Chapter 07 - Foreign Currency Transactions and Hedging Foreign Exchange Risk
Foreign Currency Transactions and Hedging Foreign Exchange Risk
Multiple Choice Questions
According to the World Trade Organization, what was the size of international trade in
A) $7,000,000,000 (7 billion dollars)
B) $70,000,000,000 (70 billion dollars)
C) $37,000,000,000 (37 billion dollars)
D) $16,000,000,000,000 (16 trillion dollars)
In the years between 1990 and 2001 when global gross domestic product rose 27%, what
was the growth in global exports?
What is a “foreign exchange rate?”
A) the price to buy a foreign currency
B) the price to buy foreign goods
C) the difference between the price of goods in a foreign currency and the price in a
D) the cost to hold all monetary assets in a single currency
Why was there very little fluctuation in the foreign exchange rate in the period 1945-
A) This was a period when the world economy was very stable.
B) There was very little growth in the world economy between 1945 and 1973.
C) Countries linked their currency to the U.S. dollar, which was backed by gold
D) Most currencies were pegged to the British pound, which could be converted to