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Question
In 1981, the Federal Reserves permitted U.S. banks to establish international banking facilities. International banking facilities (IBFs) are:
a. non-controlling ownership in foreign banks by U.S. banks.
b. branches of U.S. banks in foreign countries.
c. records of transactions involving banks and their international customers are kept separate from the rest of the domestic accounts.
d. import-export specialized companies operated by U.S. banks.
Answer
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Related questions
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Risk premium equals to:a. expected premium minus forward premium.b. expected premium plus forward premium.c. forward premium minus expected premium.d. exchange rate premium plus forward premium.
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d. Not enough information to find answer.
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The equivalence of the exchange rate to the ratio of price levels between two countries is referred to as the:
a. Absolute PPP
b. Relative PPP
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If a currency has appreciated more than the price differential between two countries as implied by PPP, then a currency is overvalued.
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Q:
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a. targets a domestic inflation rate within a certain range of values.
b. attempts to influence exchange rate movements with official statements on the governments preferred rate, without taking any direct action in the financial markets.
c. coordinates monetary and fiscal policies with ones trading partners so as to achieve particular international economic outcomes.
d. offsets private capital movements with changes in the asset portfolio of the central bank.
Q:
Starting from a position where a countrys money demand equals the money supply and its balance of payments is in equilibrium. According to the monetary approach, an expansionary monetary policy will lead to a(n) ______ of the home currency under flexible exchange rate regime; whereas it will cause trade _______ under fixed exchange rate.
a. depreciation; deficit
b. depreciation; surplus
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Q:
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b. Percentage change in spot exchange rate
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According to the monetary approach to the balance of payments, which of the following economic events would help a country to resolve its balance of trade deficit?
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Considering the internal balance in an economy, which of the following could lead to lower interest rate and higher income?
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c. The maximization of shareholder wealth.
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In foreign exchange forecasting, what is a good forecast?
a. When the forecast encourages the firm to buy.
b. When the forecast is close.
c. When the forecast is high.
d. When the forecast predicts the right hedging strategy.
Q:
Suppose for two currencies the forward premium is 8.5% and the expected premium is 5%. Then the risk premium is:
a. -13.5%
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Q:
Suppose that the 1-year forward rate of dollar per pound is $1.32, the current spot rate ($/pound) is $1.20, and the expected future spot rate ($/pound) is $1.40. The expected premium on the pound is:
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Q:
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Q:
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Q:
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Q:
Suppose for two currencies the forward premium is 4% and the expected premium is 8%. Then the risk premium is:
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Q:
A U.S. firm has a 1 million payment due to a Dutch firm in 90 days. The current spot rate is $1.00 per euro, and the 90-day forward rate is $1.11. Ben forecasts that the spot rate in 90 days will be $0.99. Jerry forecasts that the spot rate will be $1.12 in 90 days. The actual spot rate in 90 days turns out to be $1.10. Whose advice, between Ben and Jerry, will save the companys money?
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b. Jerry
c. Both Ben and Jerry
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Q:
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b. 5%
c. 6.67%
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