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I need you finish the answer in two hours. since I can not choose two hours s , so type a

I need you finish the answer in two hours. since I can not choose two hours s , so type a

I need you finish the answer in two hours. since I can not choose two hours s , so type a shortest due date I can choose. But remember, my right due time is 2 hours

1. A&M Co. purchases a futures contract specifying C$100,000 with the April settlement date. This futures contract is priced at $1.46/C$. On March 1st, A&M realizes that it has no need for C$ in April. It thus sells a futures contract specifying C$100,000 with the April settlement date. This futures contract is priced at $1.52/C$. What is the result of these transactions to A&M Co.?(Points : 3.85)
A&M Co. incurs a loss of C$,6000.

A&M Co. incurs a loss of $6,000.

A&M Co. makes a profit of C$6,000.

A&M Co. makes a profit of $6,000.


Question 2. 2. A speculator purchases a put option on Australian dollars(with a strike price of $0.85) for $.04 per unit. An Australian dollar option represents 31,250 units. At the time of the purchase, the spot rate of the Australian dollar is $0.86 and continually rises to $0.90 by the expiration date. What is the highest net profit possible for the speculator based on the information above?(Points : 3.85)
0
-$2,812.50
+$312.50
-$1,250.00
-$1,562.50

Question 3. 3. P&G corporation has purchased currency put options to hedge a 80,000 euro receivable. The premium is $.05 (per unit of euro) and the exercise price of the option is $1.28. If the option is exercised, what is the total amount of dollars received (after accounting for the option premium paid)?(Points : 3.85)
$106,400
$102,400
$98,400
$62,500
$65,040

Question 4. 4. Which of the following is false?(Points : 3.85)
The commonly accepted goal of the MNC is to maximize shareholder wealth.
The value of MNC should decrease when an event causes the expected cash inflows from foreign currencies to decrease and when foreign currencies denominating these cash flows are expected to depreciate.
Licensing can be classified as a DFI (direct foreign investment).

Question 5. 5. Which of the following theories identifies specialization as a reason for international business?(Points : 3.85)
theory of comparative advantage
imperfect markets theory
product cycle theory
none of the above

Question 6. 6. Which of the following is true?
(Points : 3.85)
The transaction regarding a U.S. citizen receiving a dividend payment as a result of his investment in a Finnish company in the Finland stock market is recorded as a debit under the current account of U.S.
The transaction regarding a U.S. citizen receiving a dividend payment as a result of his investment in a Finnish company in the Finland stock market is recorded as a credit under the current account of U.S.
The transaction regarding a U.S. citizen receiving a dividend payment as a result of his investment in a Finnish company in the Finland stock market is recorded as a credit under the capital and financial account of U.S.
The transaction regarding a U.S. citizen receiving a dividend payment as a result of his investment in a Finnish company in the Finland stock market is recorded as a debit under the capital and financial account of U.S.

Question 7. 7. When the BOP (balance of payment) accounts are recorded correctly, by BOP identity(Points : 3.85)
Under fixed exchange rate regime, BCA (balance of current accounts) + BKA (balance of capital and financial accounts) = - BRA (Balance of official reserve accounts).
Under fixed exchange rate regime, BCA (balance of current accounts) = - BKA (balance of capital and financial accounts).
Under purely flexible exchange rate regime, BCA (balance of current accounts) + BKA (balance of capital and financial accounts) = - BRA (Balance of official reserve accounts).
None of the above.

Question 8. 8. The U.S. balance of trade deficit would be ___________ if the dollar __________ against all currencies.(Points : 3.85)
larger; depreciates
smaller; depreciates
smaller; appreciates
unchanged; depreciates

Question 9. 9. The "J curve" effect describes:(Points : 3.85)
the continuous long-term inverse relationship between a country's current account balance and the country's growth in gross national product.
the short-run tendency for a country's balance of trade to deteriorate even while its currency is depreciating.
the tendency for exporters to initially reduce the price of goods when their own currency appreciates.
the reaction of a country's currency to initially depreciate after the country's inflation rate declines.

Question 10. 10. Which of the following is false?
(Points : 3.85)
IMF (International Monetary Fund) is sometimes referred as the “central bank’s central bank”.
The financing by the IMF (International Monetary Fund) is measured in special drawing rights (SDRs).
WTO (World Trade Organization) was established to provide a forum for multilateral trade negations and to settle trade disputes related to the GATT (General Agreement on Tariffs and Trade) accord.

