Fin 6605 MC Set A Model

The country is growing economically d e the country

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Unformatted text preview: The country is growing economically. d. e. The country is a popular tourist destination 62. A large government deficit relative to GDP, a high rate of money expansion accompanied by fixed exchange rates, along with substantial government expenditures are some of the common characteristics of ____. common a. b. c. c. d. e. Exchange rate risk Exchange Interest rate risk Country risk Country Investment risk None of the above 63. Which of the following was set up to promote exchange rate stability and facilitate the international flow of currencies? international a. b. c. d. The International Monetary Fund The World Bank The Federal Reserve Bank The Bank for International Settlements 64. The _____ lends money to countries to help ease balance of payments difficulties. a. b. c. d. d. e. United nations World Bank Federal Reserve Bank International Monetary Fund International Bank for International Settlements 65. A strengthening of Japanese yen would result in which of the following outcomes? result a. b. c. c. d. e. Higher unemployment in Japanese import industry Greater competition in Japanese domestic market Greater Higher unemployment in Japanese export industry Higher employment in Japanese export industry Both b and c. 66. An increase in U.S. real interest rate relative to Japanese rate would result in a: to a. a. b. c. c. d. d. Strengthening of the dollar and a weakening of the yen Strengthening Strengthening of the yen and weakening of the dollar Higher US inflation in comparison with Japanese inflation Higher Higher demand for Japanese securities in the US and lower demand for US securities in Japan lower 67. A drop in U.S. real interest rate relative to 67 drop European rate would result in a: European a. Strengthening of the dollar and weakening of the euro b. Weakening of the dollar and a strengthening of the euro b. Weakening c. No change in the dollar or the euro d. A weakening of both the dollar and the euro 68. Because real interest rates are equalized among countries by arbitrage, which of the following is true? true a. The country with higher nominal interest rate a. should have higher inflation should b. The country with the higher nominal interest rate b. should have lower inflation c. The country with the higher nominal interest rate should have lower taxes should d. The country with the higher nominal interest rate d. should have higher currency values should 69. The theory that “nominal interest rate differential is an unbiased predictor of future changes in the spot exchange rate” is called the: the: a. a. b. b. c. d. d. e. e. Interest Rate Parity Purchasing Power Parity International Fisher Equation International Forward Rate Parity Generalized Fisher Equation 70. Which of the following types of forecasting methods uses past trends in exchange rate movement to predict future trends? movement a. b. b. c. d. d. Fundamental Exponential Technical Technical Random walk 71. The purchase of U.S. Commercial Paper by a German investor shows up on U.S. BOP as a:...
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This note was uploaded on 12/17/2012 for the course FIN 3604 taught by Professor Zhang during the Spring '12 term at University of San Francisco.

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