage globalization
B) assist developing countries
C) facilitate currency conversions
D) stabilize the currency exchange rate
Answer: C
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

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68) The ________ tries to exploit differences in the interest rates between countries.
A) currency option
B) country fund
C) collective rate
D) carry trade
Answer: D
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the functions of the foreign exchange market

69) Ross Manufacturing wants to sell foreign exchange on a spot basis and contracts with an
international bank to handle the transaction. What is the most likely reason that Ross uses an
international bank in this case?
A) The bank can customize the spot to meet Ross' needs.
B) Laws require that banks handle spot transactions.
C) The bank will not charge Ross a service fee.
D) Ross is a U.S. organization.
Answer: A
Diff: 3
Skill: Synthesis
Objective: 2, 3
Learning Outcome: Describe the functions of the foreign exchange market

70) Which of the following would most likely help international businesspeople to forecast
future changes in exchange rates?
A) swap transaction
B) forward price
C) put option
D) spot price
Answer: B
Diff: 1
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

71) In 2007, the Canadian dollar fell against the U.S. dollar.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

72) The rising value of the Canadian dollar relative to the U.S. dollar makes American goods
cheaper to consumers in Canada.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 1
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73) The price of foreign exchange is set by demand and supply in the marketplace.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

74) The equilibrium point between the quantity of a currency supplied and the quantity of the
currency demanded is the exchange rate.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

75) Foreign exchange rates are usually published daily in most major newspapers.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 1

76) In a flexible exchange rate system, the price of foreign exchange is established by central
banks.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

77) The direct exchange rate and the indirect exchange rate are reciprocals of one another.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

78) A person normally purchases items using the indirect exchange rate.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

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79) Exchange rates are quoted both directly and indirectly.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

80) It is common in the U.S. to quote the British pound on a direct basis and the Japanese yen on
an indirect basis.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

81) The euro is the primary transaction currency for the foreign exchange market.
Answer: FALSE
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

82) Foreign exchange speculation is attractive to investors because of its low risk nature.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

83) Most developing countries have hard currencies.

Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

84) Spot transactions account for about two-thirds of all foreign exchange transactions.
Answer: FALSE
Diff: 3
Skill: Concept
Objective: 3

85) The currency option requires a firm to buy or sell a specified amount of a foreign currency at
a specified price any time up to a specified date.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 3

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86) Swap transactions are the only mechanism for obtaining foreign exchange in the future.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

87) Currency futures represent only 1 percent of the foreign-exchange market.

Answer: TRUE
Diff: 3
Skill: Concept
Objective: 3

88) International bankers can customize currency options for their commercial clients.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

89) The forward price of a foreign currency is typically the same as its spot price.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

90) If a foreign currency is selling at a forward premium, the foreign exchange market believes
that the currency will depreciate over time.
Answer: FALSE
Diff: 3
Skill: Concept
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

91) Two-point arbitrage involves profiting from price differences in two geographically different
markets.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 4

92) When the direct quote and the cross rate for each possible pair of currencies are equal, there
is no opportunity for three-point arbitrage.
Answer: TRUE
Diff: 3
Skill: Concept
Objective: 4
21
Copyright © 2015 Pearson Education, Inc.
93) Carry trade was popular in the early 1990s, but has largely been replaced by covered interest
arbitrage today.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 4

94) The short-term interest rate differential between two countries is a good indicator of the
forward premium on the currencies, but not the forward discount.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 4

95) Another name for uncovered interest arbitrage is carry trade.

Answer: TRUE
Diff: 1
Skill: Concept
Objective: 4

96) The Eurocurrency market is limited to exchanges that include the euro.
Answer: FALSE
Diff: 1
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

97) The Japanese yen makes up the largest portion of the international bond market.
Answer: FALSE
Diff: 1
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

98) The dominant currencies in the international bond market are the euro and the U.S. dollar.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

22
Copyright © 2015 Pearson Education, Inc.
99) MNCs can cross-list their common stocks on multiple stock exchanges.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

100) Low-cost Eurocurrency loans can be obtained in offshore financial centers.

Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

101) Delivery takes place at two different points in time with a swap transaction.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 3

102) What is the primary transaction currency for the foreign exchange market? What are the
dominant currencies in the international bond market?
Answer: The primary transaction currency for the foreign exchange market is the U.S. dollar.
The dominant currencies in the international bond market are the euro and the U.S. dollar.
Diff: 2
AACSB: Dynamics of the global economy
Skill: Synthesis
Objective: 1, 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

103) As a retail customer, what price do you usually pay for foreign exchange?
Answer: Retail customers generally pay the prevailing wholesale exchange rate plus a premium.
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

23
Copyright © 2015 Pearson Education, Inc.
104) Briefly discuss the different categories of clients that are serviced by foreign exchange
departments of banks?
Answer: Commercial customers engage in foreign exchange transactions as part of normal
commercial activities. Speculators deliberately assume exchange risks by acquiring positions in a
currency, hoping to predict changes in market value. Arbitrageurs attempt to exploit small
differences in the price of a currency between markets.
Diff: 3
Skill: Application
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

105) What is the difference between a forward contract and a currency future?
Answer: A currency future is for a standard amount while a forward contract can involve
different amounts.
Diff: 2
Skill: Application
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

106) How can firms obtain foreign exchange in the future?

Answer: Firms can obtain foreign exchange in the future through swap transactions, currency
futures, and currency options.
Diff: 2
Skill: Application
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

107) What is the difference between a call option and a put option?
Answer: A call option grants the right to buy the foreign currency in question, while a put option
grants the right to sell the foreign currency.
Diff: 2
Skill: Application
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

108) What does the difference between the spot and forward prices of a country's currency most
likely suggest?
Answer: The difference between the spot and forward prices of a country's currency can signal
the market's expectations regarding that country's economic policies and prospects.
Diff: 2
Skill: Critical Thinking
Objective: 3
Learning Outcome: Describe the functions of the foreign exchange market

24
Copyright © 2015 Pearson Education, Inc.
109) Why does arbitrage most likely exist?
Answer: When the price of a good differs between two markets, people will tend to buy the
good in the market offering the lower price and resell it in the market offering the higher price.
Thus, arbitrage is the riskless purchase of a product for immediate resale.
Diff: 3
Skill: Application
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

110) Briefly explain the theory of purchasing power parity and the law of one price.
Answer: The theory of purchasing power parity states that the prices of tradeable goods, when
expressed in a common currency, will tend to equalize across countries as a result of exchange
rate changes. The law of one price states that arbitrage will continue until the price of the good in
question is identical in both markets (excluding transaction, transportation and other costs).
Diff: 2
Skill: Application
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

111) What is three-point arbitrage?

Answer: Three-point arbitrage is the buying and selling of three different currencies to make a
risk-free profit.
Diff: 2
Skill: Critical Thinking
Objective: 4

112) What is the international Fisher effect? Explain how it relates to the foreign-exchange
market?
Answer: The international Fisher effect suggests that national differences in expected inflation
rates yield differences in nominal interest rates among countries. Because of the international
Fisher effect and covered-interest arbitrage, an increase in a country's expected inflation rate
implies higher interest rates in that country. This in turn will lead to either a shrinking of the
forward premium or a widening of the forward discount on the country's currency in the foreign-
exchange market. Because of this linkage between inflation and expected changes in exchange
rates, international businesspeople and foreign currency traders carefully monitor countries'
inflation trends. The connection between inflation and exchange rates also affects the
international monetary system.
Diff: 2
AACSB: Dynamics of the global economy
Skill: Synthesis
Objective: 1, 3
Learning Outcome: Describe the functions of the foreign exchange market

