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89) A(n) ________ involves attempting to collect foreign currency receivables early when a
foreign currency is expected to depreciate and paying foreign currency payables before they are
due when a currency is expected to appreciate.
A) A follower strategy
B) An interim strategy
C) A lead strategy
D) A lag strategy
90) ________ includes obligations for the purchase or sale of goods and services at previously
agreed prices and the borrowing or lending of funds in foreign currencies.
A) Economic exposure
B) Transaction exposure
C) Corporate financial exposure
D) Translation exposure
91) A lag strategy involves
A) attempting to collect foreign currency receivables early when a foreign currency is expected to
depreciate.
B) delaying collection of foreign currency receivables if that currency is expected to appreciate.
C) paying foreign currency payables before they are due when a currency is expected to
appreciate.
D) delaying collection of foreign currency receivables if that currency is expected to depreciate.
92) With the help of an example, explain how a tourist participates in the foreign exchange market.
93) What are the main uses of foreign exchange markets for international business?
94) What is meant by the phrases "the dollar is selling at a discount" on the 30-day forward market
and "the dollar is selling at a premium" on the 30-day forward market?
95) Where is the foreign exchange market located? What is the nature of the market? Is the market
growing or shrinking on a global basis?
96) What is the law of one price?
97) Discuss the failure of PPP theory to predict exchange rates accurately. What is the purchasing
power parity puzzle?
98) Compare and contrast the Fisher Effect and the International Fisher Effect.
99) Consider the role of investor psychology and bandwagon Effects on how well purchasing
power parity and the international Fisher effect explain short-term movements in exchange rates.
100) Discuss the two schools of thought on exchange rate forecasting.
101) Explain the difference between fundamental analysis and technical analysis.
102) Compare and contrast currencies that are freely convertible, externally convertible, and
nonconvertible.
103) Describe translation exposure. How can translation exposure be minimized?
104) Explain the notion of economic exposure. How can economic exposure be minimized?
105) How can a firm minimize its foreign exchange exposure?
