Chapter 2, Economics - International Economics And Development

1

Boyce Dynamics, a U.S. maker of LED flashlights, fills unsolicited orders from foreign buyers. It has not proactively investigated international trade options. Boyce Dynamics is best categorized as a ________.

2

The CEO of Coffman Enterprises wants to export products to foreign markets. However, top executives at Coffman are concerned that the firm will face fierce competition from foreign rivals because Coffman lacks significant core competencies. The executives are most likely worried that Coffman lacks ________.

3

This spring break you are planning to leave the United States and visit London, where you will stay in a hotel for 10 days. The London hotel will be performing a(n) ________.

4

One reason that companies use the foreign-exchange market is to diversify their expenses from other sources.

5

________ are among the fastest-growing economic activities in the world.

6

Companies are likely to export products abroad in all of the following situations EXCEPT ________.

7

Companies use the foreign-exchange market to convert money for use in financial transactions.

8

Arbitrage is the purchase of foreign currency on one market for immediate resale on a foreign market in order to profit from a price discrepancy.

9

Ryan, a foreign-exchange dealer, sold U.S. dollars for Swiss francs in the United States, then sold Swiss francs for Japanese yen in Switzerland, and then sold the Japanese yen for U.S. dollars in the United States. Ryan hopes that he will end up with more U.S. dollars than when he began. Which term best describes Ryan's actions?

10

Which of the following is an example of cryptocurrency?

11

An American investing in a London-based company is an example of interest arbitrage.

12

A document requesting payment 30 days after delivery is known as a ________.

13

Companies most likely use the foreign-exchange market to ________.

14

Companies most likely use the foreign-exchange market to ________.

15

In the spot market, the spread is the difference between the bid and offer rates and is the trader's profit margin.

16

An offer is the right but not the obligation to buy or sell foreign currency.

17

The bid is the price at which the trader is willing to sell foreign currency.

18

Western Union's role in foreign-exchange trading is best described as ________.

19

Options are more flexible than forward contracts.

20

If the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a forward premium.

21

A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.

22

A currency sells at a forward premium when the forward rate is greater than the spot rate.

23

If a foreign currency is quoted in American terms (the direct quote) and the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a ________.

24

In an FX swap, one currency is swapped for another on one date and then swapped back on a future date.

25

Hong Kong is one of the top four largest markets in the world in foreign-exchange trades and the largest in Asia.

26

The U.S. dollar is important as a vehicle for foreign-exchange transactions between two countries other than the United States.

27

A major challenge faced by Western Union in transferring money between the United States and Mexico is that Mexican citizens trust the banks but do not trust Western Union due to its reliance on global banks.

28

The U.S. dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign-exchange center in the world.

29

According to 2010 surveys, the most frequently traded currency pair is the U.S. dollar and Japanese yen.

30

In the spot market, the ________ is the difference between the bid and offer rates and is the trader's profit margin.

31

Which of the following is the price at which the trader is willing to sell foreign currency?

32

The U.S. dollar is widely traded because it is a transaction currency in many international commodity markets.

33

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign-exchange traders agree to the transaction.

34

The ________ is the most widely traded currency in the world.

35

Most foreign exchange is handled through voice brokers.

36

A foreign-exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date as specified in a standardized contract to all participants in the specified market is known as a(n) ________.

37

In which of the following transactions is a currency switched with another on one date and then switched back on a future date?

38

In which of the following transactions is one currency swapped for another on one date and then swapped back on a future date?

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Chapter 2, Economics - International Economics And Development

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