Under the gold standard before World War I, an ounce of gold cost GBP4.2214 in London and USD20.6686 in Boston.What was the exchange rate between these currencies under this standard?

Select one:

a.USD0.2345/GBP

b.GBP0.2042/USD

c.GBP4.8961/USD

d.USD4.3261/GBP

As willing__________ takers, __________ banks and treasuries differ in motive and behaviour from all other foreign exchange market participants

Select one:

a.profit; central

b.profit; commercial

c.loss; central

d.loss; commercial

The exchange rate quote of JPY112.50/USD is given in the __________ term and is a/an __________ quote in the US.

Select one:

a.American; direct

b.European; indirect

c.European; direct

d.American; indirect

In which of the following aspects is the financial management of multinational companies NOT very different from the financial management of domestic companies?

Select one:

a.Dealing with various cultures, different histories, and institutions.

b.Dealing with various corporate governance regulations.

c.Dealing with foreign exchange risk

d.Applying modified finance theories.

One innovation introduced in the Bretton Woods agreement was the Special Drawing Right (SDR), an international reserve asset, created by the __________.

Select one:

a.US Department of the Treasury

b.World Bank

c.International Bank for Reconstruction and Development

d.International Monetary Fund

An exchange rate quote of AUD0.910/NZD means that the price of one unit of __________ is __________ 0.910.

Select one:

a.NZD; NZD

b.AUD; AUD

c.NZD; AUD

d.AUD; NZD

Say Malaysia places a strict quota on goods imported from North Korea but North Korea does not retaliate.Holding other factors constant, this should immediately cause the supply of Malaysian Ringgit to be exchanged for North Korean Won to __________ and the value of the Malaysia Ringgit to ___________.

Select one:

a.decline; increase

b.increase; decline

c.decline; decline

d.increase; increase

The international credit market primarily concentrates on _______________.

Select one:

a.short-term lending

b.providing exchange of foreign currencies for credit firms

c.medium-term lending

d.long-term lending

Which of the following isNOT TRUEregarding American Depository Receipts (ADRs)?

Select one:

a.ADRs are denominated in the currency of the stock's home country

b.ADRs allow non-US firms to tap into the US market for funds.

c.ADRs sometimes allow for arbitrage opportunities

d.ADRs enable US investors to avoid cross-border transactions.

The equilibrium exchange rate between Malaysian Ringgit and British pounds is MYR5.40/GBP.At the exchange rate of MYR5.00/GBP, Malaysian demand for pounds would __________ the supply of pounds for sale, and there would be a __________ of pounds in the foreign exchange market.

Select one:

a.exceed; surplus

b.exceed; shortage

c.be less than; surplus

d.be less than; shortage

The exchange rate in Bank A is CAD3.6812/BHD and the exchange rate for Bank B is BHD0.4661/GBP. What is the cross rate of GBP/CAD? (Note that BHD is Bahraini Dinar)

Select one:

a.GBP1.7158/CAD

b.GBP0.5828/CAD

c.GBP0.1266/CAD

d.GBP7.8979/CAD

Given the quotes of USD1.1495/EUR and USD1.2835/GBP, what is the price of EUR in GBP?

Select one:

a.0.8956

b.1.4754

c.1.1166

d.0.6778

The current spot rate for a unit of New Zealand Dollar is MYR1.7520. The interest rate in Malaysia is 5% and New Zealand is 4% per annum. The inflation in Malaysia is estimated to be at 3%, whilst in New Zealand is 1%. What is the spot rate of MYR/NZD five years from now according to International Fisher Effect?

Select one:

a.MYR1.9325/NZD

b.MYR1.7688/NZD

c.MYR1.7867/NZD

d.MYR1.8379/NZD

If a country chooses to have a pure float exchange rate regime, which two of the monetary goals (or also known as "Impossible Trinity") are the country most able to achieve?

Select one:

a.Monetary independence and exchange rate stability

b.Full financial integration and monetary independence

c.Exchange rate stability and full financial integration

d.None of the goals can be attained with the pure float exchange rate regime

A corporate treasury working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London. The banks give the following quotes on the euro simultaneously.

Citibank NYCBarclays London

USD1.2624-25/EURUSD1.2622-23/EUR

Using USD1 million or its euro equivalent, determine whether the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes.

Select one:

a.USD237.62

b.USD158.45

c.USD230.15

d.USD79.22

If a currency's nominal value __________ than justified by the country's lower relative inflation rate, then the currency's real value had decreased.

Select one:

a.weakened more

b.weakened less

c.strengthened less

d.strengthened more

If the $ interest rate is __________ than the interest rate, _______________ implies that $ would be trading at a forward premium against .

Select one:

a.lower; international Fisher effect

b.lower; interest rate parity

c.higher; international Fisher effect

d.higher; interest rate parity

Bank Y quotes JPY135/EUR, whereas Bank Z quotes JPY133/EUR.So, an arbitrageur should buy __________ from Bank Y, and sell __________ to Bank Z.

Select one:

a.JPY; EUR

b.JPY; JPY

c.EUR; EUR

d.EUR; JPY

A speculator borrows for a year at 4% interest now, converts it at spot to $, and deposits for a year at 5%.Which would be the best outcome for the speculator from the uncovered interest arbitrage?

Select one:

a. appreciates against $ by less than 1% over the year.

b. depreciates against $ by less than 1% over the year.

c. depreciates against $ by more than 1% over the year.

d. appreciates against $ by more than 1% over the year.

Given that the current spot and 6-month forward quotes are, respectively, JPY144.00/GBP and JPY140.00/GBP, JPY is trading at a _______________.

Select one:

a.spot discount

b.spot premium

c.6-month forward discount

d.6-month forward premium

__________ purchasing power parity states that the spot exchange rate between two currencies is determined by the relative _______________ in the respective countries.

Select one:

a.Relative; expected inflation rates

b.Absolute; expected inflation rates

c.Absolute; prices of similar baskets of goods

d.Relative; prices of similar baskets of goods

The international money market is primarily served by _______________.

Select one:

a.all governments which directly intervene in foreign currency markets

b.several large banks that accept deposits and provide loans in various currencies

c.the International Monetary Fund that enhances the development of countries

d.small banks that convert foreign currencies for tourists and visitors on business

One main __________ of joining the euro for member states is that there is __________ price-based competition both inside and outside the eurozone.

Select one:

a.cost; reduced

b.benefit; reduced

c.benefit; increased

d.cost; increased

A large increase in the Singapore income level, with no change in the Thailand income level and assuming other factors remain unchanged, is expected to __________ Singapore demand for Thailand goods, and the Singapore Dollar should __________.

Select one:

a.decrease; depreciate

b.increase; appreciate

c.decrease; appreciate

d.increase; depreciate

If inflation increases substantially in India while in Pakistan it remains unchanged, this is expected to place _______ pressure on the value of the Indian Rupee with respect to the Pakistan Rupee.

Select one:

a.no

b.upward

c.either upward or downward, depending on the degree of increase in the Indian inflation

d.downward

A designer bag costs USD500 in California. The same designer bag is also available in Bangkok. The current spot rate is THB38.7500/USD. The inflation rate in US is expected to be at 4% and 2% in Bangkok respectively. If purchasing power parity hold, how much is the cost of the same designer bag in THB one year from now?

Select one:

a.THB19,375.00

b.THB19,002.40

c.THB19,762.50

d.THB 20,150.00