25
Copyright © 2015 Pearson Education, Inc.
113) What is a correspondent relationship between banks? What services are performed by
correspondent banks?
Answer: A correspondent relationship is an agent relationship whereby one bank acts as a
correspondent, or agent, for another bank in the first bank's home country, and vice versa.
Correspondent banks provide various services including paying or collecting foreign funds,
providing credit information, and honoring letters of credit.
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

114) What are the different ways to establish an overseas banking operation?
Answer: An overseas banking operation can be established as a subsidiary bank, a branch bank,
or an affiliated bank.
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

115) What is the difference between a Eurocurrency and a Eurobond?

Answer: A Eurocurrency is defined as a currency on deposit outside its country of issue. A
Eurobond is a bond issued in the currency of country A, but sold to residents of other countries.
Diff: 2
Skill: Application
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

116) Why are the interest rates often low on international bonds?
Answer: Large transaction sizes, creditworthy borrowers, and freedom from costly regulations
imposed on domestic markets all help to lower interest rates charged on international bonds.
Diff: 2
Skill: Application
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

117) Why would an MNC most likely use an offshore financial center?
Answer: Benefits of offshore financial centers include political stability, a positive regulatory
climate for international capital transactions, excellent communication links to other major
financial centers, and availability of legal, accounting, and financial expertise.
Diff: 2
Skill: Application
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

26
Copyright © 2015 Pearson Education, Inc.
118) Explain how the rising value of the Canadian dollar relative to the U.S. dollar affects
Canadian consumers, Canadian visitors to the United States, and Canadian exporters to the
United States.
Answer: The rising value of the Canadian dollar means that Canadian consumers pay lower
prices for goods made in the United States, and Canadian vacationers to the United States enjoy
lower cost trips. Canadian exporters to the United States, though, could see their business drop
off as Americans import fewer Canadian-made goods.
Diff: 3
Skill: Critical Thinking
Objective: 1
Learning Outcome: Describe the functions of the foreign exchange market

119) Explain the theory of purchasing power parity. How does it affect arbitrage?
Answer: This theory states that the prices of tradable goods, when expressed in a common
currency, will tend to equalize across countries as a result of exchange rate changes. Purchasing
power parity occurs because the process of buying goods in the cheap market and reselling them
in the expensive market affects the demand for, and the price of, the foreign currency, as well as
the market price of the good itself in the two product markets in question. When purchasing
power parity occurs, there is no reason to cross borders to purchase the products.
Diff: 3
AACSB: Dynamics of the global economy
Skill: Synthesis
Objective: 1, 4
Learning Outcome: Describe the functions of the foreign exchange market

120) Assume that the per capita income in Germany in 2011, converted into US dollars, was
$44,270 while the per capita income in Japan, converted into U.S. dollars, was $44,900. Does
this mean that the average Japanese citizen enjoys a higher standard of living than the average
German? Why or why not?
Answer: This question relates to the theory of purchasing power parity. At first glance, it does
appear that the average Japanese citizen has a slightly higher income than the average German
citizen. However, this does not take into account the differences in price levels between the two
countries. After adjusting for purchasing power, Japan's per capita income falls to $35,330.
Diff: 3
Skill: Critical Thinking
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

27
Copyright © 2015 Pearson Education, Inc.
121) Why have international banks increasingly provided their own overseas operations rather
than using correspondent banks?
Answer: Providing its own overseas operations enables a larger bank to compete better
internationally. A bank that has its own foreign operations can access new sources of deposits
and profitable lending opportunities. The bank can also better meet the needs of domestic clients
with international banking needs.
Diff: 2
AACSB: Dynamics of the global economy
Skill: Application
Objective: 2
Learning Outcome: Describe the functions of the foreign exchange market

