QUESTIONS AND VERIFIED ANSWERS FOR Currency-Fixed-Income-Equity-REVIEWE BY EXPERTS
9 views 0 purchase
Course
FINA 408
Institution
Concordia University (
)
Currencies – Currency Market Mechanics
1. Of the visible countries, which is the fourth biggest exporter and fourth biggest importer?
a. Japan
b. Germany
c. US
d. China
2. The Mexican peso declined vs the US $ by 37% during the so called tequila crisis. What exacerbating factor did Mexico�...
Currencies – Currency Market Mechanics
1. Of the visible countries, which is the fourth biggest exporter and fourth biggest importer?
a. Japan
b. Germany
c. US
d. China
2. The Mexican peso declined vs the US $ by 37% during the so called tequila crisis. What exacerbating factor did Mexico’s’ Tequila Crisis
have in common with the Argentine crisis of 2002
a. Both counties use the same currency: the peso
b. Both countries had a large dollar denominated debt
c. Both crises occurred in December, a holiday month
d. Both crises happened in Latin America
3. How many New Zealand dollars can you buy with the 100 Australian dollar
a. 0.92690
b. 1.0789
c. 92.690
d. 107.89
4. Alisson lives in America and retired. Its 2016 and the lady wants to travel the world. She wants to pick the country that had a weaken
currency vs the US dollars. Where will she go?
a. Norway
b. UK
c. Japan
d. France
5. 4 Currency chart for Barbadian vs Jamaican dollar; Czech vs Polish; Nigerian vs Ghanaian and Hong Kong vs Macanese. Which one is
pegged?
a. BvJ
b. CvP
c. NvG
d. HKvM
6. Which of the following Is not an example of failed peg?
a. UK Sterlings vs Deutchs
b. Mexican peso vs US in 1994
c. HK vs US in 1997
d. Argentine peso vs US in 2002
7. How many Danish crowns will buy 100 Japanese yen?
a. 0.05360
b. 5.360
c. 18.656
d. 1865.6
Currencies – Currency Valuation
8. According to this Big Mac index screen, which of the following currencies is the most undervalued?
a. US
b. China
c. Brazil
d. Thailand
9. What generally happens when a central bank unexpectedly increases interest rate?
a. The currency strengthens
b. The currency weakens
c. Currency strengthens
d. Currency weakens, then strengthen
10. Which driver weakened the SF from 1 euro/SF to 0.83 Euro/SF
a. A surprise change in inflation expectations
b. A surprise change in valuation expections
c. A surprise change in interest rate expectation
d. A surprise change in trade
, 11. What does the Big Mac index show?
a. How the law of one price is true of consumer products
b. How currencies may be overvalued or undervalued
c. How interest rate and inflation affect trade
d. How the Economist magazine estimate inflation
12. What are the 3 main ST drivers of currency valuation?
a. Surprise change in interest rate, inflation and gold
b. Surprises changes in interest rate, inflation and trade
c. Surprise change in unemployment, inflation and trade
d. Surprise change in unemployment trade and gold
13. By what mechanism do interest rate affect currency values?
a. Global Investors are attracted by higher bond yield in high interest rate countries
b. Change in interest rate directly influence the value at which a currency is pegged
c. High interest rate increase the value of house prices which make the currency safer
d. Low interest rate always make a market more attractive for investors, which lifts the currency
14. Which of theses headlines could move a currency pair?
a. US Stock rally on fed surprise reduction of D.R.
b. Railroad rate hikes drive Dichotomy of necessary vs excessive
c. HK’s Firmly committed to Dollar Peg, John Tsang says
d. Grade Inflation: Devaluing B-School’s Currency
Currencies – Central Banks and Currencies
15. What is the most common target inflation rate for an advanced economy?
a. 1%
b. 2%
c. 3%
d. 0%
16. What was the primary goal of Abenomics?
a. To reduce inflation by increasing unemployment
b. To help Shinzo Abe win the election of 2012
c. To halt the vicious cycle of deflation
d. To Strengthen the yen to foster consumption of luxury goods
17. Vicious Deflationary Cycle. What step connects the lower left grey arrow to the upper right blue arrow?
a. Workers expect prices to increase
b. Workers demand pay increase
c. Employment decrease
d. Price declines
18. What was the Great depression in the US linked to inflation or deflation
a. Inflation
b. Deflation
c. Both
d. Neither
Currencies – Currencies Risk
19. In 2016, the UK voted to leave EU. White line= UK main equity (FTSE 100); Orange Line - # of dollars it takes ot buy one pound sterling.
