MCQ & True/false : International Financial Management: 1. Changes in relative inflation rates can affect international trade activity, which influences the demand for and supply of currencies and therefore influences exchange rates. (a) True (b) False 2. Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a 6% premium. Today’s spot rate of the Canadian dollar is £0.47. The spot rate forecasted for one year ahead is: (a) £0.4418 (b) £0.3418 (c) £0.4982 (d) £0.5418 3. A currency call option grants the right to buy a specific currency at a designated price within a specific period of time. (a) True (b) False
MCQ & True/false : International Financial Management: 1. Changes in relative inflation rates can affect international trade activity, which influences the demand for and supply of currencies and therefore influences exchange rates. (a) True (b) False 2. Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a 6% premium. Today’s spot rate of the Canadian dollar is £0.47. The spot rate forecasted for one year ahead is: (a) £0.4418 (b) £0.3418 (c) £0.4982 (d) £0.5418 3. A currency call option grants the right to buy a specific currency at a designated price within a specific period of time. (a) True (b) False
Chapter9: Forecasting Exchange Rates
Section: Chapter Questions
Problem 28QA
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MCQ & True/false : International
1. Changes in relative inflation rates can affect international trade activity, which influences the demand for and supply of currencies and therefore influences exchange rates.
(a) True (b) False
2. Assume that the forward rate is used to
(a) £0.4418
(b) £0.3418
(c) £0.4982
(d) £0.5418
3. A currency call option grants the right to buy a specific currency at a designated price within a specific period of time.
(a) True (b) False
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