Quiz Chapter 12

Question 1
1.1 out of 1.1 points

Everything else equal, significant trade deficits, imports exceeding exports, should have what effect on a country's exchange rate?

Selected Answer:
C.
The country's currency should depreciate in value relative to their major trading countries.

Question 2
1.1 out of 1.1 points

Which instrument is issued by a bank?

Selected Answer:
Letter of credit

Question 3
0 out of 1.1 points

Common causes of “capital flight” include all the following except

Selected Answer: high inflation in the host country

Question 4
1.1 out of 1.1 points

With reference to international balance of payment accounting, if a country's merchandise imports exceed merchandise exports for a period,

Selected Answer:
A.
the country has a deficit in the merchandise trade account.

Question 5
1.1 out of 1.1 points

A Mexican importer of computer parts from Canada would take which action in the foreign exchange markets?

Selected Answer:
C.
demand Canadian dollars

Question 6
1.1 out of 1.1 points

Both forward foreign exchange markets and foreign currency futures can hedge foreign exchange risk.

Selected Answer:
True

Question 7
1.1 out of 1.1 points

When a commercial bank issues a payment guarantee on behalf of an importer, that guarantee is

Selected Answer: a letter of credit.

Question 8
1.1 out of 1.1 points

Eurobonds are bearer bonds and do not have to be registered, which makes them more marketable.

Selected Answer:
True

Question 9
1.1 out of 1.1 points

A U.S. commercial bank must pay 20 million Canadian dollars (C$) in 90 days. It wishes to hedge the risk in the futures market. To do so the bank should

Selected Answer:
B.
buy C$20 million in Canadian dollar futures.

Question 10
1.1 out of 1.1 points