Fundamentals of Multinational Finance, 6e (Moffett et al.)
Chapter 9 Foreign Exchange Rate Determination
9.1 Exchange Rate Determination: The Theoretical Thread
1) An important thing to remember about foreign exchange rate determination is that parity
conditions, asset approach, and balance of payments approaches are ________ theories rather
than ________ theories.
A) competing; complementary
B) competing; contemporary
C) complementary; contiguous
D) complementary; competing
2) Which of the following did NOT contribute to the exchange rate collapse in emerging markets
in the 1990s?
A) infrastructure weaknesses
B) speculation on the part of market participants
C) the sharp reduction of cross-border foreign direct investment
D) All of the above contributed to the emerging markets exchange rate collapse of the 1990s.
3) The ________ provides a means to account for international cash flows in a standardized and
A) parity conditions
B) asset approach
C) balance of payments
D) International Fisher Effect