1) generating exchange rate forecasts with the fundamental approach involves
a.looking at charts of the exchange rate and extrapolating the patterns into the future
b.estimation of a structural model
c.substituting the estimated values of the independent variables into the estimated
structural model to generate the forecast
d.both b and c
2) the “world beta” measures the
a.unsystematic risk
b.sensitivity of returns on a security to world market movements
c.risk-adjusted performance
d.risk of default and bankruptcy
3) find the debt-to-value ratio for a firm with a debt-to-equity ratio of 2.
a.
b.
c.3/5
d.
e.5/7
4) the international accounting standards committee
a.is now known as the international accounting standards board
b.is charged with accounting standards at the international house of pancakes
c.includes many convicted felons among its members
d.all of the above
5) from the perspective of the u.s. firm that owns an asset in britain, the exposure that
can be measured by the coefficient b in regressing the dollar value p of the british asset
on the dollar/pound exchange rate s using the regression equation is
a.asset exposure
b.operating exposure
c.accounting exposure
d.none of the above
6) yesterday, you entered into a futures contract to buy 62,500 at $1.50 per . suppose the
futures price closes today at $1.46. how much have you made/lost?
a.depends on your margin balance
b.you have made $2,500.00
c.you have lost $2,500.00
d.you have neither made nor lost money, yet
7) a decrease in the implied three-month libor yield causes eurodollar futures price
a.to increase
b.to decrease
c.there is no direct or indirect relationship
d.none of the above
8) mncs can reduce their exchange rate expense
a.by using bilateral netting
b.by using a centralized cash management system
c.by using multilateral netting
d.all of the above
9) the sf/$ 180-day forward exchange rate is sf1.30/$ and the 180 day forward premium
is 8 percent. what is the outright spot exchange rate?
a.sf1.30/$
b.sf1.35/$
c.sf1.25/$
d.none of the above
10) studies of the accuracy of paid exchange rate forecasters
a.tend to support the view that “you get what you pay for”
b.tend to support the view that forecasting is easy, at least with regard to major
currencies like the euro and japanese yen
c.tend to support the view that banks do their best forecasting with the yen
d.none of the above
11) suppose you observe a spot exchange rate of $1.50/. if interest rates are 3% apr in
the u.s. and 5% apr in the euro zone, what is the no-arbitrage 1-year forward rate?
a.1.5291/$
b.$1.5291/
c.1.4714/$
d.$1.4714/
12) the “one word that haunts the dollar” is
a.(central bank) diversification
b.reunification (korean)
c.euro
d.(current account) deficit