Test bank International Finance MCQ wordChap 6Word文档格式.docx
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Test bank International Finance MCQ wordChap 6Word文档格式.docx
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equilibrium.
Answer:
C
Topic:
TheLawofOnePrice
Skill:
Recognition
2)
________statesthatthespotexchangerateisdeterminedbytherelativepricesofsimilarbasketsofgoods.
Absolutepurchasingpowerparity
Relativepurchasingpowerparity
Interestrateparity
TheFisherEffect
A
PPP
3)
TheEconomistpublishesannuallythe"
BigMacIndex"
bywhichtheycomparethepricesoftheMcDonald'
sCorporation'
sBigMachamburgeraroundtheworld.Theindexestimatestheexchangeratesforcurrenciesbasedontheassumptionthattheburgersinquestionarethesameacrosstheworldandtherefore,thepriceshouldbethesame.IfaBigMaccosts$2.54intheUnitedStatesand294yeninJapan,whatistheestimatedexchangerateofyenperdollarashypothesizedbytheHamburgerindex?
$0.0086/¥
124¥
/$
$0.0081/¥
115.75¥
D
Analytical
4)
Ifthecurrentexchangerateis113JapaneseyenperU.S.dollar,thepriceofaBigMachamburgerintheUnitedStatesis$3.41,andthepriceofaBigMachamburgerinJapanis280yen,thenotherthingsequal,theBigMachamburgerinJapanis________.
correctlypriced
underpriced
overpriced
notenoughinformationtodetermineifthepriceisappropriateornot
B
Analytical
5)
ThepriceofaBigMacintheU.S.is$3.41andthepriceinMexicoisPeso29.0.WhatistheimpliedPPPofthePesoperdollar?
Peso8.50/$1
Peso10.8/$1
Peso11.76/$1
Noneoftheabove
6)
TheimpliedPPPrateofexchangeofMexicanPesosperU.S.dollaris8.50accordingtotheBigMacIndex.ThecurrentexchangerateisPeso10.8/$1.Thus,accordingtoPPPandtheLawofOnePrice,atthecurrentexchangeratethepesois________.
overvalued
undervalued
correctlyvalued
notenoughinformationtoanswerthisquestion
7)
AccordingtotheBigMacIndex,theimpliedPPPexchangerateisMexicanpeso8.50/$1buttheactualexchangerateispeso10.80/$1.Thus,atcurrentexchangeratesthepesoappearstobe________by________.
overvalued;
approximately21%
approximately27%
undervalued;
8)
Ifamarketbasketofgoodscost$100istheUSand70eurosinFrance,thenthePPPexchangeratewouldbe$.70/euro.
FALSE
9)
IfaccordingtothelawofonepricethecurrentexchangerateofdollarsperBritishpoundis$1.75/£
thenatanexchangerateof$1.85/£
thedollaris________.
unknownrelativevaluation
LawofOnePrice
10)
Generallyspeaking,thetheoryofabsolutepurchasingpowerparityworksbetterforsinglegoodsthanforamarketbasketofgoods.
11)
Otherthingsequal,andassumingefficientmarkets,ifaHondaAccordcosts$21,375intheU.S.thenatanexchangerateof$1.98/£
theHondaAccordshouldcost________inGreatBritain.
£
21,375
18,365
10,795
42,322
12)
TheassumptionsforrelativePPParemorerigidthantheassumptionsforabsolutePPP.
Conceptual
13)
________statesthatdifferentialratesofinflationbetweentwocountriestendtobeoffsetovertimebyanequalbutoppositechangeinthespotexchangerate.
TheInternationalFisherEffect
AbsolutePurchasingPowerParity
RelativePurchasingPowerParity
14)
OneyearagothespotrateofU.S.dollarsforCanadiandollarswas$1/C$1.SincethattimetherateofinflationintheU.S.hasbeen4%greaterthanthatinCanada.BasedonthetheoryofRelativePPP,thecurrentspotexchangerateofU.S.dollarsforCanadiandollarsshouldbeapproximately________.
