1.) The price of one unit of foreign currency expressed in terms of the domestic currency is A) the GDP of the domestic country as a percentage of the GDP of the foreign country. B) always equal to the relative price ratio. C) the price level of one country relative to the weighted price level of other countries. D) the real exchange rate. E) the nominal exchange rate. 2.) A forward contract is: A) a right to purchase a foreign currency at a specific point in the future. B) an obligation to purchase/sell foreign currency at a specific point in the future. C) a contract for the immediate exchange of currencies. D) an agreement to sell currencies at a tixed price indefinitely. 3.) A foreign exchange option is: A) the right to engage in buying or selling on the spot market. B) the right to purchase/sell foreign currency at a specified price on a specified future date. C) when the price of foreign currency is less than the spot rate. D) used by manufacturing firms to speculate in the market. 4.) In international finance, hedging indicates: A) taking on additional risk in order to make a profit. B) delaying a purchase of foreign exchange, hoping the price will rise. C) simultaneously buying several currencies to ensure that at least one will rise in value. D) avoiding risk of loss by using the forward market