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ANSWER: a
ANSWER: c
3. The interest rate at which banks in the Eurocurrency market lend to each other is known as the .
a. Eurocurrency currency rate (ECR)
b. London interbank offer rate
c. exchange rate
d. interest rate parity
ANSWER: b
ANSWER: b
5. If Japanese yen are deposited in a bank in Paris, the deposits would be called
a. Eurofrancs
b. European Currency Unit
c. Eurobond
d. Euroyen
ANSWER: d
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. If the spot rate for Swiss francs is $0.6658/franc and the 180-day forward rate is $0.6637, the market is
indicating that the Swiss franc is expected to
a. strengthen relative to the dollar
b. weaken relative to the ECU
c. lose value relative to the dollar over the next 6 months
d. gain value relative to the dollar over the next 6 months
ANSWER: c
7. Which of the following is not a correct statement about foreign currency futures?
a. futures contracts have a standardized maturity date
b. futures contracts are an exchange-traded agreement
c. futures contracts are not liquid
d. futures contracts are "marked to market" daily
ANSWER: c
8. The most important foreign currency futures market in the United States is the .
a. Chicago Board of Trade
b. New York Mercantile Exchange
c. Commodity Exchange
d. Chicago Mercantile Exchange
ANSWER: d
9. The buyer of a foreign currency call option has the a fixed amount of a foreign currency.
a. right to sell
b. right but not the obligation to buy
c. obligation to buy, only at expiration,
d. obligation to buy
ANSWER: b
ANSWER: d
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 2: The Domestic and International Financial Marketplace
11. If the exchange rate from U.S. dollars to Canadian dollars is $0.80/Canadian dollar, then the exchange rate
from Canadian dollars to U.S. dollars is
a. 0.80 Canadian $/US dollar
b. $1.25 Canadian $/US dollar
c. $1.20 Canadian $/US dollar
d. $8.00 Canadian $/US dollar
ANSWER: b
12. If the exchange rate from U.S. dollars to Swiss francs is $0.20/franc, then the exchange rate from francs to
dollars is
a. 0.20 francs/dollar
b. 0.80 francs/dollar
c. 5.0 francs/dollar
d. 2.0 francs/dollar
ANSWER: c
13. If the spot rate (in U.S. dollars) for Japanese Yen is 0.00703 and the 180 day forward rate is 0.00717, then
the Yen is trading at a(n) .
a. expected gain
b. premium
c. reciprocal
d. discount
ANSWER: b
14. If the forward (direct quote) exchange rate is lower than the spot rate, then the currency is said to be
trading at a _____.
a. forward premium
b. forward gain
c. forward discount
d. forward loss
ANSWER: c
ANSWER: d
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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died in bed, knew what his progenitors had been spared. Even in the
soberly civilized eighteenth century there lingered a doubt as to the
relative value of battle-field, gallows and sick-chamber.
“True blue
And Mrs. Crewe”
and how shall we reach him save through the pages of history? It is
the foundation upon which are reared the superstructures of
sociology, psychology, philosophy and ethics. It is our clue to the
problems of the race. It is the gateway through which we glimpse the
noble and terrible things which have stirred the human soul.
A cultivated American poet has said that men of his craft “should
know history inside out, and take as much interest in the days of
Nebuchadnezzar as in the days of Pierpont Morgan.” This is a
spacious demand. The vast sweep of time is more than one man can
master, and the poet is absolved by the terms of his art from severe
study. He may know as much history as Matthew Arnold, or as little
as Herrick, who lived through great episodes, and did not seem to be
aware of them. But Mr. Benét is wise in recognizing the inspiration of
history, its emotional and imaginative appeal. New York and Pierpont
Morgan have their tale to tell; and so has the dark shadow of the
Babylonian conqueror, who was so feared that, while he lived, his
subjects dared not laugh; and when he died, and went to his
appointed place, the poor inmates of Hell trembled lest he had come
to rule over them in place of their master, Satan.
“The study of Plutarch and ancient historians,” says George
Trevelyan, “rekindled the breath of liberty and of civic virtue in
modern Europe.” The mental freedom of the Renaissance was the
gift of the long-ignored and reinstated classics, of a renewed and
generous belief in the vitality of human thought, the richness of
human experience. Apart from the intellectual precision which this
kind of knowledge confers, it is indirectly as useful as a knowledge of
mathematics or of chemistry. How shall one nation deal with another
in this heaving and turbulent world unless it knows something of
more importance than its neighbour’s numerical and financial
strength—namely, the type of men it breeds. This is what history
teaches, if it is studied carefully and candidly.
How did it happen that the Germans, so well informed on every
other point, wrought their own ruin because they failed to understand
the mental and moral make-up of Frenchmen, Englishmen and
Americans? What kind of histories did they have, and in what spirit
did they study them? The Scarborough raid proved them as ignorant
as children of England’s temper and reactions. The inhibitions
imposed upon the port of New York, and the semi-occasional ship