Which one of the following is a part of the Bretton Woods System? The price of gold was pegged at $38 per ounce Each country was responsible for maintaining its exchange rate within +/- 2% of its adopted par value. Gold was the only medium of international exchange It resulted in the creation of IMF
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- International financial management: MCQ If the direct exchange rate of the pound is worth $1.3825, What is the indirect rate of the pound? (a) about 0.7233 US dollars. (b) about 1.3825 pounds. (c) about 0.7233 pounds. (d) about 0.7533 pounds. 2. Assume the Canadian dollar is equal to £0.51 and the Peruvian Sol is equal to £0.16. The value of the Canadian dollars Peruvian Sol is: (a) about 3.1875 Sol (b) about .3137 Sol (c) about 5.7681 SolWhich of the following is true regarding Bretton Woods Agreement EXCEPT _______. A. silver replaces gold as the medium of exchange B. every currencies are backed by gold C. declaring fixed exchange rates between currencies D. government intervention to limit exchange rates fluctuation above or below their initially established levelsMatch each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).
- Which of the following statements is/are not related to the Bretton Woods Agreement? I. Bretton Woods Agreement called for fixed exchange rates between currencies. II. Governments intervened to prevent exchange rates from moving more than 1 percent above or below their initially established levels. III. The agreement lasted from 1944 until 1971. IV. Every national currencies would be backed by gold. A. I, III, IV B. None C. II D. II, IIIIf the U.S.DOLLAR is determined to be the functional currency, which of the following is usually used to restate to US$ monetary assets and liabilities to the reporting currency? I. The average exchange rate II. The historical exchange rate III. The current exchange rate A) III only. B) Either Il or III, depending on the nature of the item. C) I only. D) II only.An exchange rate is the price of one country's currency expressed in another country's currency. The exchange rates of the euro () and the Japanese yen (X) relative to the U.S. dollar ($) are listed as follows: Spot Rate 0.6589 / $:1 Euro Yen 99.4400 / $1 quotation, the foreign exchange rate represents the number of American dollars that can be When exchange rates are stated as purchased with one unit of foreign currency. Given the exchange rate data above, how many yen (x) can one euro ( 1) purchase? ○ ¥ 166.01 x181.10 ○ ¥ 150.92 O173.56 quotation. The foreign currency price of one unit of the home currency is called
- Until August 1971, industrialized countries around the world maintained a fixed exchange rate of their currencies with the U.S. dollar, which was inked to gold. The gold standardized system was called the Bretton Woods Fixed Exchange Rate System. This system collapsed in 1971, and since then, the dollar has not been linked to gold Based on your understanding of the international monetary system, complete the following statements: exchange rate is the quoted price for a unit of foreign currency to be delivered at a specified date in the future. exchange rate that is allowed to fluctuate only slightly (if at all) around the par value. The government sets a When American customers import less from Europe than they export to Europe, the euro The ▼ relative to the dollar. of a currency refers to an increase or decrease of the stated par value of a currency whose value is fixed. Under afloating regime, supply and demand for the currency determine the exchange rate. Currencies under such a…Until August 1971, industrialized countries around the world maintained a fixed exchange rate of their currencies with the U.S. dollar, which was linked to gold. The gold standardized system was called the Bretton Woods Fixed Exchange Rate System. This system collapsed in 1971, and since then, the dollar has not been linked to gold. Based on your understanding of the international monetary system, complete the following statements: A exchange rate is the quoted price for a unit of foreign currency to be delivered within a very short period of time. The government sets a exchange rate that is allowed to fluctuate only slightly (if at all) around the pa value. • When American customers import less from Europe than they export to Europe, the euro relative to the dollar. • The of a currency refers to a decrease or increase, respectively, in the foreign exchange value of a floating currency. ● Under a floating regime, the government plays a significant role in managing the exchange rate by…b) Complete the following sentences based on your readings on International Financial Management. (One term may be used more than once) i. ii. iii. Suppose the spot exchange rate is 2 US dollars per British pound. The forward exchange rate is 0.5263 pound per dollar. The pound is selling at a forward Investing in a financial instrument other than one's home currency and locking in the proceeds through the forward rate is called states that difference between the forward and spot exchange rates is related to the interest rate differential between the currencies.
- The Hi-Stakes Company has a number of importing and exporting transactions. Importing activities result in payables and exporting activities result in receivables (CU represents the local currency unit of the foreign entity) Required: a. If the direct exchange rate increases, does the dollar weaken or strengthen relative to the other currency? If the indirect exchange rate increases, does the dollar weaken or strengthen relative to the other currency? Direct exchange rate Indirect exchange rate b. Indicate in the following table whether H-Stakes will have a foreign currency transaction gain, loss, or not be affected (NA) by changes in the direct or indirect exchange rates for each of the four situations presented Importing Importing Exporting Exporting Dollar LCU Dollar LCUUsing the cost and revenue information shown for Dekalb, Inc., determine how the costs, revenue, and cash flow items would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZS = $0.55, (2) NZS = $0.60, and (3) NZ$ = 50.65. (Assume U.S. sales will be unaffected by the exchange rate.) REVENUE AND COST ESTIMATES: DEKALB, INC. (IN MILLIONS OF U.S. DOLLARS AND NEW ZEALAND DOLLARS) U.S. Business Sales $1,000 Cost of Materials 650 Operating 350 New Zealand Business NZ$900 300 0 Expenses Interest Expense Cash Flow 250 -$250 0 NZ$600 Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Round your answers to the nearest dollar. Sales U.S. NZ$ = $0.55 NZ$ = $0.60 NZS = $0.65 $ 1,000 $ 1,000 $ 1,000 New Zealand Total NZ$900 - NZ$900 - NZ$900 - $ $ S Cost of Materials U.S. $ 650 New Zealand NZ$300 = NZ$300 = Total $ $ Operating expenses $ 350 Interest expenses $ 250 Cash flow $ 650 5 650 NZ$300…Assume the following exchange rates: $1 = NZ$3, NZ$1 = MXP2, and $1 = MXP5. Given this information, as you and others perform triangular arbitrage, the exchange rate of the New Zealand dollar (NZ) with respect to the U.S. dollar should ____, and the exchange rate of the Mexican peso (MXP) with respect to the U.S. dollar should ____. A. appreciate; appreciate B. depreciate; depreciate C. remain stable; appreciate D. depreciate; appreciate E. appreciate; depreciate