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- Why the single currency eliminates exchange rate fluctuation and why is better for the countries to use the a common currency?4. What is Dunning's OLI framework and how does it help us to understand foreign direct investment ?can you answer question 33, please? 33) Transfer pricing may be a problem for host countries as A) profits may not be accurately recorded as occurring in the host country. B) the cost of exchanging one currency for another is costly in monetary terms and time. C) prices are transferred to the local currency resulting in losses if exchange takes place on a day when the exchange rate is 'low'. D) profits are always removed to the host country
- As exchange rates change, the rates A. all of these options are true. B. change the relative purchasing power between countries. C. can affect imports and exports between those two countries. D. will affect the flow of funds between the countries.Question 4 There are two main functions of foreign exchange market; to convert the currency of one country into the currency of another, and to provide some insurance against foreign exchange risk. a. Define foreign exchange risk and explain the differences between spot exchange rates, forward exchange rates, and currency swap in order to insure against foreign exchange risk.When a country adopts a fixed exchange rate regime, what is that the country has to give up (trade off)?
- 4. Explain how exchange rates can affect a firm’s global sales.?Short answer question Why do nations use a crawling peg exchange rate system? What role does speculation play in this system?Q1-19 Other things equal, if exchange rates are flexible, and if US consumers increase their demand for Japanese goods at the same time that Japanese consumers increase their demand for US goods, then we would expect the dollar to: a. appreciate relative to the yen. b. depreciate relative to the yen. c. remain unchanged in value relative to the yen. d. appreciate, depreciate, or remain unchanged in value relative to the yen; an answer cannot be determined without more information
- PQ17 In view of the theory of optimum currency areas, a country would be a good candidate for membership in such an area if it had a _______ degree of factor mobility with other potenttial member countries of the currency area and if the country were a relatively _____ economy a. low / closed b. low/open c. high /closed d. high / open14. Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Type of Transaction Foreign Currency Foreign Exchange Gain /Loss A. Export sale Appreciates Loss B. Import purchase Appreciates Gain C. Import purchase Depreciates Gain D. Export sale Depreciates GaiQ. If barriers to international securities markets are reduced, will a country’s interest rate be more or less susceptible to foreign lending and borrowing activities? Explain.