Question 1

Which of the following is correct? The rise in U.S. dollar during global financial crisis in 2008 can be attributed to

Accepted Answer

The rise in the U.S. dollar during the global financial crisis in 2008 was primarily due to a flight to safety, where investors worldwide sought the safety of dollar-denominated assets, such as U.S. Treasury securities, amid the financial turmoil. This increased demand for the dollar and its assets, causing the currency to appreciate.

Question 2

Which of the following is correct? The most likely explanation for the rise of the U.S. dollar during the early 1980s is that the United States'

Accepted Answer

C

Question 3

On Friday, September 13, 1992, the Turkish lira was worth €0.0013. Over the weekend the Turkish lira devalued against the euro to €0.0012. By how much had the Turkish lira devalued against the euro?

Accepted Answer

Explination: (.0013 - .0012)/.0013 = 7.69%

Question 4

Which of the following is correct? The euro devalued by 17% against the U.S. dollar. This is equivalent to a revaluation of the U.S. dollar against the euro by:

Accepted Answer

Explination: 1/(1 -.17) -1 = 20.48%

Question 5

Which of the following is correct? If the Australian dollar devalues against the Japanese yen by 10%, the yen will appreciate by

Accepted Answer

Explination: 1/(1 -.10) -1 = 11.11%

Question 6

Which of the following is correct? An increase in the supply of euros by the European Central Bank will

Accepted Answer

Increasing the supply of euros typically leads to inflation fears, as more currency chasing the same amount of goods can lead to price increases. This can reduce the currency's value as investors may expect future purchasing power to decline.

Question 7

On July 19, 1985, the Italian lira devalued by 17% against the U.S. dollar. Which of the following is correct? This is equivalent to a revaluation of the U.S. dollar against the lira of

Accepted Answer

1/(1 - .17) - 1 = 20.48%

Question 8

During 1995, the yen went from ¥80.00/$ to ¥105/$. By how much did the U.S. dollar appreciate against the yen?

Accepted Answer

105/80 - 1 = 31.25%

Question 9

Which of the following is correct? Given the added risks associated with doing business abroad, companies should

Accepted Answer

Companies should not limit their foreign sales arbitrarily, as international markets can offer significant growth opportunities and diversification benefits. The decision should be based on strategic goals and market conditions rather than fixed limits.

Quiz 1: Introductin to International Financial Management and Exchange Rate Determination