MGT 370 Test 3

MGT 370 Test 3

Question 1. 1. The risk resulting from possible fluctuations in currency exchange rates is called: (Points : 1) hedging. transaction exposure. the direct quote. floating. None of the above

Question 2. 2. In an options market hedge there is the option to sell or purchase certain currencies at a certain exchange rate either on or before a certain date. The agreed-upon exchange rate is called the: (Points : 1) international leverage. trade dimension. leveraging currency. transaction exposure. None of the above

Question 3. 3. In 1996, the _____ was revised to a U.S. export policy stating that “everything is authorized unless it is specifically prohibited.” (Points : 1) Destination Control Statement E.A.R. pro forma invoice Shipper’s Export Declaration None of the above

Question 4. 4. Some currencies are traded in the futures’ market as “commodities.” (Points : 1) True False

Question 5. 5. Among the companies that are exposed to risks in currency fluctuation are: (Points : 1) firms that do not evaluate international currency transaction risks clearly. firms that do not follow a specific policy on currency exchange. firms that have management that is not well-versed in the intricacies of international trade. All of the above None of the above

Question 6. 6. In its absolute form, the exchange rate determination theory of Purchasing Power Parity: (Points : 1) says that exchange rates should reflect the price differences of each and every product between countries. says that the exchange rate should equalize price differences of similar products between countries. is impossible to achieve. All of the above None of the above

Question 7. 7. An options market hedge is, in effect, an