If prices double in New York while the prices in Frankfort remain the same, the purchasing power of the dollar
relative to the mark:
A) Should increase by 50%
B) Should increase by 100%
C) Should decrease by 50%
D) Should decrease by 100%
Which of the following is not commonly used to minimize transaction exposure in foreign exchange dealings?
A) Hedging in the forward exchange market
B) Hedging in the money market
C) Hedging in the stock market
D) Hedging in the currency futures market
Which of the following kinds of risk are NOT uniquely associated with MNC’s?
A) Exchange rate risk
B) Business risk
C) Political risk
D) None of these are uniquely associated with MNC’s
The spot rate of the British pound to the dollar is 1.68 ($/£). The 180 day forward rate is $1.71, the annualized
forward premium is:
Please no guessing and answer IAW the 13th edition of the Foundation of Financial Management.