Requirement of import licenses
B.
Approval by a country’s central bank
C.
Implementing multiple exchange rates
D.
Countertrade
E.
Issuing import deposit requirements
A(n) ________ is a country or territory whose financial sector features very few regulations and few, if any, taxes.
A.
booking center
B.
operational center
C.
securitization
D.
deregulation
E.
offshore financial center
One simple form of countertrade is ________, in which goods are exchanged for others of equal value.
A.
liquidity
B.
multiple exchange rates
C.
spot rates
D.
barter
E.
hard currency
Companies can be better skilled at foreign exchange activities by doing all of the following EXCEPT ________.
A.
working with major banks
B.
getting the best deal possible
C.
consolidating to save
D.
using telephones, e-mails, or faxes
E.
matching needs to providers
The international capital market consists of the ________, ________, and ________.
A.
vehicle currency, currency futures contract, liquidity
B.
international bond market, international equity market, Eurocurrency market
C.
countertrade, interbank market, securities exchange
D.
stock market, bond market, currency market
E.
liquidity, Eurobond, over-the-counter (OTC) market
To exchange currency in international transactions, companies rely on the ________, where currencies are bought and sold.
A.
over-the-counter (OTC) market
B.
interbank market
C.
forward market
D.
foreign exchange market
E.
Eurocurrency market
Which of the following statements about forward rates is FALSE?
A.
The forward rate shows a nation’s present and future economic conditions.
B.
It is an exchange rate at which two parties agree to exchange currencies on a future date.
C.
Forward rates show the expectations of traders and bankers regarding a currency’s future spot rate.
D.
The forward market handles transactions at forward rates.
E.
Forward rates do not reflect a country’s social and political situation.
Which of the following currency instruments is NOT used in the forward market?
A.
Derivatives
B.
Forward contracts
C.
Currency swaps
D.
A currency forward contract
E.
Clearing
The practice of insuring against potential losses that result from adverse changes in exchange rates is called ________.
A.
interest arbitrage
B.
currency arbitrage
C.
currency hedging
D.
currency speculation
E.
currency conversion
Equity normally takes the form of ________, or shares of ownership in a company’s assets.
A.
liquidity
B.
derivative
C.
bonds
D.
stock
E.
Debt
Which of the following is NOT a goal for government imposing currency restrictions?
A.
Protecting a currency from speculators
B.
Preserving a country’s hard currencies
C.
Preserving hard currencies to pay for imports and financing trade deficits
D.
Permitting convertibility of currency
E.
Preventing investment in other nations
As many countries abandoned central planning and socialist-style economics, the pace of privatization ________ worldwide.
A.
plummeted
B.
accelerated
C.
fell
D.
declined
E.
increased only slightly
