1. Licensing obligates a firm to provide its technology (copyrights, trademarks, patents, etc.) in exchange for fees or other benefits. Truc False 2. A balance of trade surplus indicates an excess of imports over exports. True False 3. Under the gold standard, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold. Truc Fake 4. Relatively high Japanese inflation may result in an increase in the supply of yen for sale and a reduction in the demand for yen. Truc False 3 6 7 8 9 T Y o H K B N . ? 5. When the current exchange rate is less than the strike price, a call option with that strike price will be in the money and a put option with that strike price will be out of the money True False 6. Market forces are the determinant of exchange rates in a freely floating exchange rate system. True False 7. Assume locational arbitrage is possible and involves two different banks. The realignment that would occur due to market forces would increase one bank's ask rate and would decrease the other bank's bid rate. True False 8. If interest rate parity (IRP) does not hold, there is still the possibility that covered interest arbitrage is not worthwhile because of such factors as transaction costs, currency restrictions, and differential tax laws. True False 9. If interest rate parity (IRP) exists, then foreign 7. 8 0 R T P F G H. J K L ? B N M False 9. If interest rate parity (IRP) exists, then foreign investors will earn the same returns as US investors. True False 10. If Interest Rate Parity holds, and the International Fisher Effect holds, foreign currencies with relatively high interest rates should have forward discounts and those currencies would be expected to depreciate. True False