Which one of the following is the only determinant of volatility in the forward currency markets? A) interest rate parity B) economic recovery C) political turmoil D) variance of the future exchange rates ANSWER Answer: D
Date: September 19th, 2020
Regression tests of the unbiasedness hypothesis indicate that it is ________ with real life events. A) an unbiased indicator of expected future exchange rates B) very consistent C) not consistent D) has a strong correlation to the current account ANSWER Answer: C
Date: September 19th, 2020
With the ACH (automated clearing house) credits, disbursement float is sacrificed because ACH transactions immediately draw down a company’s payroll account on pay day. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Modern portfolio theory developed by William F. Sharpe is the foundation of ________. A) currency market parity models B) the balance sheet hedge C) the capital asset pricing model D) adjusted net present value model ANSWER Answer: C
Date: September 19th, 2020
Multinational corporations most often hedge their transaction exchange rate risk using currency ________. A) options B) futures C) spreads D) forward contracts ANSWER Answer: D
Date: September 19th, 2020
If investors ________, we would assume that do not make systematic mistakes when forecasting exchange rates. A) have rational expectations B) have complete knowledge of all possible bid and ask quotes C) know that interest rate differentials provide information about the intensity of devaluations D) anticipate events that occur ANSWER Answer: A
Date: September 19th, 2020
The ________ holds that it is the covariance of an asset’s return with that of the market portfolio that determines the asset’s risk premium. A) Law of One Price B) Law of Iterated Expectations C) Capital Asset Pricing Model D) Interest Rate Parity Model ANSWER Answer: C
Date: September 19th, 2020
Controlled disbursing 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 TRUE
Date: September 19th, 2020
Controlled disbursing is a method of consciously anticipating the mail, processing, and clearing time involved with the payment process. Indicate whether the statement is true or false ANSWER FALSE
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
