International investment

This is an objective question(Part 1)1-10.

with True or False question (Part 11) 1-5

Part 1. Choose the correct answer for the following questions. (10 questions, 3 points for each question, a total of 30 points) Score Answer Sheet 1. 2 3. 6 7. 8 9 10 1. The ( ) states that the forward exchange rate quoted at time 0 for delivery at time t is equal to what the spot rate is expected to be at time t A. Interest Rate Parity Relation B. Uncovered Interest Parity Relation C. Foreign Exchange Expectation Relation D. International Fisher Relation 2. Suppose the following chart illustrates the domestic prices of three items (shoes, watches, and electric motors) of similar quality in the United States and Mexico thems U.S. (dollars) Mexico (pesos) Shoes 10 35 Watches 20 105 Electric motors 100 If one dollar exchanges for four Mexican pesos and transportation costs are zero, Mexico will import f ) A shoes and watches, and the United States will import electric motors B. watches, and the United States will import shoes a es ind electric motors. C. all three goods from the United States. D. electric motors, and the United States will import shoes and watches. 3. Consider two countries, A and B, whose currencies area and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively? ( ) A. a is expected to appreciate relative to b, and a trades with a forward discount. B. a is expected to appreciate relative to b, and a trades with a forward premium. C.a is expected to depreciate relative to b, and a trades with a forward premium D. a is expected to depreciate relative to b, and a trades with a forward discount. 4. The ( y exchange rate is the price set now for an exchange that will take place sometime in the future. A. Current B. Forward C. Future spot D. Spot 4 5. 5. From the viewpoint of a Japanese investor, which of the following would be a direct quote? ( ) A.: SFr 1.25 B. :$=1.15 CE:=110 D. : =0.0091 6. When the supply of and demand for a foreign exchange in the foreign exchange market are exactly the same, the exchange rate is the ( ) A. real exchange rate B. effective exchange rate C. equilibrium exchange rate D. cross exchange rate 7. If U.S. demand for Japanese goods increases and Japan's demand for U.S. products also rises at the same time, which of the following can you conclude in this situation? A. The U.S. dollar will appreciate against the yen B. The U.S. dollar will depreciate against the yen. C. The U.S. dollar will not change relative to the yen D. The U.S. dollar may appreciate, depreciate, or remain unchanged against the yen 8. Which of the following features are NOT shared by independent floating exchange rate system? () A. The exchange rates are determined by the market forces B. The exchange rates may change minute by minute C. The central bank has to maintain large quantities of foreign exchange reserves. D. The central bank can pursue desired monetary policy 9. A country that regulates the rate at which its currency is exchanged for all other currencies is considered to have a () exchange rate system A. fixed or managed B. floating or flexible C. currency board D. dollarization 10. The trade deficit means that () A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming Part II. True or False (5 questions, 3 points for each question, a total of 15 points) Score Answer Sheet 1. 2. 3. 4. 5. 1. Over a period of time in the past, the exchange rate between the Swiss franc and the U.S. dollar, $:SFr. changed from about 1.20 to about 1.60. So Swiss goods became cheaper for Americans. 2. Based on historical Japanese yen and Canadian dollar quotes by a bank, the implicit yen per Canadian dollar cross rate quotation was CS:= 82.5150-82.5750. Is the bid price for V:CS=0.01212? 3. Appreciation of RMB reduces inflows since the foreign demand for our goods is reduced and foreign competition is increased. 4. You notice the following hypothetical exchange rates in the newspaper. :$ spot = 1.46; :$ three-month forward = 1.42 In the language of currency traders, the would be considered strong relative to the dollar? 5. PPP suggests a relationship between the inflation differential of two countries and the percentage change in the spot exchange rate over time. Part 1. Choose the correct answer for the following questions. (10 questions, 3 points for each question, a total of 30 points) Score Answer Sheet 1. 3. 6 7. X 9. 10. 1. The ( ) states that the forward exchange rate quoted at time 0 for delivery at time t is equal to what the spot rate is expected to be at time t A. Interest Rate Parity Relation B. Uncovered Interest Parity Relation C. Foreign Exchange Expectation Relation D. International Fisher Relation 2. Suppose the following chart illustrates the domestic prices of three items (shoes, watches, and electric motors) of similar quality in the United States and Mexico hems U.S. (dollars) Mexico (pesos) Shoes 10 35 Watches 20 105 Electric motors 100 300 If one dollar exchanges for four Mexican pesos and transportation costs are zero, Mexico will import() A. shoes and watches, and the United States will import electric motors B. watches, and the United States will import shoes and electric motors C. all three goods from the United States. D. electric motors, and the United States will import shoes and watches. 