Currency speculation involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.
TRUE or FALSE
What is TRUE
100
Under the Jamaica Agreement, floating exchange rates were declared acceptable, and gold was abandoned as a reserve asset.
TRUE or FALSE
True
100
In order to capture the gains from currency translation, managers prefer that exchange rates be volatile and unpredictable. (true or false)
What is False
100
The world's three most important financial centers
What is Tokyo, London, and New York
100
Devaluation lowers the price of a country's exports on world markets and increases the price of imports (true of false)
What is True
200
The simultaneous purchase and sale of a given amount of foreign exchange for two different value dates is referred to as a
What is currency swap
200
The international monetary system in which nations linked the value of their currency to specific values of gold
What was the Gold Standard
200
The largest trading center in the foreign exchange market is __________.
What is London
200
According to ______, in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency
What is law of one price
200
An efficient market
What is has no impediments to the free flow of goods and services, reflects all publicly available information.
300
The instantaneous purchase and sale of a currency in different markets for a profit.
What is arbitrage
300
In 1976, the ________ formalized the floating exchange rate system that followed the collapse of Bretton Woods.
What is Jamaica Agreement
300
The exchange rate at which two parties agree to exchange currencies on a specified future date
What is forward rate
300
The ease with which stockholders may convert their investments into cash is
What is liquidity
300
Why are Eurobonds popular
What is the lack of government regulations
400
If a currency's forward rate is higher than its spot rate, the currency is trading at a
What is premium
400
Two factors why Bentton Woods failed
What is U.S. trade deficit, Vietnam, inflation, dollar could only be devalued if other currencies agreed, speculation that the dollar would decrease
400
In a _____ exchange rate system, the value of a set of currencies is fixed against each other at some mutually agreed on exchange rate.
What is fixed
400
An exchange rate the requires the delivery of the traded currency within two business days.
What is spot rate
500
Currency that trades freely in the foreign exchange market, with its price determined by the forces of supply and demand.
What is currency convertibility
500
When is you Application Paper Due
What is April 24 or April 17 (5-points extra)
500
When the Russian government buys its own securities on the open market, this is an example of
What is monetary policy
500
Currencies that float against one another with government intervention to stabilize the currency at a exchange rate is