Test bank International Finance MCQ (word)Chap 8.doc

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 8 Foreign Currency Derivatives 8.1 Multiple Choice and True/False Questions 1) Financial derivatives are powerful tools that can be used by management for purposes of A) speculation. B) hedging. C) human resource management. D) A and B above. Answer: D Topic: Financial Derivatives Skill: Recognition 2) A foreign currency ________ contract calls for the future delivery of a standard amount of foreign exchange at a fixed time, place, and price. A) futures B) forward C) option D) swap Answer: A Topic: Futures Contract Skill: Recognition 3) Currency futures contracts have become standard fare and trade readily in the world money centers. Answer: TRUE Topic: Futures Contract Skill: Recognition 4) The major difference between currency futures and forward contracts is that futures contracts are standardized for ease of trading on an exchange market whereas forward contracts are specialized and tailored to meet the needs of clients. Answer: TRUE Topic: Futures Contract Skill: Recognition 5) Which of the following is NOT a contract specification for currency futures trading on an organized exchange? A) size of the contract B) maturity date C) last trading day D) All of the above are specified. Answer: D Topic: Futures Contract Skill: Recognition 6) About ________ of all futures contracts are settled by physical delivery of foreign exchange between buyer and seller. A) 0% B) 5% C) 50% D) 95% Answer: B Topic: Futures Contract Skill: Analytical 7) Futures contracts require that the purchaser deposit an initial sum as collateral. This deposit is called a A) collateralized deposit. B) marked market sum. C) margin. D) settlement. Answer: C Topic: Futures Contract Provisions Skill: Recognition 8) A speculator in the futures market wishing to lock