The UK = Net importer. What can be the reasonably surmised from the chart about large UK Corporation?
a. Their CEO probably voted to remain in the EU
b. CEO probably voted to leave the EU
c. They are probably heavy exporters
d. They are probably heavy importers
20. Why is there a mirror image between the yen weakness and stock market strength on the chart shown?
a. Rising Japanese interest rate both weakens the yen and left the stock market
b. A declining yen will left inflation, which sis good for Japanese corporations
c. Yen weakness favors the man exporting corporation within the index
d. Stock market strength pushes Japanese’s investors to buy safe haven currencies
, 21. IN 2016, Germany Machinery Company has interest from 4 prospective clients from emerging markets: Brazil, Indonesia, Russia and
South Africa. They want to to buy 10 machines. The company will bill them in euros but the CFO is worried that the client may cancel
the order if the currency declines when the invoice comes. According to historical currency volatility alone, the client form which
country would be most likely to pay his invoice.
A. Indonesia
B. Brazil
C. Russia
D. South Africa
22. What is the median estimate for the number of U.S. dollars per British sterling for calendar year 2015?
a. 1.61
b. 1.63
c. 1.66
d. 1.75
23. What is the median estimate for the number of Japanese yen/euro for the calendar year 2020
a. 126
b. 132
c. 163
d. 115
24. What is the difference between the CItitgroup and JP Morgan Chase estimate for the US dollar/sterling currency pair for the end of Q1
of 2015
a. 0.16 pounds
b. 0.16 euros
c. 0.16 percent
d. 0.16 dollars
25. You are a Dutch diamond dealer who sources diamonds from South Africa. You believe that the African continent is set to boom, and
so you believe that the South African rand will strengthen against the world’s major currencies. Therefore, you are worried about your
ability to afford South African diamonds in the future.
A new mine is being dug in South Africa and you have agreed with the miner to buy 1 million South African rands' worth of diamonds
a year from today. Therefore, you will need 1 million rands in cash in one year’s time. Currently, the exchange rate is 17.1261 rands to
the euro. You believe that the rand will strengthen to 16 rand to the euro in one year’s time. You speak to some currency dealers and
they let you know that they would agree today to convert your euros into rands in one year’s time at the rate of 18.654182.
Assume that you converted some of your euros into 1 million rands at today’s prevailing rate and stored the rands in a safe. How many
more or fewer euros would you have in one year’s time if you were to agree today to the forward agreement instead of simply
purchasing the million rands today?
a. EUR 4,783 More
b. EUR 4783 less
c. EUR 4110 more
d. Eur 4110 less
Explanation: Today, 1,000,000 rands will cost you (1,000,.1261) = EUR 58,390.
If you take the forward agreement, 1,000,000 rands would cost you (1,000,.654182) = EUR 53,607.
Therefore, if you took the forward agreement instead of changing the money today, you would have (EUR 58,390 – EUR 53,607) = EUR
4,783 more.
26. Why would Jack Welch suggest putting all company plants on barges?
A. To respond to the changes in the currency market quickly
B. To avoid using any domestic currencies
C. To locate the cost base in the most favorable tax regimes
D. To purchase materials for the plant more quickly
27. Samsung is based in South Korea and reports in South Korean won. Samsung sells its products around the world and the geographic
breakdown of its 2015 revenues are in the first chart. The second chart shows how some major world currencies moved against the South
Korean won through the course of 2015. Of the currencies shown, which currency movement held back Samsung's revenue growth the
most?
A. Yuan
B. Dollar
C. Real
D. Euro
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Examhack. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