122) Explain the concept of covered interest arbitrage. Why does it occur?
Answer: Covered interest arbitrage is arbitrage that occurs when the difference between two
countries' interest rates is not equal to the forward discount or premium on their currencies. It is
considered to be the most important form of arbitrage in the foreign exchange market and occurs
when international bankers, insurance companies, and corporate treasurers that scan money
markets to obtain the best returns on their short-term excess cash balances and the lowest rates
on short-term loans protect themselves from exchange rate risks.
Diff: 3
AACSB: Dynamics of the global economy
Skill: Critical Thinking
Objective: 4
Learning Outcome: Describe the functions of the foreign exchange market

123) Why are arbitrage activities important to the international monetary system?
Answer: Arbitrage activities, which make up a major portion of the $4 trillion in currencies
traded everyday, affect the supply and demand for the major trading currencies and tie together
the foreign exchange markets.
Diff: 2
AACSB: Dynamics of the global economy
Skill: Synthesis
Objective: 1, 4
Learning Outcome: Describe the functions of the foreign exchange market

124) How did the Eurocurrency market develop? What role did global banks play in the process?
Answer: The Eurocurrency market originated in the early 1950s when the communist-controlled
governments of Central and Eastern Europe needed dollars to finance their international trade,
but feared the U.S. government would confiscate or block their holdings of dollars in U.S. banks
for political reasons. The communist governments solved this problem by using European banks
that were willing to maintain dollar accounts for them.
Diff: 3
Skill: Synthesis
Objective: 2, 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

28
Copyright © 2015 Pearson Education, Inc.
125) What is the difference between a Eurobond, a global bond, and a foreign bond?
Answer: Foreign bonds are issued by a resident of country A, but sold to residents of country B
and denominated in the currency of country B. A Eurobond is issued in the currency of country
A, but sold to residents of other countries. Global bonds are large, liquid financial assets that can
be traded anywhere at anytime.
Diff: 2
AACSB: Dynamics of the global economy
Skill: Critical Thinking
Objective: 5
Learning Outcome: Summarize the roles of the international monetary system and global capital
market

29
Copyright © 2015 Pearson Education, Inc.
Another random document with
no related content on Scribd:
The Project Gutenberg eBook of A book of
martyrs
 This ebook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this ebook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.

Title: A book of martyrs

Author: Cornelia A. P. Comer

Release date: October 13, 2023 [eBook #71872]

Language: English

Original publication: New York: Charles Scribner's Sons, 1896

Credits: The Online Distributed Proofreading Team at

https://www.pgdp.net (This file was produced from
images generously made available by The Internet
Archive)

*** START OF THE PROJECT GUTENBERG EBOOK A BOOK OF

MARTYRS ***
 THE IVORY SERIES

Each, 16mo, gilt top, 75 cents

AMOS JUDD. By J. A. Mitchell

Editor of “Life”

IA. A Love Story. By Q

[Arthur T. Quiller-Couch]

THE SUICIDE CLUB

By Robert Louis Stevenson

IRRALIE’S BUSHRANGER
By E. W. Hornung

A MASTER SPIRIT
By Harriet Prescott Spofford

MADAME DELPHINE
By George W. Cable

ONE OF THE VISCONTI

By Eva Wilder Brodhead

A BOOK OF MARTYRS
By Cornelia Atwood Pratt

Other Volumes to be announced

A BOOK OF MARTYRS
When first they mixed the Clay of Man and clothed
His Spirit in the Robe of Perfect Beauty,
For Forty Mornings did an evil Cloud
Rain Sorrows over him from Head to Foot;
And when the Forty Mornings passed to Night,
There came one Morning-Shower—one Morning-Shower
Of Joy—to Forty of the Rain of Sorrow!
And though the better Fortune came at last
To seal the Work, yet every Wise Man knows
Such Consummation never can be here!

From the Persian of Jàmi.

