When the external purchasing power or a currency is greater than the internal purchasing power, the currency is said to be ________. A) overvalued B) undervalued C) at parity D) in arbitrage ANSWER Answer: A
Date: September 19th, 2020
If people expect that their future purchasing power will decline, what will happen to the exchange rate today? What will be an ideal response? ANSWER Answer: Typically, when people think that the purchasing power of a money is going to decline in the future, due to higher expected inflation, they try to sell […]
Date: September 19th, 2020
________ float results from the lapse between the time when a firm deducts a payment from its checking account ledger and the time when funds are actually withdrawn from its account. A) Mail B) Processing C) Collection D) Disbursement ANSWER D
Date: September 19th, 2020
________ involves the strategic use of mailing points and bank accounts to lengthen mail and clearing floats. A) A direct send B) Concentration banking C) A lockbox D) Controlled disbursing ANSWER D
Date: September 19th, 2020
A ________ is an unsigned check drawn on one of a firm’s bank accounts and deposited into its account at another bank. A) direct send B) wire transfer C) depository transfer check D) preauthorized check ANSWER C
Date: September 19th, 2020
One important reason to study the purchasing power parity theory is because A) investors should borrow in a foreign currency, when there is a forward discount. B) when inflation rates differ across international borders, PPP provides a baseline forecast of future exchange rates. C) forecasting exchange rates is difficult and PPP makes it easier. D) […]
Date: September 19th, 2020
Understanding the theory of purchasing power parity is important because deviations from PPP significantly affect the A) operations of the central bank. B) hedging activities of multinational firms. C) profitability of multinational firms. D) arbitrage opportunities in the banking markets. ANSWER Answer: C
Date: September 19th, 2020
Within the United States, what is the name for the power of a dollar when it is used to purchase an amount of goods and services? A) internal purchasing power B) external purchasing power C) absolute purchasing power parity D) relative purchasing power parity ANSWER Answer: A
Date: September 19th, 2020
Float is important in the cash conversion cycle of a firm because ________. A) its presence reduces a firm’s average collection period B) its presence reduces a firm’s average payment period C) its presence lengthens both a firm’s average collection period and its average payment period D) its presence reduces the investment that a firm […]
Date: September 19th, 2020
The yields on negotiable certificates of deposit are typically above those on U.S. Treasury issues and comparable to the yields on commercial paper with similar maturities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
