Sample_exam - International Financial Management(FI 451...

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International Financial Management (FI 451, SS’11) – Sample Exam True/False (15 questions, 2pts each) Marking Instruction: True -> a , False -> b 1. Capital markets are markets for long-term financial assets and liabilities, typically considered to be greater than one year in maturity. 2. Liquidity refers to the ease with which you can exchange one asset for another of equal value. 3. Eurobonds are denominated in one or more currencies but are traded in external markets outside the borders of the countries issuing those currencies. 4. If the current spot rate is S 0 $/DM = $0.5839/DM and the one-year forward rate is F 1 $/DM = $0.5754/DM, then the deutsche mark is selling at a forward premium. 5. Daily volume in the inter-bank foreign exchange market is nearly one billion dollars. 6. You expect to receive a cash flow denominated in a foreign currency in six months. You can hedge this exposure by buying the foreign currency in the forward market. 7. Empirical evidence indicates that relative purchasing power parity can be used to successfully predict short-term changes in spot exchange rates. Multiple choice
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This note was uploaded on 10/10/2011 for the course FI 451 taught by Professor Staff during the Spring '08 term at Michigan State University.

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Sample_exam - International Financial Management(FI 451...

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