fin 535

Oct 30th, 2013
RockCafe
Category:
Business & Finance
Price: $45 USD

Question description


Question 6






  1.  

    Assume that Japan places a strict quota on
    goods imported from the U.S. and the U.S. places a strict quota on goods
    imported from Japan. This event should immediately cause the U.S. demand for
    Japanese yen to ____, and the supply of Japanese yen to be exchanged for U.S.
    dollars to ____.

    Answer



    increase;
    increase




    increase;
    decline




    decline;
    decline




    decline;
    increase


1 points  


Question 7






  1.  

    Any event that increases the supply of British
    pounds to be exchanged for U.S. dollars should result in a(n) ____ in the value
    of the British pound with respect to ____, other things being
    equal.

    Answer



    increase; U.S.
    dollar




    increase; nondollar
    currencies




    decrease; nondollar
    currencies




    decrease; U.S.
    dollar


1 points  


Question 8






  1.  

    Any event that increases the U.S. demand for
    euros should result in a(n) ____ in the value of the euro with respect to ____,
    other things being equal.

    Answer



    increase; U.S.
    dollar




    increase; nondollar
    currencies




    decrease; nondollar
    currencies




    decrease; U.S.
    dollar


1 points  


Question 9






  1.  

    Any event that reduces the supply of Swiss
    francs to be exchanged for U.S. dollars should result in a(n) ____ in the value
    of the Swiss franc with respect to ____, other things being
    equal.

    Answer



    increase; U.S.
    dollar




    increase; nondollar
    currencies




    decrease; nondollar
    currencies




    decrease; U.S.
    dollar


1 points  


Question 10






  1.  

    Which of the following events would most
    likely result in an appreciation of the U.S. dollar?

    Answer



    U.S. inflation is very
    high.




    The Fed indicates that it will
    raise U.S. interest rates.




    Future U.S. interest rates are
    expected to decline.




    Japan is expected to increase
    interest rates in the near
    future.


1 points  


Question 11






  1.  

    If the U.S. and Japan engage in substantial
    financial flows but little trade, ____ directly influences their exchange rate
    the most. If the U.S. and Switzerland engage in much trade but little financial
    flows, ____ directly influences their exchange rate the
    most.

    Answer



    interest rate differentials;
    interest rate differentials




    inflation and interest rate
    differentials; interest rate differentials




    income and interest rate
    differentials; inflation differentials




    interest rate differentials;
    inflation and income differentials




    inflation and income differentials;
    interest rate differentials



1 points  


Question 12






  1.  

    Assume that British corporations begin to
    purchase more supplies from the U.S. as a result of several labor strikes by
    British suppliers. This action reflects:

    Answer



    an increased demand for British
    pounds.




    a decrease in the demand for
    British pounds.




    an increase in the supply of
    British pounds for sale.




    a decrease in the supply of British
    pounds for sale.


1 points  


Question 13






  1.  

    Any event that reduces the U.S. demand for
    Japanese yen should result in a(n) ____ in the value of the Japanese yen with
    respect to ____, other things being equal.

    Answer



    increase; U.S.
    dollar




    increase; nondollar
    currencies




    decrease; nondollar
    currencies




    decrease; U.S.
    dollar


1 points  


Question 14






  1.  

    Assume that the U.S. experiences a significant
    decline in income, while Japan's income remains steady. This event should place
    ____ pressure on the value of the Japanese yen, other things being equal.
    (Assume that interest rates and other factors are not
    affected.)

    Answer



    upward




    downward




    no




    upward and downward
    (offsetting)


1 points  


Question 15






  1.  

    If the Fed announces that it will decrease the
    U.S. interest rates, and European Central Bank takes no action, then the value
    of euro will ____ against the value of U.S. dollar. The Fed's action is called
    ____ intervention.

    Answer



    appreciate;
    direct




    depreciate;
    direct




    appreciate;
    indirect




    depreciate;
    indirect


1 points  


Question 16






  1.  

    Currency options sold through an options
    exchange:

    Answer



    contain a commitment to the owner,
    and are standardized.




    contain a commitment to the owner,
    and can be tailored to the desire of the owner.




    contain a right but not a
    commitment to the owner, and can be tailored to the desire of the
    owner.




    contain a right but not a
    commitment to the owner, and are
    standardized.


