practicetest_iei7

practicetest_iei7 - Name: _ Class: _ Date: _ Practice Test...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Practice Test Chapter 11 IEI Fall 2007 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Assume you are an American exporter and expect to receive 50 pounds sterling at the end of 60 days. You can remove the risk of loss due to a devaluation of the pound sterling by: a. Selling sterling in the forward market for 60-day delivery b. Buying sterling now and selling it at the end of 60 days c. Selling the dollar equivalent in the forward market for 60-day delivery d. Keeping the sterling in Britain after it is delivered to you ____ 2. Which of the following tends to cause the U.S. dollar to appreciate in value? a. An increase in U.S. prices above foreign prices b. An increase in U.S. interest rates above foreign levels c. A fall in U.S. interest rates below foreign levels d. An increase in the level of U.S. income ____ 3. Concerning the covering of exchange market risks and with the assumption that a depreciation of the domestic currency is anticipated, one can say that there is an incentive for: a. Exporters to rush to cover their future needs b. Importers to rush to cover their future needs c. Both exporters and importers to rush to cover their future needs d. Neither exporters nor importers to rush to cover their future needs ____ 4. When short-term interest rates become lower in Tokyo than in New York, interest arbitrage operations will most likely result in a(n): a. Increase in the spot price of the yen b. Increase in the forward price of the dollar c. Sale of dollars in the forward market d. Purchase of yen in the spot market ____ 5. An appreciation in the value of the U.S. dollar against the British pound would tend to: a. Discourage the British from buying American goods b. Discourage Americans from buying British goods c. Increase the number of dollars that could be bought with a pound d. Discourage U.S. tourists from traveling to Britain ____ 6. Suppose researchers discover that Swiss beer causes cancer when given in large amounts to British mice. This finding would likely result in a(n): a. Increase in the demand for Swiss francs b. Decrease in the demand for Swiss francs c. Increase in the supply of Swiss francs d. Decrease in the supply of Swiss francs ____ 7. If Canadian speculators believed the Swiss franc was going to appreciate against the U.S. dollar, they would: a. Purchase Canadian dollars b. Purchase U.S. dollars c. Purchase Swiss francs d. Sell Swiss francs ____ 8. A major difference between the spot market and the forward market is that the spot market deals with:
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practicetest_iei7 - Name: _ Class: _ Date: _ Practice Test...

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