Question 11. 11. Which of the following is false?(Points : 3.85)
The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.
Portfolio investment represents transactions involving long-term financial assets (such as stocks and bonds) between countries that do not affect the transfer of control.
A balance of trade deficit indicates an excess of imports over exports.
Without the international capital flows, there would be less funding available in the U.S. across all risk levels, and the cost of funding would be lower regardless of the firm's risk level.
Countries with greater potential for economic growth and lower tax rates on corporate earnings may attract DFI (direct foreign investment).

Question 12. 12. Which of the following is NOT a component of the current account?(Points : 3.85)
balance of trade
universal transfers
direct foreign investment
All of the above are components of the current account.

Question 13. 13. Assume 1 Canadian dollar is equal to $.35 and 1 Peruvian Sol is equal to $.88. What is the value of the Peruvian Sol in Canadian dollars (i.e., how may Canadian dollars per Peruvian Sol)?(Points : 3.85)
1 Peruvian Sol is equal to 2.51 Canadian dollars.
1 Peruvian Sol is equal to 0.40 Canadian dollars.
1 Pervuian Sol is equal to 0.28 Canadian dollars
1 Pervuian Sol is equal to 3.52 Canadian dollars

Question 14. 14. A share of the ADR of a Dutch firm represents five share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 18 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.20; what is the no arbitrage price of the share of the ADR? (Points : 3.85)
$18.
$90.
$21.6.
$108.
$75.

Question 15. 15. If a Japanese firm desires to avoid the risk from exchange rate fluctuations, and it will receive €180,000 in 60 days from its business client in France, it could:(Points : 3.85)
obtain a 60-day forward purchase contract on euros (i.e., buy a a 60-day forward contract on euros).
obtain a 60-day forward sale contract on euros(i.e., sell a a 60-day forward contract on euros).
purchase a 60-day call options on euros.
sell euros when it’s due at the spot market with the spot rate.

Question 16. 16. Consider the exchange rate between British pounds and U.S. dollars. Assume British inflation rates rise while U.S. inflation rates remain constant. Then
(1) The demand for British pounds ______, shifting the demand curve of British pounds to the ______.
(2) The supply for British pounds _______, shifting the supply curve of British pounds to the _______.
(3) Consequently, the British pounds ______ against U.S. dollars.(Points : 3.85)
decreases; left; increase, right; depreciate
increases; left; decreases, right; depreciate
increases; right; decreases, left; appreciate
decreases; right; increases, left; appreciate

Question 17. 17. Assume that the United States invests heavily in government and corporate securities of Australia. In addition, residents of Australia invest heavily in the United States. Approximately $5 million worth of investment transactions occur between these two countries each year. The total dollar value of trade transactions per year is about $8 trillion. Then ____ directly influences their exchange rate the most.(Points : 3.85)
inflation and interest rate differentials
interest rate differentials
income differentials only
inflation and income differentials
inflation differentials only

Question 18. 18. Under Bretton Woods Agreement, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold. (Points : 3.85)
True
False

Question 19. 19. You just came back from Canada, where the Canadian dollar was worth $0.95. You still have C$300 from your trip and could exchange them for dollars at the airport, but the airport foreign exchange desk will only buy them for $.90. Next week, you will be going to Mexico and will need pesos. The airport foreign exchange desk will sell you pesos for $.10 per peso. You met a tourist at the airport who is from Mexico and is on his way to Canada. He is willing to buy your C$300 for 2,600 pesos. Should you accept the offer or cash the Canadian dollars at the airport? Why or Why not?(Points : 3.85)
I shall accept the tourist's offer because I get 100 more Mexican pesos. That is, I will get 2,500 Mexican pesos if I decide to exchange through the foreign exchange desk at the airport.
I shall not accept the tourist's offer because I get 100 less Mexican pesos. That is, I will get 2,700 Mexican pesos if I decide to exchange through the foreign exchange desk at the airport.
It doesn't matter since I will get the same amount of Mexican pesos. That is, I will get 2,600 Mexican pesos if I decide to exchange through the foreign exchange desk at the airport.
None of the above.

Question 20. 20. If your firm expects the euro to substantially depreciate, it could speculate by ____ euros futures in the futures exchange market.(Points : 3.85)
selling
purchasing

Question 21. 21. Which of the following is true about the bid/ask spread on currency quotations?(Points : 3.85)
The more intense the competition for the traded currency, the larger the bid/ask spread is.
The higher the inventory costs, the smaller the bid/ask spread is.
The larger the order costs, the larger the bid/ask spread.
All of the above are true.

Question 22. 22. Which of the following is/are false?(Points : 3.85)
When an Australian corporation issues a bond denominated in Japanese Yen in Japan, this bond is called a foreign bond.
Eurobonds do not have a secondary market.
Eurobonds are usually issued in bearer form.

