1. John Baum purchased a call option on British pounds for $.02 per unit. The strike price was $45 and the spot rate at the time the option was exercised was $1.46. Assume there are 10.000 units in a British pound option. What was Randys net profit on this option? _____________.

2. Futures contracts are:

a. highly standardized

b. traded on an exchange

c. can be privately negotiated

d. a and b

e. a and c

3-Inflation affects international trade flows. (True /False)

4-. A syndicate loan issued in the international credit market is tied to LIBOR (London interbank offer rate).

(True /False)

5-. The Balance of Payments is a summary of transactions between domestic and foreign residents of a specific country over a specified period. (True /False)

6-The International Money market accommodates the needs of MNCs or governments that need long-term funds denominated in a currency different from their home currency.

(True /False)

7-A Currency Call Option:

a. provides the right to buy a specific currency at exercise price.

b. It is used to hedge future payables.

c. Can be purchased on an exchange.

d. A and B

e. A and C

f. All the Above

8-Direct Quotation represents the number of units of a foreign currency per unit of home currency. (True/False)