Substantial deviations from fundamentals in the short-term

Assignment Help Financial Management

Reference no: EM131190286

1. The principle focus of the IMF bailout efforts during the Asian financial crisis was ________.

a. banking liquidity

b. dollarization of Asian currencies

c. reestablishing fixed currency exchange rates in Asia

d. shareholder's wealth

2. The authors compromise as to the key factors for exchange rate determination. They conclude that ________ is important in the short run, but that ________ determines long run exchange rates.

a. the Fisher effect; PPP

b. asset markets, interest rates, and expectations; PPP

c. the Fisher effect; asset prices, interest rates, and expectations

d. PPP, the Fisher effect

3. Despite inadequacies in estimating long-term exchange rate values, fundamental theories of exchange rates have proved remarkably accurate for the short- and medium-term.

a. true

b. false

4. The important thing to remember about foreign exchange rate determination is that parity conditions, asset approach, and balance of payments approaches are ________ theories rather than ________ theories.

a. complementary; contiguous

b. competing; contemporary

c. competing; complementary

d. complementary; competing

5. ________ approach to exchange rate determination reflects supply and demand for foreign currencies.

a. The Asset Market

b. The Balance of Payments

c. The Purchasing Power Parity

d. The International Fisher Effect

6. The authors suggest that exchange rates do adhere to fundamentals in the long-term with substantial deviations from fundamentals in the short-term.

a. true

b. false

7. ________ is the most widely accepted of all exchange rate forecasting theories.

a. Purchasing Power Parity

b. Sarbanes-Oxley

c. The Balance of Payments approach

d. The Asset Market approach

8. Overshooting in the currency market is the practice of always estimating forward rates too high to avoid more expensive undershooting errors.

a. true

b. false

9. The 'tequila effect' is a slang term used to describe a form of financial panic called ________.

a. contrary investing

b. speculation

c. contagion

d. run on the market

10. The ________ provides a means to account for international cash flows in a standardized and systematic manner.

a. parity conditions theory

b. balance of payments theory

c. international Fisher effect

d. asset approach

Reference no: EM131190286

Questions Cloud

Find the probability that it lands in a trapezoid region : A dart is thrown at a dartboard like the one below. If the dart can land anywhere on the board, find the probability that it lands in a trapezoid or a blue region.

Corporate bond has a face value : A corporate bond has a face value of $100, a coupon rate of 5.5% p.a. payable quarterly, and a yield of 7.5% p.a. What is its value?

Is there any value in searching for prior intelligence : How can you use an informant or an undercover officer? Is there any value in searching for prior intelligence? Would the types of drugs being sold make a difference in the investigation? Why or why not?

International steel group-steelton-pennsylvania : As the day-shift supervisor at the ISG Steelton steel plant, you summon the six college students who are working for you this summer, doing whatever you need done (sweeping up, sandblasting the inside of boilers that are down for maintenance, runn..

Substantial deviations from fundamentals in the short-term : The principle focus of the IMF bailout efforts during the Asian financial crisis was ________. The authors suggest that exchange rates do adhere to fundamentals in the long-term with substantial deviations from fundamentals in the short-term. The 'te..

Redraw the circuit in using only 2 input nand gates : Redraw the circuit in using only 2-input NAND gates.

Identify specific personnel or positions for each function : Create an incident and command response structure for all emergency or public service agencies in Colorado, such as police, fire, medical, and so forth. Ensure the minimal components of operations, planning, administration, and logistics are inclu..

Seven major areas of responsibility : The MHS organization chart has seven major areas of responsibility, each headed by a senior vice president. Select one of the seven areas and design additional levels of detail that indicate the managers. If you have considerable detail you may ch..

What are implications for cash flow and shareholder wealth : What are two tactics that a financial manager can use to manage earnings? What are the implications for cash flow and shareholder wealth?

User Account

All Pages