1 points  


Question 17






  1.  

    If you expect the British pound to appreciate,
    you could speculate by ____ pound call options or ____ pound put
    options.

    Answer



    purchasing;
    selling




    purchasing;
    purchasing




    selling;
    selling




    selling;
    purchasing


1 points  


Question 18






  1.  

    If the spot rate of the euro increased
    substantially over a one-month period, the futures price on euros would likely
    ____ over that same period.

    Answer



    increase
    slightly




    decrease
    substantially




    increase
    substantially




    stay the
    same


1 points  


Question 19






  1.  

    When the futures price on euros is below the
    forward rate on euros for the same settlement date, astute investors may attempt
    to simultaneously ____ euros forward and ____ euro
    futures.

    Answer



    sell; sell




    buy; sell




    sell; buy




    buy;
    buy


1 points  


Question 20






  1.  

    When you own ____, there is no obligation on
    your part; however, when you own ____, there is an obligation on your
    part.

    Answer



    call options; put
    options




    futures contracts; call
    options




    forward contracts; futures
    contracts




    put options; forward
    contracts


1 points  


Question 21






  1.  

    When the existing spot rate exceeds the
    exercise price, a call option is ____, and a put option is
    ____.

    Answer



    out of the money; in the
    money




    out of the money; out of the
    money




    in the money; in the
    money




    in the money; out of the
    money


1 points  


Question 22






  1.  

    In the U.S., the typical currency futures
    contract is based on a currency value in terms of:

    Answer



    euros.




    U.S.
    dollars.




    British
    pounds.




    Canadian
    dollars.


1 points  


Question 23






  1.  

    Currency futures contracts sold on an
    exchange:

    Answer



    contain a commitment to the owner,
    and are standardized.




    contain a commitment to the owner,
    and can be tailored to the desire of the owner.




    contain a right but not a
    commitment to the owner, and can be tailored to the desire of the
    owner.




    contain a right but not a
    commitment to the owner, and are
    standardized.


1 points  


Question 24






  1.  

    A forward rate for a currency is said to
    exhibit a discount if

    Answer



    the forward rate exceeds the
    existing spot rate.




    the forward rate is less than the
    existing spot rate.




    the forward rate exceeds the
    expected future spot rate.




    the forward rate is less than the
    expected future spot rate.



1 points  


Question 25






  1.  

    When the futures price is equal to the spot
    rate of a given currency, and the foreign country exhibits a higher interest
    rate than the U.S. interest rate, astute investors may attempt to simultaneously
    ____ the foreign currency, invest it in the foreign country, and ____ futures in
    the foreign currency.

    Answer



    buy; buy




    sell; buy




    buy; sell




    buy;
    buy


1 points  


Question 26






  1.  

    Macomb Corporation is a U.S. firm that
    invoices some of its exports in Japanese yen. If it expects the yen to weaken,
    it could ____ to hedge the exchange rate risk on those
    exports.

    Answer



    sell yen put
    options




    buy yen call
    options




    buy futures contracts on
    yen




    sell futures contracts on
    yen


1 points  


Question 27






  1.  

    If you have a position where you might be
    obligated to sell pounds, you are:

    Answer



    a call
    writer.




    a call
    buyer.




    a put
    writer.




    a put
    buyer.


1 points  


Question 28






  1.  

    Forward contracts:

    Answer



    contain a commitment to the owner,
    and are standardized.




    contain a commitment to the owner,
    and can be tailored to the desire of the owner.




    contain a right but not a
    commitment to the owner, and can be tailored to the desire of the
    owner.




    contain a right but not a
    commitment to the owner, and are
    standardized.


1 points  


Question 29






  1.  

    The greater the variability of a currency,
    the ____ will be the premium of a call option on this currency, and the ____
    will be the premium of a put option on this currency, other things
    equal.

    Answer



    greater;
    lower




    greater;
    greater




    lower;
    greater




    lower;
    lower


1 points  


Question 30






  1.  

    European currency options can be exercised
    ____; American currency options can be exercised
    ____.

    Answer



    any time up to the expiration
    date; any time up to the expiration date




    any time up to the expiration
    date; only on the expiration date




    only on the expiration date; only
    on the expiration date




    only on the expiration date; any
    time up to the expiration
    date


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