Currency Exchange Rates Paper 3

1

Debt-servicing problems of less developed countries that primarily sell raw materials to the United States would be eased by






2

Of the following transactions, the one that would result in worsening the U.S. balance of payments account is the






3

In most recent years, the U.S. balance of payments has registered a deficit. This balance of payments deficit is a measure of the excess of






4

The U.S. balance of trade is decreased by






5

An appreciation of the U.S. dollar against the Japanese yen would






6

A U.S. company took out a 12-month, 4% loan of £10,000 when the spot rate was $2 to £1. At the end of the loan term, the spot rate was 2. 0 to £ . What was the company’s effective rate on this loan?






7

On September 22, Year 1, Yumi Corp. purchased merchandise from an unaffiliated foreign company for 0,000 units of the foreign company’s local currency. On that date, the spot rate was $.55. Yumi paid the bill in full on March 20, Year 2, when the spot rate was $.65. The spot rate was $.70 on December 31, Year 1. What amount should Yumi report as a foreign currency transaction loss in its income statement for the year ended December 31, Year 1?






8

A gold-mining company expects to sell 10,000 ounces of gold 6 months from today. The revenue risk of selling the gold can be hedged by






9

Suppose that Swiss wrist watches priced in Swiss francs become very popular among U.S. consumers while Britain experiences relatively higher inflation than the United States at the same time. Assuming that all other economic parameters remain constant, which one of the following statements is most accurate?






10

Assuming exchange rates are allowed to fluctuate freely, which one of the following factors would likely cause a nation’s currency to appreciate on the foreign exchange market?






Result

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