4604 Exam 1Version #1 Student: ___________________________________________________________________________ 1. Which risk do experts generally agree is the most important for firms and why? A.Transaction risks because transactions are where firms make their profits or suffer their losses. B.Interest rate risks because interest rates affect firms in a number of different ways. C.Economic risks because the economy is a primary determinant in the success of a firm. D.Currency risks because all firms deal in currencies. 2. Fundamental forecasting requires: 3. In David Ricardo's theory of trade, _______________ is assumed to be the primary input for production. 4. Calculate the cross rate for USDHKD with the following information: USDCAD 1.0445 and HKDCAD0.1313 5. When a currency strengthens against other currencies, a central bank: A. may sell gold to counter that appreciation in the currency's value. B.will sell its currency in hopes of making a profit. C. will buy its currency in hopes of avoiding losses. 1
D.may buy gold to counter that appreciation in the currency's value. 6. Using the Markowitz Portfolio Approach, diversification: 7. The vehicle or intermediate currency in which most international exchange transactions are conducted is the: 8. The movement of goods across national borders is the definition of ________________________.
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