FINA 405 International Financial Management Chapter 2 and Chapter 3 Practice Questions
1. Calculation Questions (20 questions)
1. The international
... [Show More] monetary system can be defined as the institutional framework within which A. international payments are made.
B. movement of capital is accommodated.
C. exchange rates among currencies are determined.
D. all of the above
2. The international monetary system went through several distinct stages of evolution. These stages are summarized, in alphabetic order, as follows:
(i)- Bimetallism
(ii)- Bretton Woods system
(iii)- Classical gold standard
(iv)- Flexible exchange rate regime (v)- Interwar period
The chronological order that they actually occurred is:
A. (iii), (i), (iv), (ii), and (v)
B. (i), (iii), (v), (ii), and (iv)
C. (vi), (i), (iii), (ii), and (v)
D. (v), (ii), (i), (iii), and (iv)
3. One potential drawback of the gold standard is that
A. the world economy can be subject to deflationary pressure due to the limited supply of monetary gold.
B. the world economy can be subject to inflationary pressure without changes in the supply of monetary gold.
C. gold price is volatile.
D. all of the above
4. Under the Bretton Woods system
A. there was an explicit set of rules about the conduct of international monetary policies.
B. each country was responsible for maintaining its exchange rate within 1 percent of the adopted par value by buying or selling foreign exchanges as necessary.
C. the U.S. dollar was the only currency that was fully convertible to gold.
D. all of the above
5. Special Drawing Rights (SDR) are
A. an artificial international reserve allotted to the members of the International Monetary Fund (IMF), who can then use it for transactions among themselves or with the IMF.
B. a "portfolio" of currencies, and its value tends to be more stable than the currencies that it is comprised of.
C. used in addition to gold and foreign exchanges, to make international payments.
D. all of the above [Show Less]