A BOOK OF MARTYRS
BY
CORNELIA ATWOOD PRATT

CHARLES SCRIBNER’S SONS

NEW YORK, 1896
 Copyright, 1896, by
Charles Scribner’s Sons

TROW DIRECTORY
PRINTING AND BOOK BINDING COMPANY
NEW YORK
 NOTE
Of the stories in this volume, “Witherle’s Freedom” and “Serene’s
Religious Experience” were first published in The Century Magazine;
“A Consuming Fire,” “Hardesty’s Cowardice” and “The Honor of a
Gentleman” in Harper’s Weekly; “At the End of the World” in The
Independent. Thanks are due the publishers of these periodicals for
permission to reprint the stories here.
 CONTENTS
PAGE
Witherle’s Freedom, 1
Serene’s Religious Experience; an Inland Story, 19
An Instance of Chivalry, 45
A Consuming Fire, 71
An Unearned Reward, 89
Hardesty’s Cowardice, 111
“The Honor of a Gentleman,” 131
Rivals, 153
At the End of the World, 165
 WITHERLE’S FREEDOM
His little world was blankly astonished when Witherle dropped out
of it. His disappearance was as his life had been, neat, methodical,
well-arranged; but why did he go at all?
He had lived through thirty-seven years of a discreetly conducted
existence with apparent satisfaction; he had been in the ministry for
fifteen years; he had been married nearly as long; he was in no sort
of difficulty, theological, financial, or marital; he possessed the favor
of his superiors in the church, the confidence of his wife, and he had
recently come into a small fortune bequeathed him by a great-aunt.
Every one regarded him as very “comfortably fixed”—for a minister.
Of all the above-enumerated blessings he had divested himself
methodically, as a man folds up and lays aside worn garments. He
resigned his charge, he transferred his property to his wife, and
wrote her a farewell note in which he said, in a light-hearted way
which she mistook for incoherence, that she would never see him
again. These things done, he dropped out of the sight of men as
completely as a stone fallen into a pond.
His friends speculated and investigated, curiously, eagerly,
fearfully, but to no purpose. What was the motive? Where had he
gone? Had he committed suicide? Was he insane? The elders of the
church employed a detective, and the friends of his wife took up the
search, but Witherle was not found. He had left as little trace
whereby he could be followed as a meteor leaves when it rushes
across the sky.
Presently, of course, interest in the event subsided; the church got
a new minister; Witherle’s wife went back to her own people; the
world appeared to forget. But there was a man of Witherle’s
congregation named Lowndes who still meditated the unsolved
problem at odd moments. He was a practical man of affairs, with the
psychological instinct, and he found the question of why people do
the things that they do perennially interesting. Humanity from any
point of view is a touching spectacle; from a business standpoint it is
infinitely droll. Personally Lowndes was one of the wholesome
natures for whom there are more certainties than uncertainties in life,
and he felt for Witherle the protecting friendliness that a strong man
sometimes has for one less strong. He advised him as to his
investments on week-days, and listened patiently Sunday after
Sunday, as the lesser man expounded the mysteries of creation and
the ways of the Creator, sustained by the reflection that Witherle was
better than his sermons. He did not consider him an interesting man,
but he believed him to be a good one. When Witherle was no longer
at hand, Lowndes counselled and planned for his wife, and
otherwise made himself as useful as the circumstances would
permit. He felt sorry for Witherle’s wife, a nervous woman to whom
had come as sharp an upheaval of life as death itself could have
brought about, without the comfort of the reflection that the Lord had
taken away.
Fate, who sometimes delivers the ball to those who are ready to
play, decreed that, in May, about a year after Witherle’s
disappearance, Lowndes should be summoned from the
Pennsylvania village where he lived to one of the cities of an
adjoining State. His business took him along the dingy river-front of
the town. Crossing a bridge one evening toward sunset, he stopped
idly to note the shifting iridescent tints that converted the river for the
hour into a heavenly water-way between the two purgatorial banks
