A buy 2500 forward at the 1 year forward rate f 1

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A) Buy £2,500 forward at the 1-year forward rate, F 1 ($/£), that prevails at time zero. B) Sell £25,000 forward at the 1-year forward rate, F 1 ($/£), that prevails at time zero. C) Sell £2,278.13 forward at the 1-year forward rate, F 1 ($/£), that prevails at time zero. D) none of the options D Q38) A firm's operating exposure is A) determined by the firm's ability to mitigate the effect of exchange rate changes by adjusting its markets, product mix, and sourcing. B) defined as the extent to which the firm's operating cash flows would be affected by the random changes in exchange rates. C) determined by the structure of the markets in which the firm sources its inputs, such as labor and materials, and sells its products. D) all of the options C Q39) Generally speaking, when both a firm's costs and its price are sensitive to exchange rate changes, A) the firm is subject to high degrees of operating exposure. B) the firm should hedge. C) the firm is not subject to high degrees of operating exposure. D) none of the options D Q40) International banks are different from domestic banks in what way(s)? A) International banks can assist their clients in hedging exchange rate risk. B) International banks can arrange for foreign exchange transactions. C) International banks can arrange trade financing. D) all of the options A Q41) A domestic bank that follows a multinational client abroad to preserve that banking relationship A) is pursuing a wholesale defensive strategy. B) is pursuing a retail defensive strategy. C) is playing the role of the desperate housewife in this relationship. D) none of the options A Q42) A bank may establish a multinational operation for the reason of low marginal costs. The underlying rationale being that
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A) managerial and marketing knowledge developed at home can be used abroad with low marginal costs. B) banks follow their multinational customers abroad to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidiaries. C) multinational banking operations help a bank prevent the erosion of its traveler's check, tourist, and foreign business markets from foreign bank competition. D) the foreign bank subsidiary can draw on the parent bank's knowledge of personal contacts and credit investigations for use in that foreign market. C Q43) A correspondent bank relationship is established when A) a group of banks form a syndicate to spread out the risk and cost of a large bond offering. B) two banks write to each other about the credit conditions of their countries. C) two banks maintain deposits with one another. D) all of the options D Q44) Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in euros, at a cost of €160,000. The U.S. importer will contact his U.S. bank (where, of course, he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as €0.6250/$1.00. The importer accepts this price, so his bank will proceed to ________ the importer's account in the amount of ________.
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