What is the name of the ratio of a price level at one point in time to the price level in a designated base year? A) bid-ask spread B) reserve requirement C) percent spread D) price index ANSWER Answer: D
Date: September 19th, 2020
________ float is the delay between the receipt of a check and the actual deposit of it into a firm’s account. A) Disbursement B) Deposit C) Processing D) Clearing 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
What is the main determinant of the volatility of forward market returns? What will be an ideal response? ANSWER Answer: The main and only determinant of the volatility of forward market returns is the variance of the future exchange rate.
Date: September 19th, 2020
Most federal agency issues have short maturities and offer slightly higher yields than U.S. Treasury issues having similar maturities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The ACH (automated clearing house) debits are preauthorized electronic withdrawals from a payer’s account. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Describe how you construct the uncertain ₤-denominated return from investing 1 ₤ in the Swiss franc money market. What will be an ideal response? ANSWER Answer: If you invest ₤ in the Swiss money market, you first must convert from ₤ into Swiss francs in the spot foreign exchange market. With the Swiss […]
Date: September 19th, 2020
If you were attempting to forecast the forward exchange rate for a particular horizon such as 90 days, how would the forward exchange rate be an unbiased predictor of the future spot exchange rate? What will be an ideal response? ANSWER Answer: If the forward exchange rate for 90 days is an unbiased […]
Date: September 19th, 2020
