单选测试689 合题文档格式.docx

1、s Big Mac hamburger around the world. The index estimates the exchange rates for currencies based on the assumption that the burgers in question are the same across the world and therefore, the price should be the same. If a Big Mac costs $2.54 in the United States and 294 yen in Japan, what is the

2、estimated exchange rate of yen per dollar as hypothesized by the Hamburger index? A） $0.0086/B） 124/$ C） $0.0081/D） 115.754. If the current exchange rate is 113 Japanese yen per U.S. dollar, the price of a Big Mac hamburger in the United States is $3.41, and the price of a Big Mac hamburger in Japan

3、 is 280 yen, then other things equal, the Big Mac hamburger in Japan is _. A） correctly priced B） under priced C） over priced D） not enough information to determine if the price is appropriate or not 5. The price of a Big Mac in the U.S. is $3.41 and the price in Mexico is Peso 29.0. What is the imp

4、lied PPP of the Peso per dollar?A） Peso 8.50/$1 B） Peso 10.8/$1 C） Peso 11.76/$1 D） None of the above 6. The implied PPP rate of exchange of Mexican Pesos per U.S. Dollar is 8.50 according to the Big Mac Index. The current exchange rate is Peso 10.8/$1. Thus, according to PPP and the Law of One Pric

5、e, at the current exchange rate the peso is _. A） overvalued B） undervalued C） correctly valued D） not enough information to answer this question 7. If according to the law of one price the current exchange rate ofdollars per British pound is $1.75/, then at an exchange rate of $1.85/, the dollar is

6、 _. D） unknown relative valuation 8. True or FalseThe assumptions for relative PPP are more rigid than the assumptions for absolute PPP. 9. One year ago the spot rate of U.S. dollars for Canadian dollars was $1/C$1. Since that time the rate of inflation in the U.S. has been 4% greater than that in C

7、anada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately _. A） $0.96/C$ B） $1/C$1 C） $1.04/C$1 D） relative PPP provides no guide for this type of question 10. True or FalseEmpirical tests prove that PPP is an accurate pre

8、dictor of future exchange rates. 11. Two general conclusions can be made from the empirical tests of purchasing power parity （PPP）:A） PPP holds up well over the short run but poorly for the long run and the theory holds better for countries with relatively low rates of inflation. B） PPP holds up wel

9、l over the short run but poorly for the long run and the theory holds better for countries with relatively high rates of inflation. C） PPP holds up well over the long run but poorly for the short run and the theory holds better for countries with relatively low rates of inflation. D） PPP holds up we

10、ll over the long run but poorly for the short run and the theory holds better for countries with relatively high rates of inflation. 12. If a countrys real effective exchange rate index were to be less than 100, this would suggest an _ currency. B） over compensating C） undervalued D） under compensat

11、ing 13. If we set the real effective exchange rate index between Canada and the United States equal to 100 in 1998, and find that the U.S. dollar has risen to a value of 112.6, then from a competitive perspective the U.S. dollar is A） overvalued. B） undervalued. C） very competitive. D） There is not

12、enough information to answer this question. 14. If we set the real effective exchange rate index between the United Kingdom and the United States equal to 100 in 2005, and find that the U.S. dollar has changed to a value of 91.4, then from a competitive perspective the U.S. dollar is _. C） equally v

13、alued 15. Exchange rate pass-through may be defined as_ A） the bid/ask spread on currency exchange rate transactions. B） the degree to which the prices of imported and exported goods change as a result of exchange rate changes. C） the PPP of lesser-developed countries. D） the practice by Great Brita

14、in of maintaining the relative strength of the currencies of the Commonwealth countries under the current floating exchange rate regime. 16. Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Plillips charged 120 euro per player in

15、Euroland and $150 per DVD player in the United States. Currently the spot exchange rate is $1.45/euro and Phillips ischarging $160 per DVD player. What is the degree of pass through by Phillips NV on their DVD players?A） 92% B） 33.3% C） 41.9 % D） 4.1% 17. Jaguar has full manufacturing costs of their

16、 S-type sedan of 22,803. They sell the S-type in the UK with a 20% margin for a price of 27,363. Today these cars are available in the US for $55,000 which is the UK price multiplied by the current exchange rate of $2.01/. Jaguar has committed to keeping the US price at $55,000 for the next six mont

17、hs. If the UK pound appreciates against the USD to an exchange rate of $2.15/, and Jaguar has not hedged against currency changes, what is the amount the company will receive in pounds at the new exchange rate?A） 22,803 B） 25,581 C） 27,363 D） 55,000 18. Jaguar has full manufacturing costs of their S

18、-type sedan of , and Jaguar has not hedged against currency changes, what is the percentage margin the company will realize given the new exchange rate?A） 20.0% B） 15.3% C） 12.2% D） 7.2% 19. Assume a nominal interest rate on one-year U.S. Treasury Bills of 4.60% and a real rate of interest of 2.50%.

19、 Using the Fisher Effect Equation, what is the approximate expected rate of inflation in the U.S. over the next year?A） 2.10% B） 2.05% C） 2.00% D） 1.90% 20. The relationship between the percentage change in the spot exchange rate over time and the differential between comparable interest rates in di

20、fferent national capital markets is known as _. A） absolute PPP B） the law of one price C） relative PPP D） the International Fisher Effect 21. According to the international Fisher Effect, if an investor purchasesa five-year U.S. bond that has an annual interest rate of 5% rather than a comparable B

21、ritish bond that has an annual interest rate of 6%, then the investor must be expecting the _ to _ at a rate of at least 1% per year over the next 5 years. A） British pound; appreciate B） British pound; revalue C） U.S. dollar;D） U.S. dollar; depreciate 22. Assume the current U.S. dollar-British spot

22、 rate is 0.6993/$. If thecurrent nominal one-year interest rate in the U.S. is 5% and the comparable rate in Britain is 6%, what is the approximate forward exchange rate for 360 days?A） 1.42B） 1.43C） 0.6993D） 0.706023. Assume the current U.S. dollar-yen spot rate is 125/$. Further, thecurrent nomina

23、l 180-day rate of return in Japan is 3% and 4% in the United States. What is the approximate forward exchange rate for 180 days?A） 123.80B） 124.00C） 124.39D） 124.67Chapter 824. A foreign currency _ contract calls for the future delivery of a standard amount of foreign exchange at a fixed time, place

24、, and price. A） futures B） forward C） option D） swap 25. Financial derivatives are powerful tools that can be used by management for purposes of_A） speculation. B） hedging. C） human resource management. D） A and B above. 26. Which of the following is NOT a contract specification for currency futures

25、 trading on an organized exchange?A） size of the contract B） maturity date C） last trading day D） All of the above are specified. 27. A speculator that has _ a futures contract has taken a_ position. A） sold; long B） purchased; short C） sold;D） purchased; sold 28. Peter Simpson thinks that the U.K.

26、pound will cost $1.43/ in six months. A 6-month currency futures contract is available today at a rate of $1.44/. If Peter was to speculate in the currency futures market, and his expectations are correct, which of the following strategies would earn him a profit?A） Sell a pound currency futures con

27、tract. B） Buy a pound currency futures contract. C） Sell pounds today. D） Sell pounds in six months. 29. Jack Hemmings bought a 3-month British pound futures contract for$1.4400/ only to see the dollar appreciate to a value of $1.4250 at which time he sold the pound futures. If each pound futures contract is for an amount of 62,500, how much money did Jack gain or lose from his speculation with pound futures?A） $937.50 loss B） $937.50 gain 937.50 loss 937.50 gain 30. A foreign currency _ gives the pu