3. Consider two countries, A and B, whose currencies are a and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively? ( ) A, a is expected to appreciate relative to b, and a trades with a forward discount B. a is expected to appreciate relative to b, and a trades with a forward premium C.a is expected to depreciate relative to h, and a trades with a forward premium Da is expected to depreciate relative to b, and a trades with a forward discount 4. The ( ) exchange rate is the price set now for an exchange that will take place sometime in the future. A. Current B. Forward C. Future spot D. Spot 2 5. 5. From the viewpoint of a Japanese investor, which of the following would be a direct quote? ( ) A.: SFr 1.25 B. :$=1.15 C.:=110 D. : = 0.0091 6. When the supply of and demand for a foreign exchange in the foreign exchange market are exactly the same, the exchange rate is the ( ) A. real exchange rate B. effective exchange rate C. equilibrium exchange rate D. cross exchange rate 7. If U.S. demand for Japanese goods increases and Japan's demand for U.S. products also rises at the same time, which of the following can you conclude in this situation? A. The U.S. dollar will appreciate against the yen B. The U.S. dollar will depreciate against the yen. C. The U.S. dollar will not change relative to the yen D. The U.S. dollar may appreciate, depreciate, or remain unchanged against the yen 8. Which of the following features are NOT shared by independent floating exchange rate system? () A. The exchange rates are determined by the market forces B. The exchange rates may change minute by minute C. The central bank has to maintain large quantities of foreign exchange reserves. D. The central bank can pursue desired monetary policy 9. A country that regulates the rate at which its currency is exchanged for all other currencies is considered to have a () exchange rate system A. fixed or managed B. floating or flexible C. currency board D. dollarization 10. The trade deficit means that ( ) A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming Part II. True or False (5 questions, 3 points for each question, a total of 15 points) Score Answer Sheet 1. 2. 3. 4. 5. 1. Over a period of time in the past, the exchange rate between the Swiss franc and the U.S. dollar, $:SFr, changed from about 1.20 to about 1.60. So Swiss goods became cheaper for Americans. 2. Based on historical Japanese yen and Canadian dollar quotes by a bank, the implicit yen per Canadian dollar cross rate quotation was CS:= 82.5150-82.5750. Is the bid price for :CS=0.01212? 3. Appreciation of RMB reduces inflows since the foreign demand for our goods is reduced and foreign competition is increased. 4. You notice the following hypothetical exchange rates in the newspaper. :$ spot = 1.46; :$ three-month forward = 1.42 In the language of currency traders, the would be considered strong relative to the dollar? 5. PPP suggests a relationship between the inflation differential of two countries and the percentage change in the spot exchange rate over time. Part 1. Choose the correct answer for the following questions. (10 questions, 3 points for each question, a total of 30 points) Score Answer Sheet 1. 2 3. 6 7. 8 9 10 1. The ( ) states that the forward exchange rate quoted at time 0 for delivery at time t is equal to what the spot rate is expected to be at time t A. Interest Rate Parity Relation B. Uncovered Interest Parity Relation C. Foreign Exchange Expectation Relation D. International Fisher Relation 2. Suppose the following chart illustrates the domestic prices of three items (shoes, watches, and electric motors) of similar quality in the United States and Mexico thems U.S. (dollars) Mexico (pesos) Shoes 10 35 Watches 20 105 Electric motors 100 If one dollar exchanges for four Mexican pesos and transportation costs are zero, Mexico will import f ) A shoes and watches, and the United States will import electric motors B. watches, and the United States will import shoes a es ind electric motors. C. all three goods from the United States. D. electric motors, and the United States will import shoes and watches. 3. Consider two countries, A and B, whose currencies area and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively? ( ) A. a is expected to appreciate relative to b, and a trades with a forward discount. B. a is expected to appreciate relative to b, and a trades with a forward premium. C.a is expected to depreciate relative to b, and a trades with a forward premium D. a is expected to depreciate relative to b, and a trades with a forward discount. 4. The ( y exchange rate is the price set now for an exchange that will take place sometime in the future. A. Current B. Forward C. Future spot D. Spot 4 5. 5. From the viewpoint of a Japanese investor, which of the following would be a direct quote? ( ) A.: SFr 1.25 B. :$=1.15 CE:=110 D. : =0.0091 6. When the supply of and demand for a foreign exchange in the foreign exchange market are exactly the same, the exchange rate is the ( ) A. real exchange rate B. effective exchange rate C. equilibrium exchange rate D. cross exchange rate 7. If U.S. demand for Japanese goods increases and Japan's demand for U.S. products also rises at the same time, which of the following can you conclude in this situation? A. The U.S. dollar will appreciate against the yen B. The U.S. dollar will depreciate against the yen. C. The U.S. dollar will not change relative to the yen D. The U.S. dollar may appreciate, depreciate, or remain unchanged against the yen 8. Which of the following features are NOT shared by independent floating exchange rate system? () A. The exchange rates are determined by the market forces B. The exchange rates may change minute by minute C. The central bank has to maintain large quantities of foreign exchange reserves. D. The central bank can pursue desired monetary policy 9. A country that regulates the rate at which its currency is exchanged for all other currencies is considered to have a () exchange rate system A. fixed or managed B. floating or flexible C. currency board D. dollarization 10. The trade deficit means that () A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming Part II. True or False (5 questions, 3 points for each question, a total of 15 points) Score Answer Sheet 1. 