The international fisher effect is the observation that

Question

Question 1 In valuing a currency, the direct quote is:

the traditional way of expressing the value of a currency like the Canadian dollar.

the value of the foreign currency expressed in units of the domestic currency.

the traditional way of expressing the value of a currency like the Japanese yen.

the value of the domestic currency expressed in units of foreign currency.

None of the above

Question 2. Among the companies that are exposed to risks in currency fluctuation are:

firms that do not evaluate international currency transaction risks clearly.

firms that do not follow a specific policy on currency exchange.

firms that have management that is not well-versed in the intricacies of international trade.

All of the above

None of the above

Question 3. The International Fisher effect is the observation that exchange rates reflect the differences between nominal interest rates in different countries.

True

False

Question 4. Market-based forecasting of exchange rates:

is based on the premise that "the market knows best."

attempts to capture the collective knowledge of sophisticated speculators in the future spot rate of a currency.

does not take into account government interventions.

All of the above

None of the above

Question 5. In the long run, technical forecasting of exchange rates is very accurate.

True

False

Question 6. The International Bank for Reconstruction:

is called the Bretton Woods.

was developed to manage Germany's World War I reparations.

is also known as the World Bank.

All of the above

None of the above

Question 7. One strategy a company can follow to protect itself from currency fluctuations is use of:

a letter of credit.

risk retention.

forward market hedges.

All of the above

None of the above

Question 8. Some currencies are traded in the futures' market as "commodities."

True

False

Question 9. The United States export policy is mostly concerned about:

keeping some military technologies away from some countries.

stopping exports of non-essential items to countries that cannot afford them.

regulating exports to countries that have strong import regulations.

All of the above

None of the above

Question 10. The stated goal of the European Union is to eventually transform the euro to be a challenger to the U.S. dollar in its role as a preferred third-country currency.

True

False