FIN 403 Week 1 DQs and Summary

 This work of FIN 403 Final Exam shows the solutions to the following problems:


 1.The current currency in Italy is called:


 2.A Forward contract:


 3.If the US Dollar appreciates compared to the Euro:


 4.All else equal, if the Fed increases interest rates:


 5.In general, when speculating on exchange rate movements, the speculator will borrow the currency that is expected to appreciate and invest in the country whose currency is expected to depreciate.


 6. To force the value of the pound to appreciate against the dollar, the Federal Reserve should:


 7. A strong dollar is normally expected to cause:


 8. The value of the Canadian dollar, Japanese yen, and Australian dollar with respect to the U.S. dollar are part of a:


 9. Graylon, Inc., based in Washington, exports products to a German firm and will receive payment of

Business - Finance
 1.  Which of the following is an international finance risk factor? a) Political b) Temperature c) Balance of payment

 2.  What is most likely the consequence of globalization? a) Prosperous world economy b) More trade opportunities c) Decrease in local job opportunities

 3.  What is World Bank’s objective? a) Promote stability in exchange rates b) Make loans to countries in order to enhance economic development c) Promote private enterprise within countries

 4.  1 year go, 1 Hong Kong Dollar. Currently 1 Hong Kong Dollar. Therefore, US Dollar has a) Appreciated b) Depreciated c) No way to tell.

 5. Which of the following BEST exemplifies the relationship among the international flow of goods, services, and capital, the balance of payments, and domestic economic behavior? a) Interest rate, depreciation rate, and cross rate b) Inflation rate, tax rate, and deflation rate c) Interest rate, inflation, and exchange rate

 6. Appreciation of US Dollar will encourage a) Importation b) Exportation c) no change in America.

 7. A weak dollar places a) downward b) upward pressure on U.S. inflation, which in turn places further downward pressure on the value of the dollar.

 8. Forward currency contracts are created in organized exchanges like the NYSE or the Chicago Mercantile Exchange. a) True b) False

 9. Which of the following is a function of the derivatives market? a) Selling b) Hedging c) Fisher effect d) Increased cost of capital

 10. Which of the following derivatives could be used in speculation and hedging in the foreign market? a) Money market b) Capital market c) Option d) Internet

 11. Which of the following is NOT an international risk consideration? A) Terrorism b) Poverty c) Historical exchange rate d) Cross-cultural risks

 12.  Select the characteristic of Monopoly a) Investment in Research Development b) Buyers can shop around c) Pricing is determined through supply and demand.

 13. Which would be the most favorable to foreign investment for a U.S. organization? a) Canada-interest rate 14%, inflation 10% b) Japan-interest rate 15%, inflation 16% c) Iraq-interest rate 25%, inflation 20% d) Australia-interest rate 13%, inflation 18%

 14. a) High national income b) Strong local currency c) Political situation tends NOT to result in a strong demand for imports and a current account deficit.

 15. The difference between Future Contracts and Call options is that future contracts require an obligation, which option does not. a) True b) False

 16. What type of risk exposur

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