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.