Finance

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 following options are all important reasons to study the theory of

The following options are all important reasons to study the theory of PPP EXCEPT: A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies. B) deviations from PPP significantly affect the profitability of firms. C) it is particularly useful […]

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Date: September 19th, 2020

When the price level of an economy is ________, ________ is occurring.

When the price level of an economy is ________, ________ is occurring. Conversely, when the price level is ________, ________ is occurring. A) rising, deflation, falling, inflation B) rising, inflation, falling, deflation C) falling, inflation, rising, deflation D) falling, deflation, rising, deflation     ANSWER Answer: B

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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

When managing accounts receivable, a good strategy would be to _______

When managing accounts receivable, a good strategy would be to ________. A) send the accounts to a collection agency to extract payments B) tighten the credit terms to force the customer to pay on time C) offer cash discount without losing sales and imposing burden on customer D) make frequent personal visits to the customer […]

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Date: September 19th, 2020