28)

The followings are justifications by a central bank or government to intervene in the valuation of domestic exchange rate EXCEPT:

a.

to stimulate sluggish economic growth

b.

all answers available in the selection are justifications by a central bank or government for intervention.

c.

to cool an overheating economy

d.

to keep inflation under control 29)

The main differences for the forecasting of foreign exchange in the context of time horizon are, longer-term forecasting is generally driven by ________, while short-term is generally driven by objectives such as ________.

a.

need to hedge a receivable; long-term capital appreciation

b.

the need for long-term investment; the need to hedge a payable

c.

the need to hedge a payable; the need for long-term investment

d.

long-term capital appreciation; long-term investment 30)

For a translation of exchange rates with the U.S. as the home country, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the local currency is the functional currency, then:

a.

temporal method could be used for the translation.

b.

any translation method does not make a different

c.

current rate method could be used for the translation.

d.

translation is not required. 31)

Given that the forecasted euro to U.S. dollar rate in a year is euro1.10/USD and the forecasted U.S. dollar to British pound rate in a year is USD1.40/GBP. This implies that the euro per British pound in a year is:

a.

euro1.40/GBP

b.

GBP1.54/euro

c.

GBP1.40/euro

d.

euro1.54/GBP 32)

A bill or draft of exchange is addressed to:

a.

maker

b.

invoker

c.

drawer

d.

drawee