Finance

The version of purchasing power parity that states the exchange rates

The version of purchasing power parity that states the exchange rates will adjust to equalize the internal and external purchasing power of a currency is known as the ________. A) relative purchasing power parity B) equilibrium purchasing power parity C) absolute purchasing power parity D) real exchange rate equilibrium     ANSWER Answer: C

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Date: September 19th, 2020

The theory of relative purchasing power parity states that, between tw

The theory of relative purchasing power parity states that, between two nations, the ________. A) inflation rates are unrelated B) exchange rate differential reflects the inflation rate differential C) inflation rate is smaller in weaker currencies D) the interest rate is greater than the inflation rate during depreciations     ANSWER Answer: B

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Date: September 19th, 2020

The higher yields on Eurodollar deposits compared with nearly all othe

The higher yields on Eurodollar deposits compared with nearly all other marketable securities, governmental or nongovernmental, with similar maturities are attributable to 1. the fact that the depository banks are generally less closely regulated than U.S. banks and are therefore more risky, and 2. some foreign exchange risk may be present. Indicate whether the statement […]

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Date: September 19th, 2020

A customer sends payment to a post office box which is emptied by a fi

A customer sends payment to a post office box which is emptied by a firm’s bank daily. The bank then processes the payments and notifies the firm of the day’s collections. This collection technique is known as ________. A) a direct send B) concentration banking C) the lockbox system D) controlled disbursing     ANSWER […]

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Date: September 19th, 2020

Why is it true that the hypothesis that the forward exchange rate is a

Why is it true that the hypothesis that the forward exchange rate is an unbiased predictor of the future spot exchange rate is equivalent to the hypothesis that the forward premium (or discount) on a foreign currency is an unbiased predictor of the rate of its appreciation (or depreciation)?     ANSWER Answer: When the […]

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Date: September 19th, 2020

When managing accounts payable, a good strategy would be to ________.

When managing accounts payable, a good strategy would be to ________. A) pay as early as possible creating better credit rating for a firm B) pay as slowly as possible without damaging a firm’s credit rating C) pay big customers early to maintain good relations and small customers on a later date D) pay only […]

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Date: September 19th, 2020