Question

37-)

If the spot rate is JPY129.87/USD and the 6 month forward rate is JPY128.53/USD, then the 6-month yen is selling at a forward ________ of approximately ________ per annum.

Select one:

a. premium; 2.09%

b. premium; 2.06%

c. discount; 2.09%

d. discount; 2.06%

11-)

_______ is the active buying and selling of the domestic currency against foreign currencies.

Select one:

a. Foreign Direct Investment

b. Indirect Intervention

c. Federal Funding

d. Direct Intervention

12-)

Which one of the following management techniques is likely to best offset the risk of long-run exposure to receivables denominated in a particular foreign currency?

Select one:

a. Increase sales in this country.

b. Borrow money in the foreign currency in question.

c. Lend money in the foreign currency in question.

d. Increase sales to that country.

14-)

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, a country that has given up their own sovereignty over monetary policy is considered to have:

Select one:

a. hard pegs.

b. soft pegs.

c. a residual agreement.

d. floating arrangements.

Answer #1

ans -37 | ||||||||

Yen is appreciated againt the USD as per forward rate. | ||||||||

yen premium = | ||||||||

Spot rate | 129.87 | |||||||

Forward rate | 128.53 | |||||||

Therefore yen rate = | ||||||||

Spot rate | =1/129.87 | 0.0077 | ||||||

Forward rate | =1/128.53 | 0.00778 | ||||||

forward premium = (0.0078-0.0077)/0.0077 | 1.043% | |||||||

Therefore annual premium = 1.043*2 | 2.09% | |||||||

correct answer is option : | a. premium; 2.09% | |||||||

ans -11 | ||||||||

correct answer is option : d. Direct Intervention | ||||||||

ans -12 | ||||||||

correct answer is option : b. Borrow money in the foreign currency in question. | ||||||||

ans -14 | Correct answer is option : a. hard pegs. |

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