Final
Help!
|
|
||||
|---|---|---|---|---|---|
| What are the two functions of the foreign exchange market? | 1. used to convert the currency of one country into the currency of another. 2. provides some insurance against foreign exchange risk
🗑
|
||||
| How can you insure against foreign exchange risk? | by using spot exchange rates, forward exchange rates and currency swaps
🗑
|
||||
| What is currency speculation? | the short term movement of funds from one country to another in the hopes of profiting from shifts in exchange rates
🗑
|
||||
| What three factors have an important impact on future exchange rate movements in a country's currency? | 1. a country's price inflation (cost of goods) 2. a country's interest rate (cost of money) 3. market psychology
🗑
|
||||
| What index exemplifies purchasing power parity and what does that index explain? | The Big Mac Index and the law of one price
🗑
|
||||
| What are three types of currency convertibility? | freely convertable, externally convertable adn nonconvertable
🗑
|
||||
| What are the three types of foreign exchange risk? | 1. transaction exposure: extent to which individual transactions are affected by fluctuations in exchange value. 2. translation exposure 3. economic exposure: extent to which changes in exchange rates affect a firm's future international earning power.
🗑
|
||||
| What is a floating exchange rate? | when a country allows the foreign exchange market to determine the relative value of a currency
🗑
|
||||
| What is a pegged exchange rate? | when a country fixes the value of its currency relative to a reference currency
🗑
|
||||
| What is a dirty float? | when a country tries to hold the value of its currency within some range of a reference currency
🗑
|
||||
| What is a fixed exchange rate? | when countries fix thier currencies aganist each other
🗑
|
||||
| What is the amount needed to purchase one ounce of gold called? | gold par value
🗑
|
||||
| What are the two intitutions formed from Bretton Woods? | The IMF and the World Bank
🗑
|
||||
| What was the main accomplishment of Bretton Woods? | it fixed currencies to gold
🗑
|
||||
| What were the roles of the IMF? | implementing a fixed exchange rate system which brought stablitiy to the world trade enviroment, it curtailed price inflation, lent to foreign members in need to tide them over during short period deficits.
🗑
|
||||
| What was decided during the Jamaica Agreement? | 1. floating rates were declared acceptable 2. gold was abandoned as a reserve asset 3. the amount member countries contribute to the IMF was increased
🗑
|
||||
| What are market makers? | the financial service companies that connect investors and borrowers, either directly or indirectly
🗑
|
||||
| What are the benefits of a global capital market? | there is an additional supply of funds, the lower cost of capital, provides a wider range of investment opportunities
🗑
|
||||
| What two factors are responsible for the growth of capital markets? | 1. advances in information 2. deregulation by governments
🗑
|
||||
| What is a eurocurrency? | any currency banked outside of its country of origin
🗑
|
||||
| Besides the eurodollar, what other eurocurrencies are important? | the euro-yen, euro-pound and the euro-euro
🗑
|
||||
| What are the two types of international bonds? | foreign bonds and eurobonds
🗑
|
||||
| What are some attractions of the Eurobond Market? | an absence of regulatory interference, less stringent disclosure requirements and a favorable tax status
🗑
|
||||
| What are the world's four major trading currencies? | the U.S dollar, the EU's euro, the Japanese Yen and the British pound.
🗑
|
||||
| What are the arguments for a pro floating exchange rate? | the ability to expand or contract the money supply as it sees fit (called monetary policy autonomy) and automatic trade balance adjustments
🗑
|
||||
| What is an argument for a pro fixed exchange rate? | it ensures that governments do not expand thier monetary supply too rapidly, causing high inflation
🗑
|
||||
| What factors of the international market affect profitability of trade and investment deals? | transaction exposure, translation exposure and economic exposure.
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
callieco