国际财务管理徐虹 第5章第6章.doc

Chapter 5 Multiple Choice Quiz Suppose you observe the following exchange rates: €1 = $1.25; ￡1 = $2.00. What must the euro-pound exchange rate be? A A €1 = ￡1.60 B €1 = ￡0.625 C €2.50 = ￡1 D €1 = ￡2.50 Feedback: (2) In the forward market, A A) Market participants agree to buy or sell foreign currency in the future at prices agreed-upon today. B) Market participants agree to buy (not sell) foreign currencies in the future at prices agreed-upon today. C) Market participants pay today for a specific amount of foreign currency to be received in the future. D) Market participants agree to buy and sell fixed amounts of foreign currency at spot prices that will prevail in the future. (3) An exchange rate quoted in American terms B A) Says how many units of foreign currency you get for one U.S. dollar. B) Says how many U.S. dollars one unit of foreign currency is worth. C) Is the same as the indirect quotation. D) Is the inverse of the direct quotation. (4) Suppose you observe the following exchange rates: €1 = $.85; ￡1 = $1.60; and €2.00 = ￡1.00. Starting with $1,000,000, how can you make money? A A) Exchange $1m for ￡625,000 at ￡1 = $1.60. Buy €1,250,000 at €2 = ￡1.00; trade for $1,062,500 at €1 = $.85. B) Start with dollars, exchange for euros at €1 = $.85; exchange for pounds at €2.00 = ￡1.00; exchange for dollars at ￡1 = $1.60. C) Start with euros; exchange for pounds; exchange for dollars; exchange for euros. Feedback: Exchange $1m for ￡625,000 at ￡1 = $1.60. Buy €1,250,000 at €2 = ￡1.00; trade for $1,062,500 at €1 = $.85. (5) Consider a trader who takes a long position in a six-month forward contract on British pounds. The forward rate is $1.75 = ￡1.00; the contract size is ￡62,500. At the maturity of the contract the spot exchange rate is $1.65 = ￡1.00 B A) The trader has lost $625. B) The trader has lost $6,250. C) The trader has made $6,250. D) The trader has lost $66,287.88 Feedback: The trader agr