单选测试689 合题.docx

单选测试689 合题.docx

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单选测试689合题

Chapter6,8,9

1.Ifanidenticalproductcanbesoldintwodifferentmarkets,andnorestrictionsexistonthesaleortransportationcosts,theproduct'spriceshouldbethesameinbothmarkets.Thisisknowas_________

A）relativepurchasingpowerparity.

B）interestrateparity.

C）thelawofoneprice.

D）equilibrium.

2.________statesthatthespotexchangerateisdeterminedbytherelativepricesofsimilarbasketsofgoods.

A）Absolutepurchasingpowerparity

B）Relativepurchasingpowerparity

C）Interestrateparity

D）TheFisherEffect

3.TheEconomistpublishesannuallythe"BigMacIndex"bywhichtheycomparethepricesoftheMcDonald'sCorporation'sBigMachamburgeraroundtheworld.Theindexestimatestheexchangeratesforcurrenciesbasedontheassumptionthattheburgersinquestionarethesameacrosstheworldandtherefore,thepriceshouldbethesame.IfaBigMaccosts$2.54intheUnitedStatesand294yeninJapan,whatistheestimatedexchangerateofyenperdollarashypothesizedbytheHamburgerindex?

A）$0.0086/¥

B）124¥/$

C）$0.0081/¥

D）115.75¥/$

4.Ifthecurrentexchangerateis113JapaneseyenperU.S.dollar,thepriceofaBigMachamburgerintheUnitedStatesis$3.41,andthepriceofaBigMachamburgerinJapanis280yen,thenotherthingsequal,theBigMachamburgerinJapanis________.

A）correctlypriced

B）underpriced

C）overpriced

D）notenoughinformationtodetermineifthepriceisappropriateornot

5.ThepriceofaBigMacintheU.S.is$3.41andthepriceinMexicoisPeso29.0.WhatistheimpliedPPPofthePesoperdollar?

A）Peso8.50/$1

B）Peso10.8/$1

C）Peso11.76/$1

D）Noneoftheabove

6.TheimpliedPPPrateofexchangeofMexicanPesosperU.S.Dollaris8.50accordingtotheBigMacIndex.ThecurrentexchangerateisPeso10.8/$1.Thus,accordingtoPPPandtheLawofOnePrice,atthecurrentexchangeratethepesois________.

A）overvalued

B）undervalued

C）correctlyvalued

D）notenoughinformationtoanswerthisquestion

7.Ifaccordingtothelawofonepricethecurrentexchangerateof

dollarsperBritishpoundis$1.75/£,thenatanexchangerateof$1.85/£,thedollaris________.

A）overvalued

B）undervalued

C）correctlyvalued

D）unknownrelativevaluation

8.TrueorFalse

TheassumptionsforrelativePPParemorerigidthantheassumptionsforabsolutePPP.

9.OneyearagothespotrateofU.S.dollarsforCanadiandollarswas$1/C$1.SincethattimetherateofinflationintheU.S.hasbeen4%greaterthanthatinCanada.BasedonthetheoryofRelativePPP,thecurrentspotexchangerateofU.S.dollarsforCanadiandollarsshouldbeapproximately________.

A）$0.96/C$

B）$1/C$1

C）$1.04/C$1

D）relativePPPprovidesnoguideforthistypeofquestion

10.TrueorFalse

EmpiricaltestsprovethatPPPisanaccuratepredictoroffutureexchangerates.

11.Twogeneralconclusionscanbemadefromtheempiricaltestsofpurchasingpowerparity（PPP）:

A）PPPholdsupwellovertheshortrunbutpoorlyforthelongrunandthetheoryholdsbetterforcountrieswithrelativelylowratesofinflation.

B）PPPholdsupwellovertheshortrunbutpoorlyforthelongrunandthetheoryholdsbetterforcountrieswithrelativelyhighratesofinflation.

C）PPPholdsupwelloverthelongrunbutpoorlyfortheshortrunandthetheoryholdsbetterforcountrieswithrelativelylowratesofinflation.

D）PPPholdsupwelloverthelongrunbutpoorlyfortheshortrunandthetheoryholdsbetterforcountrieswithrelativelyhighratesofinflation.

12.Ifacountry'srealeffectiveexchangerateindexweretobelessthan100,thiswouldsuggestan________currency.

A）overvalued

B）overcompensating

C）undervalued

D）undercompensating

13.IfwesettherealeffectiveexchangerateindexbetweenCanadaandtheUnitedStatesequalto100in1998,andfindthattheU.S.dollarhasrisentoavalueof112.6,thenfromacompetitiveperspectivetheU.S.dollaris

A）overvalued.

B）undervalued.

C）verycompetitive.

D）Thereisnotenoughinformationtoanswerthisquestion.

14.IfwesettherealeffectiveexchangerateindexbetweentheUnitedKingdomandtheUnitedStatesequalto100in2005,andfindthattheU.S.dollarhaschangedtoavalueof91.4,thenfromacompetitiveperspectivetheU.S.dollaris________.

A）overvalued

B）undervalued

C）equallyvalued

D）Thereisnotenoughinformationtoanswerthisquestion.

15.Exchangeratepass-throughmaybedefinedas________

A）thebid/askspreadoncurrencyexchangeratetransactions.

B）thedegreetowhichthepricesofimportedandexportedgoodschangeasaresultofexchangeratechanges.

C）thePPPoflesser-developedcountries.

