Yen Mid Rates (¥ / $) Yen Bid Yen Ask Pound Mid Rates ($ / £) Pound Bid Pound AskSpot 129.87 129.82 129.92 1.4484 1.4481 1.4487Forward Rates 1 month 129.68 -20 -18 1.4459 -26 -246 months 128.53 -136 -132 1.4327 -160 -154Swaps 2 year 117.65 1232 1212 1.4250 -238 -2303 year 115.50 1452 1422 1.4225 -265 -253The current spot rate of dollars for pounds as quoted in a newspaper is ________ or ________.A)$1.4481/£; £0.6906/$ B)£1.4484/$; $0.6904/£ C)£1.4487/$; $0.6903/£ D)$1.4484/£; £0.6904/$If the direct quote for a U.S. investor for British pounds is $1.43/£, then the indirect quote for the U.S. investor would be ________ and the direct quote for the British investor would be ________.A)£1.43/£; £0.699/$ B)£0.699/$; $1.43/£ C)$0.699/£; £0.699/$ D)£0.699/$; £0.699/$A forward contract to deliver British pounds for U.S. dollars could be described either as ________ or ________.A)buying dollars forward; buying pounds forward. B)selling pounds forward; selling dollars forward. C)selling dollars forward; buying pounds forward. D)selling pounds forward; buying dollars forward.In the Anglo-American model of corporate governance, the primary goal of management is toA) maximize the wealth of all stakeholders. B) maximize shareholder wealth. C) minimize costs. D) minimize risk.A common type of swap transaction in the foreign exchange market is the ________ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market.A)"repurchase agreement"B)"forspot"C)"forward against spot"D)"spot against forward"________ are NOT one of the three categories reported for foreign exchange.A)Futures transactions B)Swap transactions C)Spot transactions D)Strip transactionsDaily trading volume in the foreign exchange market is around ________ per ________ .A)$3,200 billion; day B)$1,000 billion; month C)$1,000 billion; day D)$3,200 billion; monthUnder an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.A)surplus, revaluing; deficit, devaluingB)deficit, devaluing; surplus, devaluingC)deficit, revaluing; surplus, revaluingD)surplus, devaluing; deficit, revaluingThe subcategory that typically dominates the current account is ________.A)income tradeB)goods (merchandise) tradeC)services tradeD)transfer accountsThe four currencies (in order) that constitute about 80% of all foreign exchange trading areA)U.S. dollar, euro, Japanese yen, and U.K. pound.B)U.S. dollar, euro, Chinese yuan, and U.K. pound. C)U.K. pound, Chinese yuan, euro, and Japanese yen. D)U.S. dollar, U.K. pound, yen, and Chinese yuan.A foreign exchange ________ is the price of one currency expressed in terms of another currency. A foreign exchange ________ is a willingness to buy or sell at the announced rate.A)rate; rate B)rate; quoteC)quote; rate D)quote; quoteThe COMPLETE financial account consists of which three components?A)Direct investment, stock investment, and bond investment.B)Direct investment, portfolio investment, and other asset investment.C)Stock investment, bond investment, and mutual fund investment.D)Mutual fund investment, portfolio investment, and stock investment.Balance of payment (BOP) data may be important for any of the following reasons:A)BOP data helps to forecast a country's market potential, especially in the short run.B)The BOP is an important indicator of a country's foreign exchange rate.C)Changes in a country's BOP may signal a change in controls over payment of dividends and interest.D)all of the above.Which of the following statements about the balance of payments is NOT true?A)Although the BOP must always balance in theory, in practice there are substantial imbalances as a result of statistical errors and misreporting of current account and financial account flows.B)The BOP is the summary statement of all international transactions between one country and all other countries.C)The BOP is a flow statement, summarizing all international transactions that occur across the geographic borders over a period of time, typically a year.D)All of the above are true.There is a general consensus that ________ should be free but there is no such consensus that ________ should be free.A)international trade; international goods tradeB)international investment; international goods tradeC)international trade; international investmentD)international investment; international tradeIn terms of magnitude, over the last two decades the surplus on U.S. services trade has typically been ________ the deficit on U.S. goods trade.A)less thanB)greater thanC)equal toD)constantly shifting relative toFrom an effect point of view, a country experiencing a serious BOP ________ is more likely to see exports ________ than otherwise.A)surplus; expandB)surplus; contractC)deficit; expandD)none of the aboveWhen categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset.A)direct investment; indirect investmentB)portfolio investment; direct investmentC)portfolio investment; indirect investmentD)direct investment; portfolio investmentThe travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.A)current transfersB)goods tradeC)income tradeD)services tradePortfolio investment is capital invested in activities that are ________ rather than made for ________.A)profit motivated; controlB)long term; profitC)control motivated; profitD)short term; the long term
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