Principles of Management and Leadership Satterlee 1e liberty university course - Test Bank

Principles of Management and Leadership Satterlee 1e liberty university course – Test Bank

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Sample Questions Are Posted Below

Matching Questions

1. Indirect quotation
2. Volatility
3. Devaluation
4. Exchange rate
5. Cross rate
6. Ask/Offer rate
7. Forward exchange rate
8. Direct quotation
9. Floating exchange rate
10. Over-the-Counter Market
11. Bonds
12. Bid rate
13. Revaluation
14. Stocks
15. Spot rates
16. Arbitrage
17. Foreign exchange market (FX)
18. Global financial markets
19. Hedging
20. Fixed exchange rates

Matching Answers

1. Expresses the value of domestic currency in foreign currency and is not as common
2. Represents the possibility of a change in exchange rates projected over a year
3. deliberate downward adjustment in the official exchange rate
4. Currency of one country is exchanged for the currency of another country
5. Calculated when parties are conducting a trade in currencies other than USD
6. The selling price of a currency (higher rate)
7. Rate at which currency can be purchased in the future
8. Exchange rate of a foreign currency in domestic currency units
9. Freely determined by the interaction of supply and demand
10. Decentralized market of securities that are not listed on an exchange market
11. Alternative way for companies and governments to raise money
12. The buying price of a currency (lower rate)
13. Upward change in the currency’s value
14. Represent shares of equity that a company releases for sale
15. Exchange rate of one currency in units of another currency immediately
16. Buying a commodity when its price is low and then reselling it after prices rise in order to make a profit
17. Physical & virtual institutionalized structure whereby currency of one country is exchanged to currency of another
18. Promote the exchange of goods and services across national borders
19. Measures taken to protect from loss that may occur due to exchange rate or currency fluctuation
20. Established and generally maintained by intervention from governments in the foreign exchange markets

Multiple Choice and True/False

1. On August 15, 1971, President Richard Nixon completely ended the _________:
   1. Maastricht Treaty
   2. Smoot-Hawley Tariff Act
   3. Bretton Woods Agreement
   4. *Gold standard
2. The OTC Market has gradually evolved into the largest, fastest, and most flexible currency trading market in the world.
   1. True
   2. *False
3. The reasons that global financial markets are important to borrowers.
   1. Expanding the supply of money and expanding lending opportunities
   2. Expanding lending opportunities and reduce the cost of money
   3. *Reduce the cost of money and expand the supply of money
   4. Reducing risk and expanding lending opportunities
4. It was established and launched in 1972 by the Chicago Mercantile Exchange for the purpose of developing future trade in financial products.
   1. World Bank
   2. *International Monetary Market (IMM)
   3. International Monetary Fund (IMF)
   4. Federal Reserve Bank
5. Participation is voluntary, but before qualifying to adopt the Euro, a country must participate in the _______as one of the convergence criteria for entry.
   1. Economic and Monetary Union (EMU)
   2. Eurocurrency market
   3. *ERM II
   4. ERM I
6. Usually facilitate a connection between two anonymous parties that are willing to trade?
   1. Commercial Banks and Investments Banks
   2. Central Banks and Governments
   3. Corporations
   4. *Brokers
7. Called for the development of a European Union that utilized the existing offices of the European Community, supplemented by new intergovernmental offices on foreign and security policy, home affairs, and justice.
   1. *Maastricht Treaty
   2. Smoot-Hawley Tariff Act
   3. Bretton Woods Agreement
   4. Lisbon Treaty

8. The 1930 Fordney-McCumber Act raised U.S. tariffs to historically high levels.
   1. True
   2. *False
9. The role of the _______________ is to supervise the exchange rate practices of member countries and to encourage the free convertibility of any national money into the monies of other countries.
   1. World Bank
   2. International Monetary Market (IMM)
   3. *International Monetary Fund (IMF)
   4. Federal Reserve Bank
10. Primary guardians of national currencies and usually responsible for setting monetary policy and exchange rate policy.
    1. Commercial Banks and Investments Banks
    2. *Central Banks and Governments
    3. Corporations
    4. Brokers
11. The membership requirements for the European Monetary Union (EMU) are based on the convergence criterion: Price Stability, Sound Public Finance, Sustainable Public Finances Commodity Durability Convergence and Exchange Rate Stability.
    1. *True
    2. False
12. Three major events resulted from the __________: (1) the establishment of a fixed exchange rate system, (2) the International Monetary Fund, and (3) the World Bank.
    1. Maastricht Treaty
    2. Smoot-Hawley Tariff Act
    3. *Bretton Woods Agreement
    4. Fordney-McCumber Act
13. The law of volatility states that similar goods or commodities in different countries should remain at the same price after conversion of currencies according to current exchange rates.
    1. True
    2. *False
14. Use the FX market to facilitate international business activities.
    1. Commercial Banks and Investments Banks
    2. *Corporations
    3. Central Banks and Governments
    4. Brokers

15. In the United States, the _____________ is responsible for regulating the growth of the economy, which is accomplished by the increase or decrease of money supply.
    1. World Bank
    2. International Monetary Market (IMM)
    3. International Monetary Fund (IMF)
    4. *Federal Reserve Bank
16. The major difference between the currency futures market and the OTC market is that futures settle gains and losses on a daily basis through the margin mechanism.
    1. *True
    2. False
17. Wholesale conditions of pricing between major financial institutions, as well as to the circle of the largest banks that participate in FX trade under wholesale conditions.
    1. FX Market
    2. International Monetary Market (IMM)
    3. *Interbank market
    4. Over-the-Counter market
18. A pegged exchange rate is an exchange rate that is freely determined by the interaction of supply and demand.
    1. True
    2. *False
19. If a currency price is expected to rise in the future, what is the higher price a buyer pays?
    1. Forward Exchange
    2. Forward Discount
    3. Forward Neutral
    4. *Forward Premium
20. The European Community established its Exchange Rate Mechanism (ERM) in 1979 and formed the initial steps for the creation of a single European currency.
    1. *True
    2. False
21. The reasons that global financial markets are important to lenders.
    1. Expand the supply of money and reduce the cost of money
    2. Reducing risk and reducing the cost of money
    3. Reduce the cost of money and regulate the supply of money
    4. *Expanding lending opportunities and reducing risk
22. The difference between a spot rate and a forward rate is termed the
    1. Forward Exchange
    2. *Forward Discount
    3. Forward Neutral
    4. Forward Premium
23. The majority of transactions on the FX include operations with the Euro, where one party sells or buys dollars using other world currencies.
    1. True
    2. *False
24. Was created to promote general economic development. Provides loans in addition to technical expertise to developing countries at more favorable terms than commercial lenders
    1. *World Bank
    2. International Monetary Market (IMM)
    3. International Monetary Fund (IMF)
    4. Federal Reserve Bank
25. Generally the market makers on the foreign exchange
    1. Corporations
    2. Central Banks and Governments
    3. *Commercial Banks and Investments Banks
    4. Hedge Funds