Test bank International Finance MCQ wordchap 3.docx
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Test bank International Finance MCQ wordchap 3.docx
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TestbankInternationalFinanceMCQwordchap3
FundamentalsofMultinationalFinance,3e(Moffett)
Chapter3
TheInternationalMonetarySystem
3.1
MultipleChoiceandTrue/FalseQuestions
1)
Thepriceofonecountry'scurrencyinunitsofanothercurrencyorcommodityisthe________.
A)
foreigninterestrate
B)
foreigncurrencyexchangerate
C)
parvalue
D)
internationalrate
Answer:
B
Topic:
CurrencyTerminology
Skill:
Recognition
2)
Acountrythatregulatestherateatwhichitscurrencyisexchangedforallothercurrenciesisconsideredtohavea________exchangeratesystem.
A)
fixedormanaged
B)
floatingorflexible
C)
forward
D)
spot
Answer:
A
Topic:
CurrencyTerminology
Skill:
Recognition
3)
YouchecktheYcurrencywebpageandfindthattheJapaneseyenistradingatarateof
113yenperdollar.Thisrateofexchangeistypicallyreferredtoasthe________.
A)
forwardrate
B)
parrate
C)
spotrate
D)
113rate
Answer:
C
Topic:
CurrencyTerminology
Skill:
Conceptual
4)
Thedropinvalueofacurrencypeggedtogoldoranothercurrencyisknownas________.
A)
revaluation
B)
depreciation
C)
deterioration
D)
devaluation
Answer:
D
Topic:
CurrencyTerminology
Skill:
Conceptual
5)
A________currencyisexpectedtodevalueordepreciaterelativetomajorcurrencies.
A)
softorweak
B)
hardorstrong
C)
deteriorated
D)
devalued
Answer:
A
Topic:
CurrencyTerminology
Skill:
Conceptual
6)
Theincreaseinvalueofacurrencypeggedtogoldoranothercurrencyisknownas________.
A)
appreciation
B)
revaluation
C)
strengthened
D)
hardened
Answer:
B
Topic:
CurrencyTerminology
Skill:
Conceptual
7)
Acurrencythathasincreasedinforeignexchangevaluerelativetoafloatingratecurrencyhas________.
A)
revalued
B)
violatedinternationaltradeagreements
C)
appreciated
D)
deteriorated
Answer:
C
Topic:
CurrencyTerminology
Skill:
Conceptual
8)
Acurrencythathasdecreasedinforeignexchangevaluerelativetoafloatingratecurrencyhas________.
A)
revalued
B)
appreciated
C)
devalued
D)
depreciated
Answer:
D
Topic:
CurrencyTerminology
Skill:
Conceptual
9)
The________,asofDecember2007,isthecommoncurrencyfor13ofthecountriesthataremembersoftheEuropeanUnion.
A)
SDR(SpecialDrawingRights)
B)
ECU(EuropeanCurrencyUnit)
C)
Euro
D)
Yugo
Answer:
C
Topic:
CurrencyTerminology
Skill:
Recognition
10)
AUnitedStatesfirmhadchosentodepositmoneyinaBritishbankandhaveitdenominatedinU.S.dollars.Thisisanexampleofa(an)________deposit.
A)
imPounded
B)
Euroyen
C)
Europound
D)
Eurodollar
Answer:
D
Topic:
CurrencyTerminology
Skill:
Recognition
11)
Underthegoldstandardofcurrencyexchangethatexistedfrom1879to1914,anounceofgoldcost$20.67inU.S.dollarsand£4.2474inBritishpounds.Therefore,theexchangerateofpoundsperdollarunderthisfixedexchangeregimewas
A)
£4.8665/$.
B)
£0.2055/$.
C)
alwayschangingbecausethepriceofgoldwasalwayschanging.
D)
unknownbecausethereisnotenoughinformationtoanswerthisquestion.
Answer:
B
Topic:
GoldStandard
Skill:
Analytical
12)
WorldWarIcausedthesuspensionofthegoldstandardforfixedinternationalexchangeratesbecausethewar
A)
costtoomuchmoney.
B)
interruptedthefreemovementofgold.
C)
lastedtoolong.
D)
usedgoldasthemainingredientinarmamentplating.
Answer:
B
Topic:
GoldStandard
Skill:
Conceptual
13)
Aspeculativetechniquewherebythespeculatorsellsanassetthathe/shedoesn'town,suchasacurrency,toanotherpartyfordeliveryatafuturedateiscalled________.
A)
sellingahead
B)
sellingbehind
C)
sellingshort
D)
sellinglong
Answer:
C
Topic:
CurrencySpeculation
Skill:
Conceptual
14)
WhichofthefollowinginvestmentstrategieswillallowmetomakeaprofitifIanticipatethatthevalueoftheEuro,acurrencythatIdonotown,isgoingtofalloverthenext90daysandIamcorrectinmyprediction?
A)
SellEurosshort.
B)
BuyEurosshort.
C)
Selldollarsshort.
D)
BuyEuroslong.
Answer:
A
Topic:
CurrencySpeculation
Skill:
Conceptual
15)
ThepostWWIIinternationalmonetaryagreementthatwasdevelopedin1944isknownasthe________.