2. 3. 4. 5. 1. Over a period of time in the past, the exchange rate between the Swiss franc and the U.S. dollar, $:SFr. changed from about 1.20 to about 1.60. So Swiss goods became cheaper for Americans. 2. Based on historical Japanese yen and Canadian dollar quotes by a bank, the implicit yen per Canadian dollar cross rate quotation was CS:= 82.5150-82.5750. Is the bid price for V:CS=0.01212? 3. Appreciation of RMB reduces inflows since the foreign demand for our goods is reduced and foreign competition is increased. 4. You notice the following hypothetical exchange rates in the newspaper. :$ spot = 1.46; :$ three-month forward = 1.42 In the language of currency traders, the would be considered strong relative to the dollar? 5. PPP suggests a relationship between the inflation differential of two countries and the percentage change in the spot exchange rate over time. Part 1. Choose the correct answer for the following questions. (10 questions, 3 points for each question, a total of 30 points) Score Answer Sheet 1. 3. 6 7. X 9. 10. 1. The ( ) states that the forward exchange rate quoted at time 0 for delivery at time t is equal to what the spot rate is expected to be at time t A. Interest Rate Parity Relation B. Uncovered Interest Parity Relation C. Foreign Exchange Expectation Relation D. International Fisher Relation 2. Suppose the following chart illustrates the domestic prices of three items (shoes, watches, and electric motors) of similar quality in the United States and Mexico hems U.S. (dollars) Mexico (pesos) Shoes 10 35 Watches 20 105 Electric motors 100 300 If one dollar exchanges for four Mexican pesos and transportation costs are zero, Mexico will import() A. shoes and watches, and the United States will import electric motors B. watches, and the United States will import shoes and electric motors C. all three goods from the United States. D. electric motors, and the United States will import shoes and watches. 3. Consider two countries, A and B, whose currencies are a and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively? ( ) A, a is expected to appreciate relative to b, and a trades with a forward discount B. a is expected to appreciate relative to b, and a trades with a forward premium C.a is expected to depreciate relative to h, and a trades with a forward premium Da is expected to depreciate relative to b, and a trades with a forward discount 4. The ( ) exchange rate is the price set now for an exchange that will take place sometime in the future. A. Current B. Forward C. Future spot D. Spot 2 5. 5. From the viewpoint of a Japanese investor, which of the following would be a direct quote? ( ) A.: SFr 1.25 B. :$=1.15 C.:=110 D. : = 0.0091 6. When the supply of and demand for a foreign exchange in the foreign exchange market are exactly the same, the exchange rate is the ( ) A. real exchange rate B. effective exchange rate C. equilibrium exchange rate D. cross exchange rate 7. If U.S. demand for Japanese goods increases and Japan's demand for U.S. products also rises at the same time, which of the following can you conclude in this situation? A. The U.S. dollar will appreciate against the yen B. The U.S. dollar will depreciate against the yen. C. The U.S. dollar will not change relative to the yen D. The U.S. dollar may appreciate, depreciate, or remain unchanged against the yen 8. Which of the following features are NOT shared by independent floating exchange rate system? () A. The exchange rates are determined by the market forces B. The exchange rates may change minute by minute C. The central bank has to maintain large quantities of foreign exchange reserves. D. The central bank can pursue desired monetary policy 9. A country that regulates the rate at which its currency is exchanged for all other currencies is considered to have a () exchange rate system A. fixed or managed B. floating or flexible C. currency board D. dollarization 10. The trade deficit means that ( ) A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming Part II. True or False (5 questions, 3 points for each question, a total of 15 points) Score Answer Sheet 1. 2. 3. 4. 5. 1. Over a period of time in the past, the exchange rate between the Swiss franc and the U.S. dollar, $:SFr, changed from about 1.20 to about 1.60. So Swiss goods became cheaper for Americans. 2. Based on historical Japanese yen and Canadian dollar quotes by a bank, the implicit yen per Canadian dollar cross rate quotation was CS:= 82.5150-82.5750. Is the bid price for :CS=0.01212? 3. Appreciation of RMB reduces inflows since the foreign demand for our goods is reduced and foreign competition is increased. 4. You notice the following hypothetical exchange rates in the newspaper. :$ spot = 1.46; :$ three-month forward = 1.42 In the language of currency traders, the would be considered strong relative to the dollar? 5. PPP suggests a relationship between the inflation differential of two countries and the percentage change in the spot exchange rate over time