31. When a buyer locks in an exchange rate and

Question : 31. When a buyer locks in an exchange rate and : 1401826



31. When a buyer locks in an exchange rate and avoids the risk of currency fluctuations,

it is called:


a.  the spot market.

b.  the gray market.

c.  vertical purchasing.

d.  hedging.

e.  factoring.



32. Protecting oneself against potential loss is called:


a.  hedging.

b.  factoring.

c.  risk analysis.

d.  portfolio reduction strategy.

e.  devaluing.



33. Forward currency markets typically exist for the ______________ currencies.


a.   Asian



d.   convertible

e.   flat



34. The extent to which a foreign company changes dollar prices of its products in the

U.S. market as a result of exchange rate fluctuations is called:


a.  hedging.

b.  exchange rate pass-through.

c.  a target exchange rate.

d.  factoring.

e.  inflation-proofing.



35. The __________________ of a nation summarizes all the transactions that have

taken place between its residents and the residents of other countries over a specified

time period (usually a month, quarter or a year).


a.  target exchange rate

b.  portfolio acquisition

c.  balance of payments

d.  debt accumulation

e.  exchange inflation



36. With respect to a balance of payments between nations calculation, transactions are

recorded in three categories.  These are the current account, the capital account,

and the:


a.  goods inventory.

b.  cost of goods sold.

c.  manufacturer’s inventory.

d.  capital goods.

e.  official reserves.



37. With respect to balance of payments calculation, when a German tourist visits the

United States and spends money on meals and lodging, it is a(n)  ___________ to the

U.S. trade in services balance.


a.  debit

b.  credit

c.  convertible

d.  exchange interest factor

e.  non-entity



38. Balance of payments between nations is based on which of the following principles

of accounting?


a.  Debit only.

b.  Credit only.

c.  Factor analysis.

d.  First in, last out.

e.  Double entry accounting.



39. Double entry accounting, with respect to calculation of balance of payments

calculation, means:


a.  the balance of payments statement must always balance.

b.  the balance of payments statement will always favor the larger nation.

c.  the balance of payments statement will always favor the smaller nation.

d.  the balance of payments statement will never be in complete balance.

e.  the balance of payments statement will rarely be accurate.



40. The government entity which prepares the balance of payments statement in the

United States is:


a.  the Federal Reserve.

b.  the Internal Revenue Service.

c.  the Customs Department.

d.  the Department of Commerce.

e.  the Federal Communications Commission.




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