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Unformatted text preview: GEB 3373 Fall 2010 Exam 3 Name __________________________________ 1 At th e c on c lu s ion of thi s e xam you ar e p e rmitt e d to tak e th e e xam hom e with you . Bubble in on the scantron sheet the single correct answer for each question (0.5 points each). 1. The rate at which outright forward transactions that involve the exchange of currency beyond three days at a fixed exchange rate, is known as the _____. a. spot rate b. forward rate c. FX swap rate d. reverse transaction rate e. future rate 2. The yen-dollar forward rate for yen is $.00909/¥1. The spot rate is $.010/¥1. Yen are thus selling at a _____. a. forward premium b. forward discount c. discounted premium d. backward discount e. spot discount 3. A negotiable certificate issued by a U.S. bank to represent the underlying shares of a foreign corporation's stock is called a(n) _____. a. Euroequity b. American Depositary Receipt c. Global Depositary Receipt d. European Depositary Receipt e. Trust Receipt 4. It is much easier to forecast a future exchange rate for a relatively _____ currency that is pegged to the U.S. dollar, such as the Hong Kong dollar, than for a currency that is _____, such as the Japanese yen. a. flexible; managed floating b. stable; freely floating c. stable; pegged to the dollar d. flexible; freely floating e. none of the above GEB 3373 Fall 2010 Exam 3 Name __________________________________ 2 5. The purchasing power parity theory claims that a change in relative _____ between two countries must cause a change in _____ in order to keep the prices of goods in two countries fairly similar. a. exchange rates; inflation b. inflation; exchange rates c. interest rates; inflation d. interest rates; exchange rates e. inflation; tax rates 6. The Fisher Effect _____. a. links inflation and interest rates b. links interest rates and exchange rates c. implies that the currency of the country with the lower interest rate will weaken in the future d. implies that the country with the higher interest rate should have lower inflation e. both b and c are correct 7. The International Fisher Effect implies that _____. a. the country with the higher interest rate should have lower inflation b. the currency of the country with the lower interest rate will strengthen in the future c. the currency of the country with the higher interest rate will strengthen in the future d. the country with the higher inflation rate will have a lower interest rate e. interest rates and inflation are not linked at all 8. When choosing geographic sites for international expansion, the two basic questions firms must answer are, _____? a. Which markets should we serve and where should production be located to serve those markets b. What are the short-term competitive advantages of the project and what is the return on investment c. What is the total investment required and what are the managerial resources needed to supervise the investment d. What is the availability of land and what is the cost of labor e. There are no two questions that apply in every situation GEB 3373...
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This note was uploaded on 02/12/2011 for the course GEB 3373 taught by Professor Crum during the Spring '10 term at University of Florida.
- Spring '10