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Multiple Choice Quiz
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1
If a currency is being quoted at a premium for future delivery, that means
A)it cannot be bought for immediate delivery.
B)in the expectations of the world financial community, that currency's value will be higher in the future.
C)in the expectations of the world financial community, that currency's value will be lower in the future.
D)in the expectations of the world financial community, that currency's value will not be changed in value.
2
The Fisher Effect describes the relationship between:
A)arbitrage costs and market values.
B)the law of one price and PPP.
C)real and nominal interest rates.
D)debt dominated in coins called "sovereigns."
3
Monetary policies:
A)address collecting of money by governments.
B)address spending of money by governments.
C)determine the types of taxes collected.
D)control the amount of money in circulation.
4
In forecasting exchange rate movements, the efficient market approach:
A)assumes that the markets have all the available and relevant information.
B)is favored by capitalist economies.
C)develops various econometric models attempting to capture variables.
D)suggests that the best predictor of tomorrow's price is yesterday's price.
5
If a country's BOP is in deficit, that means
A)it has a healthy economy.
B)trade controls are on their way out.
C)it does not have exchange controls.
D)more money is going out than coming in.





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