國際金融英文版試題chapter4

INTERNATIONALFINANCE

AssignmentProblems(4)Name:Student#:

I.Choosethecorrectanswerforthefollowingquestions(onlycorrectanswer)(3.5creditsforeachquestion,totalcredits3.5x20=70)

1.Theexchangeratesystemrefersto__________.

A.acountry’sinternaleconomicpoliciessuchasemployment,inflationandinterestratelevels

B.acountry’smonetarypolicies

C.acountry’sfiscalpolices

D.acountry’schoiceastowhichexchangerateregimesuchasfixedorfloatingorbetweentofollow

2.Theinternationalmonetarysystemisbroadlydefinedas___________.

A.thesetofconventions,rules,proceduresandinstitutionsthatgoverntheconductoffinancialrelationsbetweennations

B.thesetofrulestomanageeverycountry’scentralbanks

C.thesetofrulestosolvetradedisputesbetweencountries

D.thesetofrulestodevelopworldeconomy

3.Underthegoldstandard,theexchangeratewasfixedbecause__________.

A.eachcurrencyunitcouldbeconvertedtoaweightofgold

B.thegoldcouldbeexportedandimportedwithnorestrictions

C.goldcoinscouldbefreelyminted

D.alloftheabove

4.Whenthegoldstandardprevailed,theUnitedStatesfixedthepriceofgoldat$20.646perounceandtheBritainfixedthepriceat4.252perounce.Nowsupposethefeesfortransportingoneounceofgoldwereapproximately$0.03persterlingofgold.Thentheexchangerateofdollarversussterlingwouldfluctuatebetween_________.

A.$4.8856/?and$4.8256/?

B.$4.9042/?and$4.8070/?

C.$4.9770/?and$4.7463/?

D.Wedon’tknow,becauseitdependsonthesupplyanddemandforcesintheforeignexchangemarket

5.Underthegoldstandard,theparvalueoftheexchangeratewasdeterminedby__________.

A.goldparityoftherelativecurrencies

B.interestrateoftherelativecurrencies

C.demandandsupplyforcesintheforeignexchangemarket

D.inflationrateoftherelativecurrencies

6.Whichofthefollowingistrueregardingthecollapseofthegoldstandardsystem?

A.TheWorldWarIhadmanyEuropeancountriessuspendconvertibilityoftheircurrenciesintogold.

B.ThepoliticalcostsofmaintainingtheovervaluedpoundweresogreatintheUnitedKingdom.

C.Nationsfacing1929–1933worldwiderecessiondecidedtopursueobjectivessuchashigheremploymentratesandrealgrowthrates,ratherthantomaintaintheexchangevalueoftheircurrencies.

D.Alloftheabovearethereasonsthatthegoldstandardfinallycollapsed.

7.TheU.S.dollarwasdesignatedastheinternationalcurrencyininternationalsettlementsundertheBrettonWoodssystem.Thedollarwasacceptedbytherestoftheworldbecause__________.

A.itcouldbeusedtopurchaseU.S.goodsandservices

B.itcouldbeconvertedtogoldatapriceof$35/ounce

C.theU.S.wastheonlysuperpoweratthattime

D.theIMFforcedtherestoftheworldtousedollartosettleinternationaldebts

8.TheprincipalfunctionoftheInternationalMonetaryFund(IMF)wasoriginallyto__________.

A.actasasupranationalregulatoryagencyforallcountries’centralbanks

B.lendtomembernationsexperiencingashortageofforeignexchangereserves

C.financepostwarreconstruction,particularlyinEuropeandJapan

D.reducetradebarriersandsettledisputesamongcountriesrelatingtocurrencynegotiations

9.Before1971theexchangerateswereprettystablebecauseoftheBrettonWoodsAgreement.SoiftheparvalueoftheJapaneseYenandU.S.dollarwassetby￥100/$,theupperlimitandlowerlimitthatthisexchangeratewasallowedtofluctuatefreelywouldbe__________.

A.￥101/$and￥99/$

B.￥102.25/$and￥97.75/$

C.￥105/$and￥95/$

D.￥110/$and￥90/$

10.Theincreaseinvalueofacurrencypeggedtogoldoranothercurrencyisknownas__________,

A.appreciation

B.depreciation

C.revaluation

D.devaluation

11.Acountrythatregulatestherateatwhichitscurrencyisexchangedforallother

AnswerstoAssignmentProblems(4)

PartI.

1.D2.A3.D4.A5.A6.D7.B8.B9.A10.C

11.A12.D13.D14.D15.B16.A17.C18.B19.A20.C

PartII.

1.Since50%($1)+50%(1€)=Mex$1

S$/€=1.10,S€/$=1/1.10=0.9091

So,50%($1.10)+50%($1)=$1.05/Mex$1

2.50%(€0.9091)+50%(€1)=€0.9545/Mex$1

3.0.5/1.05=0.4762

4.0.5/0.9545=0.5238

5.$4.8665/?

6.buypoundinforeignexchangemarket,changepoundforgoldinEngland,transportgoldtoU.S.,convertgoldtodollar.(alternativeanswer)

7.towardstotheparrate:$4.8665/?,becausethesupplyofdollarandthedemandforpoundrise.Thatpushesup