Subject: International Finance Management

Translation exposure reflects: 1 point the exposure of a firm's cash flows to exchange rate fluctuations the exposure of a firm's local currency value to transactions between foreign exchange traders the exposure of a firm's financial statements to exchange rate fluctuations the exposure of a firm's ongoing international transactions to exchange rate fluctuations 1 point If interest rate parity (IRP) exists, then the rate of return achieved from covered interest arbitrage should always be equal to the rate available in the foreign country. True False 1 point The absolute form of PPP accounts for market imperfections like transportation costs, tariffs, and quotas. True False 1 point Most _forecasts apply to very short-term periods such as one day because patterns in exchange rate movements are more systematic over such periods. Fundamental Technical Market-based 1 point Which of the following statements regarding fundamental forecasting is true? The precise timing of the impact of some factors associated with the fundamental value of a currency is not known Some factors that deserve consideration in the fundamental forecasting process cannot be easily quantified all of the above none of the above