$0.96/C$
$1/C$1
$1.04/C$1
relativePPPprovidesnoguideforthistypeofquestion
15)
EmpiricaltestsprovethatPPPisanaccuratepredictoroffutureexchangerates.
Recognition
16)
Twogeneralconclusionscanbemadefromtheempiricaltestsofpurchasingpowerparity(PPP):
PPPholdsupwellovertheshortrunbutpoorlyforthelongrunandthetheoryholdsbetterforcountrieswithrelativelylowratesofinflation.
PPPholdsupwellovertheshortrunbutpoorlyforthelongrunandthetheoryholdsbetterforcountrieswithrelativelyhighratesofinflation.
PPPholdsupwelloverthelongrunbutpoorlyfortheshortrunandthetheoryholdsbetterforcountrieswithrelativelylowratesofinflation.
PPPholdsupwelloverthelongrunbutpoorlyfortheshortrunandthetheoryholdsbetterforcountrieswithrelativelyhighratesofinflation.
17)
Acountry'
scurrencythatstrengthenedrelativetoanothercountry'
scurrencybymorethanthatjustifiedbythedifferentialininflationissaidtobe________intermsofPPP.
overcompensating
undercompensating
CurrencyValuation
18)
Ifacountry'
srealeffectiveexchangerateindexweretobelessthan100,thiswouldsuggestan________currency.
RealEffectiveExchangeRate
19)
IfwesettherealeffectiveexchangerateindexbetweenCanadaandtheUnitedStatesequalto100in1998,andfindthattheU.S.dollarhasrisentoavalueof112.6,thenfromacompetitiveperspectivetheU.S.dollaris
overvalued.
undervalued.
verycompetitive.
Thereisnotenoughinformationtoanswerthisquestion.
20)
IfwesettherealeffectiveexchangerateindexbetweentheUnitedKingdomandtheUnitedStatesequalto100in2005,andfindthattheU.S.dollarhaschangedtoavalueof91.4,thenfromacompetitiveperspectivetheU.S.dollaris________.
equallyvalued
21)
ThegovernmentjustreleasedinternationalexchangeratestatisticsandreportedthattherealeffectiveexchangerateindexfortheU.S.dollarvstheJapaneseyendecreasedfrom105lastyearto95currentlyandisexpectedtofallstillfurtherinthecomingyear.OtherthingsequalU.S.________to/fromJapanthinkthisisgoodnewsandU.S.________to/fromJapanthinkthisisbadnews.
importers;
exporters
importers
exporters;
22)
Exchangeratepass-throughmaybedefinedas
thebid/askspreadoncurrencyexchangeratetransactions.
thedegreetowhichthepricesofimportedandexportedgoodschangeasaresultofexchangeratechanges.
thePPPoflesser-developedcountries.
thepracticebyGreatBritainofmaintainingtherelativestrengthofthecurrenciesoftheCommonwealthcountriesunderthecurrentfloatingexchangerateregime.
ExchangeRatePass-through
23)
PhillipsNVproducesDVDplayersandexportsthemtotheUnitedStates.Lastyeartheexchangeratewas$1.25/euroandPlillipscharged120europerplayerinEurolandand$150perDVDplayerintheUnitedStates.Currentlythespotexchangerateis$1.45/euroandPhillipsischarging$160perDVDplayer.WhatisthedegreeofpassthroughbyPhillipsNVontheirDVDplayers?
92%
33.3%
41.7%
4.1%
24)
JaguarhasfullmanufacturingcostsoftheirS-typesedanof£
22,803.TheyselltheS-typeintheUKwitha20%marginforapriceof£
27,363.TodaythesecarsareavailableintheUSfor$55,000whichistheUKpricemultipliedbythecurrentexchangerateof$2.01/£
.JaguarhascommittedtokeepingtheUSpriceat$55,000forthenextsixmonths.IftheUKpoundappreciatesagainsttheUSDtoanexchangerateof$2.15/£
andJaguarhasnothedgedagainstcurrencychanges,whatistheamountthecompanywillreceiveinpoundsatthenewexchangerate?
22,803
25,581
27,363
55,000
25)
JaguarhasfullmanufacturingcostsoftheirS-
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