lined with warehouses and elevators black with the inexpressibly
mussy and depressing blackness of the soot of soft coal. His glance
fell upon a coal-barge being loaded at the nearest wharf. He leaned
over the rail, wondering why the lines of the figure of one of the
workmen looked familiar to him. The man seemed to be shovelling
coal with a peculiar zest. As this is a species of toil not usually
performed for the love of it, his manner naturally attracted attention.
While Lowndes still stood there pondering the problematical
familiarity of his back, the man turned. Lowndes clutched the rail. “By
Jove!” he said, excitedly, for he saw that the features were the
features of Witherle. Their expression was exultant and illuminated
beyond anything ever vouch-safed to that plodding gospeller. Moving
along the bridge to a point just above the barge, he took out his
watch and looked at it. It was nearly six o’clock.
The next fifteen minutes were exciting ones for Lowndes. His mind
was in a tumult. It is no light matter to make one’s self the arbiter of
another man’s destiny; and he knew enough of Witherle to feel sure
that the man’s future was in his hands. He looked down at him
dubiously, his strong hands still clutching the rail tensely. For a
minute he felt that he must move on without making his presence
known, but even as he resolved, the clocks and whistles clamorously
announced the hour.
When the men quitted their work, the man whom Lowndes’s eyes
were following came up the stairs that led to the bridge. As he
passed, Lowndes laid a hand lightly on his shoulder.
“How are you, Witherle?” he said.
The man stared at him blankly a second, recoiled, and his face
turned livid as he shook off the friendly hand. The other men had
passed on, and they were alone on the bridge.
“I’m a free man,” said Witherle, loudly, throwing back his
shoulders. “Before God, I’m a free man for the first time in my life.
What do you want with me?”
“Don’t rave,” said Lowndes, sharply. “I sha’n’t hurt you. You
couldn’t expect me to pass you without speaking, could you?”
“Then you weren’t looking for me?” asked Witherle, abjectly.
“I have business on hand.” Lowndes spoke impatiently, for he did
not enjoy seeing his old friend cower. “I am here for the Diamond Oil
Co. I was crossing the bridge just now, when I saw a man down
there shovelling coal as if he liked it; and I delayed to look, and saw
it was you. So I waited for you. That is all there is of it. You needn’t
stop if you don’t wish.”
Witherle drew a deep breath. “My nerves aren’t what they were,”
he said, apologetically. “It played the mischief with them to—” He left
the sentence hanging in the air.
 “If you weren’t going to like the results, you needn’t have gone,”
observed Lowndes, in an impartial tone. “Nobody has been exactly
able to see the reasons for your departure. You left the folks at home
a good deal stirred up.”
“What do they say about me there?”
Lowndes hesitated. “Most of them say you were crazy. Your wife
has gone back to her people.”
“Ah!”
Lowndes looked at the man with a sudden impulse of pity. He was
leaning against the rail, breathing heavily. His face was white
beneath the soot, but in his eyes still flamed that incomprehensible
ecstasy. He was inebriate with the subtle stimulus of some
transcendent thought. But what thought? And what had brought him
here? This creature, with his sensitive mouth, his idealist’s eyes, his
scholar’s hands, black and hardened now but still clearly
recognizable, was at least more out of place among the coal-heavers
than he had been in the pulpit. Lowndes felt mightily upon him the
desire to shepherd this man back to some more sheltered fold. The
highways of existence were not for his feet; not for his lips the “Song
of the Open Road.” He did not resist the desire to say, meditatively:
“You have no children——”
“God in His mercy be praised for that one blessing!” Witherle
muttered. But Lowndes went on as if he did not hear:
“But you might think of your wife.”
“I have thought of her—too much. I thought about everything too
much. I am tired of thinking,” said Witherle. “I wonder if you
understand?”
“Not in the least.”
Witherle looked about him restlessly. “Come where we can talk—
down there on that pile of boards. I think I’d like to talk. It is very
simple when once you understand it.”