D）thepracticebyGreatBritainofmaintainingtherelativestrengthofthecurrenciesoftheCommonwealthcountriesunderthecurrentfloatingexchangerateregime.

16.PhillipsNVproducesDVDplayersandexportsthemtotheUnitedStates.Lastyeartheexchangeratewas$1.25/euroandPlillipscharged120europerplayerinEurolandand$150perDVDplayerintheUnitedStates.Currentlythespotexchangerateis$1.45/euroandPhillipsis

charging$160perDVDplayer.WhatisthedegreeofpassthroughbyPhillipsNVontheirDVDplayers?

A）92%

B）33.3%

C）41.9%

D）4.1%

17.JaguarhasfullmanufacturingcostsoftheirS-typesedanof£22,803.TheyselltheS-typeintheUKwitha20%marginforapriceof£27,363.TodaythesecarsareavailableintheUSfor$55,000whichistheUKpricemultipliedbythecurrentexchangerateof$2.01/£.JaguarhascommittedtokeepingtheUSpriceat$55,000forthenextsixmonths.IftheUKpoundappreciatesagainsttheUSDtoanexchangerateof$2.15/£,andJaguarhasnothedgedagainstcurrencychanges,whatistheamountthecompanywillreceiveinpoundsatthenewexchangerate?

A）£22,803

B）£25,581

C）£27,363

D）£55,000

18.JaguarhasfullmanufacturingcostsoftheirS-typesedanof£22,803.TheyselltheS-typeintheUKwitha20%marginforapriceof£27,363.TodaythesecarsareavailableintheUSfor$55,000whichistheUKpricemultipliedbythecurrentexchangerateof$2.01/£.JaguarhascommittedtokeepingtheUSpriceat$55,000forthenextsixmonths.IftheUKpoundappreciatesagainsttheUSDtoanexchangerateof$2.15/£,andJaguarhasnothedgedagainstcurrencychanges,whatisthepercentagemarginthecompanywillrealizegiventhenewexchangerate?

A）20.0%

B）15.3%

C）12.2%

D）7.2%

19.Assumeanominalinterestrateonone-yearU.S.TreasuryBillsof4.60%andarealrateofinterestof2.50%.UsingtheFisherEffectEquation,whatistheapproximateexpectedrateofinflationintheU.S.overthenextyear?

A）2.10%

B）2.05%

C）2.00%

D）1.90%

20.Therelationshipbetweenthepercentagechangeinthespotexchangerateovertimeandthedifferentialbetweencomparableinterestratesindifferentnationalcapitalmarketsisknownas________.

A）absolutePPP

B）thelawofoneprice

C）relativePPP

D）theInternationalFisherEffect

21.AccordingtotheinternationalFisherEffect,ifaninvestorpurchases

afive-yearU.S.bondthathasanannualinterestrateof5%ratherthanacomparableBritishbondthathasanannualinterestrateof6%,thentheinvestormustbeexpectingthe________to________atarateofatleast1%peryearoverthenext5years.

A）Britishpound;appreciate

B）Britishpound;revalue

C）U.S.dollar;appreciate

D）U.S.dollar;depreciate

22.AssumethecurrentU.S.dollar-Britishspotrateis0.6993£/$.Ifthe

currentnominalone-yearinterestrateintheU.S.is5%andthecomparablerateinBritainis6%,whatistheapproximateforwardexchangeratefor360days?

A）1.42£/$

B）1.43£/$

C）0.6993£/$

D）0.7060£/$

23.AssumethecurrentU.S.dollar-yenspotrateis125¥/$.Further,the

currentnominal180-dayrateofreturninJapanis3%and4%intheUnitedStates.Whatistheapproximateforwardexchangeratefor180days?

A）123.80¥/$

B）124.00¥/$

C）124.39¥/$

D）124.67¥/$

Chapter8

24.Aforeigncurrency________contractcallsforthefuturedeliveryofastandardamountofforeignexchangeatafixedtime,place,andprice.

A）futures

B）forward

C）option

D）swap

25.Financialderivativesarepowerfultoolsthatcanbeusedbymanagementforpurposesof_______

A）speculation.

B）hedging.

C）humanresourcemanagement.

D）AandBabove.

26.WhichofthefollowingisNOTacontractspecificationforcurrencyfuturestradingonanorganizedexchange?

A）sizeofthecontract

B）maturitydate

C）lasttradingday

D）Alloftheabovearespecified.

27.Aspeculatorthathas________afuturescontracthastakena________position.

A）sold;long

B）purchased;short

C）sold;short

D）purchased;sold

28.PeterSimpsonthinksthattheU.K.poundwillcost$1.43/£insixmonths.A6-monthcurrencyfuturescontractisavailabletodayatarateof$1.44/£.IfPeterwastospeculateinthecurrencyfuturesmarket,andhisexpectationsarecorrect,whichofthefollowingstrategieswouldearnhimaprofit?

A）Sellapoundcurrencyfuturescontract.

B）Buyapoundcurrencyfuturescontract.

C）Sellpoundstoday.

D）Sellpoundsinsixmonths.

29.JackHemmingsboughta3-monthBritishpoundfuturescontractfor

$1.4400/£onlytoseethedollarappreciatetoavalueof$1.4250atwhichtimehesoldthepoundfutures.Ifeachpoundfuturescontractisforanamountof£62,500,howmuchmoneydidJackgainorlosefromhisspeculationwithpoundfutures?

A）$937.50loss

B）$937.50gain

C）£937.50loss

D）£937.50gain

30.Aforeigncurrency________givesthepu