Classical

Advanced Questions - Section 2

36:  

The essential feature of a ____ is that it immediately fixed the rate at which a specified amount of one currency is to be delivered in exchange for a specific amount of another at a future date.

A.

forward contract

B.

spot contract

C.

money contract

D.

bid contract

 
 

Option: A

Explanation :


37:  

_____ is said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries in favor of member countries.

A.

trade creation

B.

trade diversion

C.

trade exclusion

D.

trade distortion

 
 

Option: B

Explanation :


38:  

Small nations whose trade and financial relationships are mainly with a single partner tend to utilize

A.

pegged exchange rates

B.

freely floating exchange rates

C.

managed floating exchange rates

D.

crawling exchange rates

 
 

Option: A

Explanation :


39:  

Suppose that Boeing is to receive payment in euros in 6 months and wants to engage in hedging. The firm would _____ euros on the 6-month forward market in order to protect itself from a/an _____ of the euro.

A.

sell; appreciation

B.

sell; depreciation

C.

buy; depreciation

D.

buy; appreciation

 
 

Option: B

Explanation :


40:  

Direct investment and security purchases are classified as

A.

capital account transactions

B.

current account transactions

C.

unilateral transfer transactions

D.

merchandise trade transactions

 
 

Option: A

Explanation :




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