1) the gold standard eliminates the possibility of a balance of payments disequilibrium
by:
a.changing the peg value of the currency to an ounce of gold
b.inflating prices in countries with net inflows of gold and deflating prices in countries
with net outflows
c.shifting trade to the british pound
d.encouraging the discovery of gold deposits
2)
referring to figure 2.2, an increase in the demand for british goods by the u.s. importers
has led to pressure on the pound to appreciate against the dollar. if the bank of england
wants to maintain a peg of $2.0/pound, what currency should it sell and how much?
a.pounds, 1 billion
b.pounds, 2 billion
c.dollars, 1 billion
d.dollars, 2 billion
3) assume that the expected returns of the four portfolios are the same but their
variances are as follows. which of these four portfolios would you select?
a.0.015
b.0.020
c.0.150
d.0.095
4) a gdr is similar to the adr except that it is:
a.sold only to preferred investors
b.available in more than one market
c.a high variance investment
d.a low variance investment
5) an investor is considering a portfolio consisting of 60% invested in stock x and 40%
invested in stock y. the expected returns for the stocks are 10% for stock x and 8% for
stock y. variance of the stock returns are 0.04 for stock x and 0.02 for stock y, and a
covariance of -0.01 between the two stocks.
what is the expected return of the proposed portfolio?
a.9.0%
b.9.2%
c.19.0%
d.19.2%
6) in the options market, a ________ gives the right to buy currency and a ________
gives the right to sell.
a.flat option, put option
b.put option, flat option
c.call option, put option
d.put option, call option
7) due to the potential for dueling fiscal policies and sharp movements in exchange
rates, some countries have pursued:
a.international policy coordination.
b.protectionist tariffs
c.isolationism policies
d.world bank trade agreements
8) the swap market is available to:
a.commercial banks
b.governments
c.multinational firms
d.tourists
9) transfer pricing has been used by multinational corporation to:
a.minimize tax payments in foreign countries
b.minimize import tariffs
c.minimize foreign exchange controls
d.all of the above are correct
10) assume that the supply of foreign production is perfectly inelastic. if the dollar is
devalued then the total import value (in dollars) will:
a.increase
b.decrease
c.stay the same
d.uncertain