A)
UnitedNations
B)
LeagueofNations
C)
YaltaAgreement
D)
BrettonWoodsAgreement
Answer:
D
Topic:
BrettonWoodsAgreement
Skill:
Recognition
16)
AnothernamefortheInternationalBankforReconstructionandDevelopmentis
A)
theReconBank.
B)
theEuropeanMonetarySystem.
C)
theMarshallPlan.
D)
theWorldBank.
Answer:
D
Topic:
BrettonWoodsAgreement
Skill:
Recognition
17)
TheInternationalMonetaryFund(IMF)
A)
inrecentyearshasprovidedlargeloanstoRussia,SouthKorea,andBrazil.
B)
wascreatedasaresultoftheBrettonWoodsAgreement.
C)
aidscountrieswithbalanceofpaymentandexchangerateproblems.
D)
isalloftheabove.
Answer:
D
Topic:
BrettonWoodsAgreement
Skill:
Recognition
18)
UnderthetermsofBrettonWoodscountriestriedtomaintainthevalueoftheircurrenciestowithin1%ofahybridsecuritymadeupoftheU.S.dollar,Britishpound,andJapaneseyen.
Answer:
FALSE
Topic:
BrettonWoodsAgreement
Skill:
Recognition
19)
MembersoftheInternationalMonetaryFundmaysettletransactionsamongthemselvesbytransferringSpecialDrawingRights(SDRs).
Answer:
TRUE
Topic:
BrettonWoodsAgreement
Skill:
Recognition
20)
Today,theUnitedStateshasbeenejectedfromtheInternationalMonetaryFundforrefusaltopayannualdues.
Answer:
FALSE
Topic:
BrettonWoodsAgreement
Skill:
Analytical
21)
WhichofthefollowingledtotheeventualdemiseofthefixedcurrencyexchangerateregimeworkedoutatBrettonWoods?
A)
widelydivergentnationalmonetaryandfiscalpoliciesamongmembernations
B)
differentialratesofinflationacrossmembernations.
C)
severalunexpectedeconomicshockstomembernations
D)
alloftheabove
Answer:
D
Topic:
ExchangeRateRegimes
Skill:
Conceptual
22)
TheIMFsexchangerateregimeclassificationidentifies________asthemostrigidlyfixed,and________astheleastfixed.
A)
exchangearrangementswithnoseparatelegaltender;independentfloating
B)
crawlingpegs;managedfloat
C)
currencyboardarrangements;independentfloating
D)
peggedexchangerateswithinhorizontalbands;exchangerateswithincrawlingpegs
Answer:
A
Topic:
ExchangeRateRegimes
Skill:
Recognition
23)
Whichofthefollowingcorrectlyidentifiesexchangerateregimesfromlessfixedtomorefixed?
A)
independentfloating,currencyboardarrangement,crawlingpegs
B)
independentfloating,currencyboardarrangement,managedfloat
C)
independentfloating,crawlingpegs,exchangearrangementswithnoseparatelegaltender
D)
exchangearrangementswithnoseparatelegaltender,currencyboardarrangement,crawlingpegs
Answer:
C
Topic:
ExchangeRateRegimes
Skill:
Conceptual
24)
AsofJanuary2002,theIndependentFloatingregimeofexchangerateclassificationswasusedbyover75%ofthe186countriesidentifiedbytheIMF.
Answer:
FALSE
Topic:
ExchangeRateRegimes
Skill:
Recognition
25)
AsmalleconomycountrywhoseGDPisheavilydependentontradewiththeUnitedStatescouldusea(an)________exchangerateregimetominimizetherisktotheireconomythatcouldariseduetounfavorablechangesintheexchangerate.
A)
peggedexchangeratewiththeUnitedStates
B)
peggedexchangeratewiththeEuro
C)
independentfloating
D)
managedfloat
Answer:
A
Topic:
ExchangeRateRegimes
Skill:
Conceptual
26)
TheUnitedStatescurrentlyusesa________exchangerateregime.
A)
crawlingpeg
B)
pegged
C)
floating
D)
fixed
Answer:
C
Topic:
ExchangeRateRegimes
Skill:
Recognition
27)
Basedonthepremisethat,otherthingsequal,countrieswouldpreferafixedexchangerate:
Variableratesprovidestabilityininternationalpricesfortheconductoftrade.
Answer:
FALSE
Topic:
ExchangeRateRegimes
Skill:
Conceptual
28)
Basedonthepremisethat,otherthingsequal,countrieswouldpreferafixedexchangerate,whichofthefollowingstatementsisNOTtrue?
A)
Fixedratesprovidestabilityininternationalpricesfortheconductoftrade.
B)
Fixedexchangerateregimesnecessitatethatcentralbanksmaintainlargequantitiesofinternationalreservesforuseintheoccasionaldefenseofthefixedrate.
C)
Fixedratesareinherentlyinflationaryinthattheyrequirethecountrytofollowloosemonetaryandfiscalpolicies.
D)
Stablepricesaidinthegrowthofinternationaltradeandlessenexchangeraterisksforbusinesses.
Answer:
C
Topic:
ExchangeRateRegimes
Skill:
Recognition
29)
Whichofthefollowingisnotanattributeofthe"ideal"currency?
A)
monetaryindependence
B)
fullfinancialintegration
C)
exchangeratestability
D)
Allareattributesofanidealcurrency
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