 He led the way to the opposite end of the bridge, and down an
embankment to a lumber-pile at the water’s edge. Up the river the
May sun had gone down in splendor, leaving the water crimson-
stained. Witherle sat down where he could look along the river-
reaches.
“Hold on a minute, Witherle. Don’t talk to me unless you are sure
you want to.”
“That’s all right. There’s nothing much to tell. I don’t seem to mind
your understanding.”
Witherle was silent a minute.
“It is very simple,” he said again. “This is the way I think about it.
Either you do the things you want to do in this world or else you
don’t. I had never done what I wanted until I left home. I didn’t mean
to hurt anybody by coming away in that style, and I don’t think that I
did. I’d rather not be selfish, but life got so dull. I couldn’t stand it. I
had to have a change. I had to come. The things you have to do you
do. There was a Frenchman once who committed suicide and left a
note that said: ‘Tired of this eternal buttoning and unbuttoning.’ I
know how he felt. I don’t know how other men manage to live.
Perhaps their work means more to them than mine had come to
mean to me. It was just dull, that was all, and I had to come.”
Lowndes stared. Truly it was delightfully simple. “Why, man, you
can’t chuck your responsibilities overboard like that. Your wife——”
“When I was twenty-one,” interrupted Witherle, “I was in love. The
girl married somebody else. Before I met my wife she had cared for
a man who married another woman. You see how it was. We were
going to save the pieces together. As a business arrangement that
sort of thing is all right. I haven’t a word to say against it. She is a
good woman, and we got on as well as most people, only life was
not ecstasy to either of us. Can’t you see us tied together, snaking
our way along through existence as if it were some gray desert, and
we crawling on and on over the sand, always with our faces bent to
it, and nothing showing itself in our way but the white bones of the
men and women who had travelled along there before us—grinning
skulls mostly? Can’t you see it?”
Looking up, he caught an expression in Lowndes’s eyes the
meaning of which he suspected. “Oh, you needn’t be afraid,” he
added, hastily, “that this is insanity. It’s only imagination. That’s the
way I felt. And my work was only another long desert to be toiled
through—with the Sphinx at the end. I wasn’t a successful preacher,
and you know it. I hadn’t any grip on men. I hadn’t any grip on myself
—or God. I couldn’t see any use or any meaning or any joy in it. The
whole thing choked me. I wanted a simpler, more elemental life. I
wanted to go up and down the earth and try new forms of living, new
ways of doing things, new people. Life—that was what I wanted; to
feel the pulse of the world throb under my touch, to be in the stir, to
be doing something. I was always haunted by the conviction that life
was tremendous if only you once got at it. I couldn’t get at it where I
was. I was rotting away. So when that money was left me it came
like a godsend. I knew my wife could live on that, and I didn’t think
she’d miss me much, so I just came off.”
“And you like it?”
The man’s eyes flamed. “Like it? It’s great! It’s the only thing there
is. I’ve been from Maine to California this year. I wintered in a
Michigan lumber-camp—that was hell. I was a boat-hand on the
Columbia last summer—that was heaven. I worked in a coal-mine
two months—a scab workman, you understand. And now I’m at this.
I tell you, it is fine to get rid of cudgelling your brains for ideas that
aren’t there, and of pretending to teach people something you don’t
know, and take to working with your hands nine hours a day and
sleeping like a log all night. I hadn’t slept for months, you know.
These people tell me about themselves. I’m seeing what life is like.
I’m getting down to the foundations. I’ve learned more about
humanity in the last six months than I ever knew in all my life. I
believe I’ve learned more about religion. I’m getting hold of things.
It’s like getting out on the open sea after that desert I was talking
about—don’t you see? And it all tastes so good to me!” He dropped
his head into his hands, exhausted by the flood of words he had
poured rapidly out.
 Lowndes hesitated long before he spoke. He was reflecting that
