In the absence of pure competition, firms who segment markets may be able to charge different prices in different countries for the same good. This practice is known as ________. A) mark to market B) interest rate arbitrage C) pricing to market D) speculation ANSWER Answer: C
Date: September 19th, 2020
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
Date: September 19th, 2020
Within Germany, what is the name for the power of a U.S. 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: B
Date: September 19th, 2020
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
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
When people describe what they think an exchange rate value should be, they often use a benchmark model, known as ________. A) purchasing power parity B) interest rate parity C) the Fisher effect D) the International Fisher effect ANSWER Answer: A
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
Delaying the payment of accounts payable in order to improve cash management is known as ________. A) ACH transfers B) stretching payables C) credit scoring D) lockbox system ANSWER B
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
