IB 303 Test 2

IB 303 Test 2 - IB 303 1. When two parties agree to...

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IB 303 1. When two parties agree to exchange currency and execute immediately A spot exchange - 299 2. ________ typically involves the short term movement of funds from one currency to another in hopes of profiting from shifts in exchange rates Currency speculation - 298 3. The most important trading centers for foreign exchange markets are in London, NY, Tokyo - 302 4. Although a foreign exchange transaction can involve any two currencies in 2002, some 90 % of transactions included United States Dollar - 303 5. A ______ has no impediments to the free flow of goods and services. Efficient - 304 6. The law of one price and ppp theory help explain how _______ are related to the exchange rate movements Prices - 304 7. A government restricts the convertibility of its currency to protect the countries _______ and to halt any capital flight Foreign exchange reserves - 315 (surrounding few pages) 8. _____ is most likely to occur when the value of the domestic currency is depreciating rapidly b/c of hyperinflation Capital Flight - 317 9. The rapid rise in the value of the dollar on the foreign exchange market in the _________ hurt the price competitiveness of many US produces in world competitive markets 1990’s - 318,319 10. Some countries try to hold the value of the currency within some range against an important reference currency. This is referred to as: Dirty float system - 327, 328
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This note was uploaded on 04/09/2008 for the course I B 303 taught by Professor Welmon,vernismic during the Fall '07 term at Penn State.

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IB 303 Test 2 - IB 303 1. When two parties agree to...

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