$15.$ What are the types of transactions that dominate BOP?

A$.$ Exchange of goods and services

B$.$ Exchange of stocks, bonds and loans.

C$.$ Exchange of real assets and financial assets

D$.$ Exchange of physical assets.

E$.$ Exchange of currency

$16.$ What is a limitation of the Balance of Payments approach to determining exchange rates?

A$.$ Relative stocks of money or financial assets play a significant role in exchange rate determination in this theory

B$.$ The theory emphasizes on flows of currency and capital rather than on stocks of money or financial assets.

C$.$ The theory emphasize on stocks of money and financial assets rather than on flows of currency and capital.

D$.$ A and B

E$.$ None of the above

$18.$ In the foreign exchange market, $\_\_\_\_\_\_\_\_$ seek all of their profit from exchange rate changes while $\_\_\_\_\_\_\_\_$ seek to profit from simultaneous exchange rate differences in different markets.

A$.$ wholesalers; retailers

B$.$ central banks; treasuries

C$.$ speculators; arbitrageurs

D$.$ dealers; brokers

E$.$ Investors, arbitrageurs

$19.$ The U$.$S$.$ dollar suddenly changes in value against the euro moving from an exchange rate of $$0\mathrm{.}9300/$ to $$0\mathrm{.}8900/.$ Thus, the dollar has $\_\_\_\_\_\_\_\_$ by $\_\_\_\_\_\_\_\_.$

A$.$ appreciated; $4\mathrm{.}50\%$

B$.$ depreciated; $4\mathrm{.}50\%$

C$.$ been revalued; $4\mathrm{.}50\%$

D$.$ appreciated; $4\mathrm{.}30\%$

E$.$ depreciated; $4\mathrm{.}30\%$

$23.$ A firm with fixed$-$rate debt that expects interest rates to fall may engage in a swap agreement to:

A$.$ pay fixed$-$rate interest and receive floating rate interest.

B$.$ pay floating rate and receive fixed rate.

C$.$ pay fixed rate and receive LIBOR rate.

D$.$ pay LIBOR and receive floating rate.

E$.$ Pay LIBOR and receive market rate.

$24.$ Transaction exposure and operating exposure exist because of unexpected changes in future cash flows. The difference between the two is that $\_\_\_\_\_\_\_\_$ exposure deals with cash flows already contracted for, while $\_\_\_\_\_\_\_\_$ exposure deals with future cash flows that might change because of changes in exchange rates.

A$.$ transaction; operating

B$.$ operating; transaction

C$.$ operating; accounting

D$.$ Accounting, translation

E$.$ none of the above

$25.$ If an imbalance results from the accounting method used for translation, the imbalance is taken either to $\_\_\_\_\_\_\_\_$ or $\_\_\_\_\_\_\_\_.$

A$.$ Current liabilities, equity reserves

B$.$ Current assets; equity reserves

C$.$ Cash flow statement, i