Treasury notes generate lower returns than U.S. Treasury bills. Indicate whether the statement is true or false ANSWER FALSE
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
What is the name given to the risk associated with an asset’s return arising from the covariance of the return on a large, well-diversified portfolio? A) covariance B) systematic risk C) idiosyncratic risk D) risk premium ANSWER Answer: B
Date: September 19th, 2020
What concept states that there is no systematic difference between the forward rate and the expected future spot rate, and that the expected forward market return is zero? A) unbiased predictor B) unbiasedness hypothesis C) uncovered interest rate parity D) unsystematic risk ANSWER Answer: B
Date: September 19th, 2020
Playing the float involves the strategic use of mailing points and bank accounts to lengthen mail float and clearing float, respectively. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
What problem occurred as the result of a monetary stabilization plan consisting of tiding two currencies to the same exchange rate? A) Peso problem B) Argentina 2000 C) Swedish problem D) Survey data problem ANSWER Answer: B
Date: September 19th, 2020
When the forward rate equals the expected future spot rate, the forward rate is said to be a(n) ________ of the future spot rate. A) unbiased predictor B) forward market investment C) forward market return D) unsystematic risk ANSWER Answer: A
Date: September 19th, 2020