Witherle’s exaltation was pathological—he was drunk with the air of
the open road.
“Poor little devil!” he thought. “One might let alone a man who
finds ecstasy in being a coal-heaver; but it won’t do.”
“Life is big,” he admitted, slowly; “it’s tremendous, if you like; it’s all
you say—but it isn’t for you. Don’t you see it is too late? We’re all of
us under bonds to keep the world’s peace and finish the contracts
we undertake. You’re out of bounds now. You have got to come
back.”
Witherle stared at him blankly. “You say that? After what I’ve told
you? Why, there’s nothing to go back for. And here—there is
everything! What harm am I doing, I’d like to know? Who is hurt?
What claims has that life on me? Confound you!” his wrath rising
fiercely, “how dare you talk like that to me? Why isn’t life for me as
well as for you?”
This Witherle was a man he did not know. Lowndes felt a little
heart-sick, but only the more convinced that he must make his point.
“If you didn’t feel that you were out of bounds, why were you afraid
of me when I came along?”
The thrust told. Witherle was silent. Lowndes went on: “Bread isn’t
as interesting as champagne, I know, but there is more in it, in the
long run. However, that’s neither here nor there—if a man has a right
to his champagne. But you haven’t. You are mistaken about your
wife. She was all broken up. I don’t pretend to say she was
desperately fond of you. I don’t know anything about that. But,
anyhow, she had made for herself a kind of life of which you were
the centre, and it was all the life she had. You had no right to break it
to pieces getting what you wanted. That’s a brutal thing for a man to
do. She looked very miserable, when I saw her. You’ve got to go
back.”
Witherle turned his head from side to side restlessly, as a sick man
turns on the pillow.
 “How can I go back?” he cried, keenly protesting. “Don’t you see
it’s impossible? I’ve burned my ships.”
“That’s easy enough. You went off in a fit of double consciousness,
or temporary insanity, or something like that, and I found you down
here. It will be easy enough to reinstate you. I’ll see to that.”
“That would be a lie,” said Witherle, resolutely.
Lowndes stared at him curiously, reflecting upon the
fastidiousness with which men pick and choose their offenses
against righteousness, embracing one joyously and rejecting another
with scorn.
“Yes; so it would. But I have offered to do the lying for you, and
you are off your head, you know.”
“How?” demanded Witherle, sharply.
“Any man is off his head who can’t take life as it comes, the bad
and the good, and bear up under it. Suicide is insanity. You tried to
commit suicide in the cowardliest way, by getting rid of your
responsibilities and saving your worthless breath. Old man, it won’t
do. You say you’ve learned something about religion and humanity—
come back and tell us about it.”
Witherle listened to his sentence in silence. His long lower lip
trembled.
“Anything more?” he demanded.
“That’s all. It won’t do.”
The man dropped his head into his hands and sat absolutely still.
Lowndes watched the river growing grayer and grayer, and listened
to the lapping of the water against the lumber, remembering that one
of the poets had said it was a risky business tampering with souls,
and matter enough to save one’s own. The reflection made him feel
a little faint. What if Witherle had a right to that life in spite of
everything—that life for which he had given all?
Witherle lifted his head at last. “You are sure my wife was broken
up over it?” he demanded, despairingly.
 “Sure.”
Witherle cast one longing glance across the darkening river to the
black outlines of the barge. There, ah, even there, the breath of life
was sweet upon his lips, and toil was good, and existence was worth
while.
“I thought no soul in the world had a claim on me. Curse duty! The
life of a rat in a cage!” he cried. “Oh, Lord, I haven’t the head nor the
heart for it!”
The words were bitter, but his voice broke with compliance. He
rose to his feet and stretched out his arms with a fierce gesture, then
dropped them heavily by his side.
“Come on,” he said.
Lowndes, watching him with that curious, heart-sickening
sympathy growing upon him, was aware that he had seen the end of
a soul’s revolt. Rightly or wrongly, Witherle’s freedom was over.