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BUSI 604 - Test 2. 100% verified to ace your tests

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The most important issue in understanding the effects of exchange rates on business is its (________). Selected Answer: Volatility Question 2 2 out of 2 points Many nations restrict hedging of their currencies due to their national and international policies and interests. false Selected Answer: False Question 3 2 out of 2 points Since the world thrives to trade and does not have a uniformed international currency, the exchange rate from one currency to another is determined by (______) and (________) on a given day on the FX Market. Selected Answer: supply and demand Question 4 2 out of 2 points A simpler way to calculate purchasing power parity between two countries is to compare the price of a (________) good that is in fact identical across countries. Selected Answer: Standard Question 5 2 out of 2 points Purchasing Power Parity has an impact on exchange rates and indicates the current level of inflation of one currency against another. Selected Answer: True Question 6 2 out of 2 points (________) and (_________) quotation are also referred to as American and European Quotes. Selected Answer: direct and indirect Question 7 2 out of 2 points The public begins to experience the effects of deflation with an expanding money supply. Selected Answer: False Question 8 2 out of 2 points Consumers attempt to offset inflation by exchanging (_________) for something that is perceived to hold a value better such as property, gold, or foreign currencies. Selected Answer: lower-value currency Question 9 0 out of 2 points The economies of the world have become highly interdependent because of improvements in communication and transportation technologies and the lowering of barriers to trade. Selected Answer: False Question 10 0 out of 2 points Forward rates are typically cheaper than spot rates. Selected Answer: False Question 11 2 out of 2 points (_________) are used as an alternative to borrowing and lending in the Eurodollar and other offshore markets. Selected Answer: FX swaps Question 12 2 out of 2 points (__________) essentially decreases a consumer’s purchasing power by making goods and services more expensive. Selected Answer: Inflation Question 13 2 out of 2 points The FX swap of currency amounts is normally variable. Selected Answer: False Question 14 2 out of 2 points The Foreign Exchange Market is a market place where the exchange rate is determined and where transactions take place. Selected Answer: True Question 15 2 out of 2 points

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