题目内容

Assume you are an Chinese importer who must pay 100,000 Euros at the end of 90 days when you receive 1,000 cases of French wine at your warehouse. Suppose that you have not covered this transaction in the forward market. In which of the following cases will you suffer the largest loss?

A. The euro spot exchange rate value vis-à-vis the dollar does not change
B. The euro (spot) initially appreciates by 4 percent, and then depreciates by 2 percent
C. The euro (spot) initially depreciates by 2 percent, and then appreciates by 2.5 percent
D. The euro (spot) initially appreciates by 2 percent, and then depreciates by 1.9 percent

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An American importer must pay 25,000 euros at the end of 90 days when he receives 1,00 cases of French wine. If he does not hedge this transaction, he faces exchange-rate risk. The best way to remove the risk of loss due to currency fluctuations is to:

A. buy 25,000 euros in the forward exchange market for delivery in 60 days.
Buy 25,000 euros now, hold them for 60 days, and then sell them at the spot exchange rate that exists 60 days from now.
C. sell 25,000 euros in the forward exchange market for delivery after 60 days.
D. sell 25,000 euros now in the spot market.

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An import-export business that finds itself in a “short” foreign-currency position risks a financial loss if:

A. it pays attention to exchange rate forecasts.
B. foreign demand for its product rises (more than expected).
C. the domestic currency depreciates (more than expected).
D. the foreign currency depreciates (more than expected).

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Which of the following financial instruments provides a buyer the right (but not the obligation) to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a few years?

A. Letter of credit
B. Currency option
Currency swap
D. Forward contract

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An investment exposed to exchange-rate risk is a(n) _____ international investment.

A. hedged
B. covered
C. uncovered
D. arbitrage

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