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
If market efficiency is identified with parity, currency markets that are ________ provide no opportunities for currency traders to earn profits. A) not in parity B) in parity C) in interest rate parity only D) in purchasing power parity ANSWER Answer: B
Date: September 19th, 2020
Disbursement float is experienced by a payee and is a delay in the actual withdrawal of funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Mail float is the delay between the deposit of a check by a payee and the actual availability of the funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Collection float results from the lapse between the time that a firm deducts a payment from its checking account ledger and the time that funds are actually withdrawn from its accounts. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The empirical evidence indicates that interest rate parity is the norm, especially during periods of financial market ________. A) arbitrage B) turbulence C) profit-taking D) tranquility ANSWER Answer: D
Date: September 19th, 2020
