QUESTION 1 Which of the following statements is most CORRECT? One advantage of forward contracts is that they are default free. Futures contracts generally trade on an organized exchange and are marked to market daily. Goods are never delivered under forward contracts, but are almost always delivered under futures contracts. There are futures contracts for currencies but no forward contracts for currencies. Futures contracts don’t have any margin requirements but forward contracts do. 10 points QUESTION 2 When the value of the U.S. dollar appreciates against another country’s currency, we may purchase more of the foreign currency with a dollar. True False 10 points QUESTION 3 The United States and most other major industrialized nations currently operate under a system of floating exchange rates. True False 10 points QUESTION 4 A foreign currency will, on average, depreciate against the U.S. dollar at a percentage rate approximately equal to the amount by which its inflation rate exceeds that of the United States. True False 10 points QUESTION 5 If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy? 0.50 0.71 1.00 1.41 2.81 10 points QUESTION 6 Suppose 144 yen could be purchased in the foreign exchange market for one U.S. dollar today. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow? 155.5 yen 144.0 yen 133.5 yen 78.0 yen 72.0 yen 10 points QUESTION 7 Suppose that currently, 1 British pound equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc? 1 British pound equals 3.2400 Swiss francs 1 British pound equals 2.6244 Swiss francs 1 British pound equals 1.8588 Swiss francs 1 British pound equals 1.0000 Swiss francs 1 British pound equals 0.3810 Swiss francs 10 points QUESTION 8 A product sells for $750 in the United States. The exchange rate is $1 to 1.65 Swiss francs. If purchasing power parity (PPP) holds, what is the price of the product in Switzerland? 123.75 Swiss francs 454.55 Swiss francs 750.00 Swiss francs 1,237.50 Swiss francs 1,650.00 Swiss francs 10 points QUESTION 9 8. A cheap Yuan value gives China?s __________ an advantage in the global economy. importers subsidies bankers exporters 10 points QUESTION 10 In a forward market hedge, a company that has foreign currency receivables will _______ the foreign currency forward, whereas a company that has foreign currency payables will _______ the currency forward. buy; sell sell; buy borrow; sell lend; buy 10 points Click Save and Submit to save and submit. Click Save All Answers to save all answers.