Question 23. 23. Which of the following is/are false regarding the movement of the cross exchange rate between currency A and currency B?

I. If currencies A and B move by the same degree against the dollar, there is no change in the cross exchange rate.

II. When currency A depreciates against the dollar, while currency B is unchanged against the dollar, currency A appreciates against currency B by the same degree as it appreciates against the dollar.

III. When currency A appreciates against the dollar by a greater degree than currency B does, then currency A appreciates against B.

IV. When currency A appreciates against the dollar by a greater degree than currency B does, then currency A depreciates against B.(Points : 3.85)
I, II and III
I II and IV.
I and III.
I and IV.
II and IV.

Question 24. 24. Which of the following is not a factor affecting exchange rates?(Points : 3.85)
relative interest rates.
relative inflation rates.
government controls.
expectations.
None of the above.

Question 25. 25. Which of the following is true?(Points : 3.85)
The buyer of a put currency option is obligated to sell the underlying currency to the seller of the put option on the expiration date if the option can only be exercised on the expiration date.
The writer (i.e., seller) of a currency call option is not obligated to sell the underlying currency to the buyer of the call option if the option is exercised.
All of the above
None of the above
II and III

Question 26. 26. On September 1st, A&F Co. ordered raw material from German and agreed to pay 100 million euros for this order on December1st. It negotiated a 3-month forward contract to obtain 100 million euros on that date at $1.25. On October 1st, the German firm informed A&F Co. that it won't be able to fulfill that order. The euro spot rate on October 1st is $1.24 and 2-month forward rate exhibits 2% discount. To offset its existing contract, A&F Co. will negotiate a forward contract to ____ for the date of December 1st and the profit/loss generated from this transaction is a ____ U.S. dollars.(Points : 3.85)
sell euro; gain of $3,480,000
sell euro; loss of $3,480,000
buy euro; loss of $3,480,000
buy euro;gain of $3,480,000

Question 27. 27. On 1/24 at the end of the day, you sold (took a short position in) 1 futures contract (one contract is agreement to buy or sell Euros 45,500) at a rate of USD 1.35 per Euro, contract expires on 3/18. Initial margin=$1,330 and maintenance margin is $1,005. On 1/25 and 1/26, the futures rate expiring on 3/18 is USD 1.45, and USD 1.455 respectively. As per “Marked to Market” daily mechanism of currency futures contracts, what shall be your margin account balance at the end of 1/25(Assuming that you'll not withdraw money from your margin account)?(Points : 3.85)
On 1/25, you received a margin call from the broker to deposit $4,225 to bring up your margin balance on 1/25 back to $1005.

On 1/25, your margin balance was brought up to $5,880 due to the profit of $4,550 realized from the change in the futures rate.
On 1/25, you received a margin call from the broker to deposit $4,550 to bring up your margin balance on 1/25 back to $1,330.
On 1/25, your margin balance was -$3,220 due to the loss of $4,550 realized from the change in the futures rate.


Question 28. 28. Continued from Q27, what shall be your margin account balance at the end of 1/26(Assuming that you'll not withdraw money from your margin account)?(Points : 3.85)
On 1/26, you received another margin call to deposit $227.5 to bring up your margin balance on 1/26 back to $1005.
On 1/25, your margin balance was -$3,447.50 due to the loss of $227.50 realized from the change in the futures rate.
On 1/26, you received another margin call to deposit $4,777.5 to bring up your margin balance on 1/26 back to $1,330.
On 1/26, your margin balance was brought up to $6,107.5 due to the profit of $227.5 realized from the change in the futures rate.
On 1/26, you did not received any margin call to require additional deposit, and your margin balance on 1/26 was $1,102.5

Question 29. 29. Hedging pound receivables by buying pounds forward is an example of the use of forward contracts by a multinational corporation. (Points : 3.85)
True
False

The Mexican peso’s value has declined against the dollar over most years even though Mexican interest rates are typically much higher than U.S. interest rates. Thus, it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexico’s securities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico?(Points : 3.85)
Because the real interest rate earned by investing in Mexico is less than the the real interest rate earned by investing in U.S. due to high inflation in U.S..
Because the nominal interest rate earned by investing in Mexico is less than the the nominal interest rate earned by investing in U.S. due to high inflation in U.S..
Because the real interest rate earned by investing in Mexico is less than the the real interest rate earned by investing in U.S. due to high inflation in Mexico.
Because the nominal interest rate earned by investing in Mexico is less than the the nominal interest rate earned by investing in U.S. due to high inflation in Mexico.

Rosa Parks 08-Nov-2017

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