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
If interest rate parity prevails, what is the return from a hedged foreign currency investment? What will be an ideal response? ANSWER Answer: A hedged foreign currency investment sells the known foreign currency return in the forward market at the time of the investment. This eliminates exposure to foreign exchange risk, but it […]
Date: September 19th, 2020
Zero-balance accounts are checking accounts in which a zero balance is maintained and the bank automatically covers all checks presented against the accounts. 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
What does the “carry trade” term mean? A) Borrow in the domestic currency to earn only the higher yield of the dollar implied by the regression. B) Borrow in the foreign currency to earn only the expected capital appreciation of the dollar implied by the regression. C) Borrow in the domestic currency to earn both […]
Date: September 19th, 2020
Disbursement float results from the delay between the time that a payer or customer deducts a payment from its checking account ledger (disburses it) and the time that a payee or vendor actually receives these funds in a spendable form. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which one of the following is NOT a drawback when economists use survey data to examine the unbiasedness hypothesis? A) Participants may not have an incentive to respond honestly. B) Participants’ investment actions are not consistent with their answers. C) Selfish motives are generally not significant. D) They don’t know the marginal investor’s expectations. […]
Date: September 19th, 2020
