SAMPLE TEST QUESTIONS I. Economics You have just been transferred to Sydney and cover Australia and New Zealand on the sovereign research desk. Australia and New Zealand operate under a free trade agreement. No barriers to trade exist‚ and both currencies float. In this environment‚ an increase in expected inflation in New Zealand would most likely cause what effect? Choose One Answer o o o An increase in exports from New Zealand to Australia An increase in imports to New Zealand from Australia
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3. MONEY Money is everything that serves as universally excepted medium of exchange or means of payment. Functions of money: Medium of exchange – enables people to exchange goods and services for other commodities Store of value – at home money loses value because of inflation so it is better to deposit financial assets with a bank. Money can also be stored in other forms – securities (cenné papiry)‚ shares‚ or bonds (dluhopisy‚ obligace). We can also invest in properties‚ lands‚ arts‚ jewelry
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Union use the Euro as their common currency. Using the functions of money described in chapter 3‚ what are the advantages of a common currency? Money has 3 functions. It serves as a medium of exchange‚ a unit of account and as a store of value. Currency unions‚ such as the Euro‚ are aided by all three of these functions of money. By serving as a medium of exchange a common currency facilitates international transactions in the Eurozone. Without a common currency transaction between individuals
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Readings and Framework SS 4 ¾ R14 Currency exchange rate: determination and forecasting ¾ R15 Economic Growth and investment decision ¾ R16 Economics of Regulation 4-94 91 100% Contribution Breeds Professionalism Economics for Valuation Reading 14: Currency exchange rate: determination and forecasting 5-94 91 100% Contribution Breeds Professionalism R14. Currency Exchange Rates Warm-up ¾ Exchange rate is simply the price or cost of units of one currency in terms of another. ¾ Nominal exchange
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ramifications of the great depression and the concentration of power among a few major economies. Moreover‚ during the period of the Great depression‚ the economies engaged in the so called “beggar thy neighbor” policies i.e. competitive devaluation of the currencies by various economies in order to substitute imports with domestic goods and increase the competitiveness of the exports in the international markets. In addition‚ a number of countries also imposed trade barriers‚ restricting the recovery of international
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Publication Services. Charles S. Gardner prepared this version. The Pros and Cons of Full Dollarization Since the end of the Bretton Woods system of fixed exchange rates nearly thirty years ago‚ the old dilemma facing countries of finding workable currency exchange arrangements has become more challenging‚ and the choices have become more varied. The decision about which exchange rate system to adopt has become more difficult as world trade and capital markets have become more integrated. New problems
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CHAPTER 10 Measuring and Managing Translation and Transaction Exposure EASY (definitional) 10.1 ___________ a certain currency exposure means establishing an offsetting currency position so that the gain or loss from the exposure on the original currency is exactly offset buy the gain or loss from the currency hedge. a) Arbitraging b) Cross-hedging c) Hedging d) Risk shifting Ans: c Section: Alternative measures of foreign exchange exposure Level: Easy 10.2 Hedging cannot provide protection
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to hold down the value of the yuan because the Chinese government believes that the appreciation of their currency can cause serious challenges to its export industry‚ as the price of the exported goods will increase causing the demand for Chinese goods worldwide to weaken and eventually causing serious unemployment in the country. The most obvious sign that China is pursuing a weak currency policy is shown by the Chinese Central Bank had been maintaining a fixed exchange rate for years. Now China’s
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different unit of money‚ which is called as currency. Currency is a medium that is used in the world to be the media as payments. Each country have their own currency‚ some small country are using the same currency as their surroundings e.g. USA – US Dollar (USD); Germany‚ Spain‚ Greece‚ etc. – Euro (EUR); UK – Poundsterling (GBP); Singapore – Singapore Dollar (SGD); Australia – Australia Dollar (AUD). Therefore one currency will be related to the other currency in the other country‚ in other word‚ if
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4 / 268 Outline Week 1 — Introduction and Motivation for International Finance (Ch. 1‚ 2‚ 5.1‚ BH // Ch. 1 & 2 MF // Ch. 1 & 2‚ PS ) Week 2 — Currency Markets and Instruments: Spot markets (Ch. 3‚ PS) Week 3 — Currency Markets and Instruments: Forward markets (Ch. 4 – 5‚ PS) Week 4 — Currency Markets and Instruments: Swaps and Options (Ch. 7 - 8‚ PS) Week 5 — Risk Management (Ch. 14‚ 17‚ BH // Ch. 12 & 13‚ PS) Week 6 — Exchange Rate Determination
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