19. Suppose it is 1995 and the following direct quotes are received for spot and one month French francs in New York: .116168 47. Then the outright 30 day forward quote for the French franc was:

a) .115662

b) .116474

c) .116672

d) .115464

e) No Answer

20. Based on PPP and IFE, a stronger dollar places _______ pressure on U.S. inflation, which in turn places _______ pressure on U.S. interest rates, which places _______ pressure on U.S. bond prices.

a. upward; downward; upward

b. upward; downward; downward

c. upward; upward; downward

d. downward; upward; upward

e. downward; downward; upward

21. Other things being equal, the financial leverage of MNCs will be higher if the governments of their home countries are _______ likely to rescue them (in the event of failure), and if their home countries are _______ likely to experience a recession.

A) more; more

B) less; more

C) less; less

D) more; less

E) No answer

22. It has been argued that the exchange rate can be used as a policy tool. Assume that the U.S. government would like to reduce unemployment. Which of the following is an appropriate action given this scenario?

a. weaken the dollar.

b. strengthen the dollar.

c. buy dollars with foreign currency in the foreign exchange market.

d. implement a tight monetary policy.

e. No answer