Economics Course Overview Quiz
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Questions and Answers

What is the primary goal of the course?

  • To comprehend the functioning of exchange rates between currencies (correct)
  • To learn about stock trading strategies
  • To study historical financial crises
  • To understand domestic financial regulations

Which of the following statements about the final examination is true?

  • It includes both open questions and numerical exercises (correct)
  • It consists of multiple-choice questions only
  • It is an open-book exam
  • It is based solely on textbook readings

How are lecture slides made available to students?

  • Posted on the university's website only
  • Printed copies distributed in class
  • Shared through email each week
  • Uploaded weekly on Moodle (correct)

What is the scheduling pattern of the lectures?

<p>Lectures are scheduled for both Tuesdays and Wednesdays (C)</p> Signup and view all the answers

Which book is NOT listed as part of the recommended bibliography?

<p>Investment Strategies by Merton, R. (D)</p> Signup and view all the answers

Which of the following is true regarding the office hours for the course?

<p>They can be scheduled by contacting the instructor via email (D)</p> Signup and view all the answers

What type of examination will students NOT encounter in this course?

<p>Intermediate examination (A)</p> Signup and view all the answers

How will students be notified of variations in the course schedule?

<p>They will be informed in advance (A)</p> Signup and view all the answers

What is the main inconvenience of a barter economy?

<p>It lacks a commonly accepted medium of exchange. (C)</p> Signup and view all the answers

For money to function effectively, it must be stable in which aspect?

<p>Purchasing power. (A)</p> Signup and view all the answers

Which of the following was one of the first types of money used in ancient civilizations?

<p>Salt and cattle. (A)</p> Signup and view all the answers

What was the primary reason for the monopolization of coin issuance by local authorities?

<p>To prevent counterfeit currency. (D)</p> Signup and view all the answers

What led to the transition from metal coins to paper banknotes around 1200?

<p>The growth of international trade. (C)</p> Signup and view all the answers

What is one significant change in the production of banknotes that occurred by 1850?

<p>Consolidation under central banks. (D)</p> Signup and view all the answers

What is the current form of money in the electronic age?

<p>Records in a bank's electronic memory. (A)</p> Signup and view all the answers

What characteristic of money ensures ease of transport and storage?

<p>Durability over time. (D)</p> Signup and view all the answers

What does the term 'currency' originate from?

<p>A Latin verb meaning to run or flow (D)</p> Signup and view all the answers

Which of the following currencies is denoted by the symbol ¥?

<p>JPY (B)</p> Signup and view all the answers

What is the origin of the name 'dollar'?

<p>A German word related to a place where coins were minted (B)</p> Signup and view all the answers

What is the key distinction between ask price and bid price in currency exchange?

<p>There is no distinction in principle (D)</p> Signup and view all the answers

What does the GBP symbol stand for?

<p>Pound (B)</p> Signup and view all the answers

Which of the following reflects the connection of modern currencies to weight systems?

<p>Dinar (A)</p> Signup and view all the answers

How can an exchange rate be expressed?

<p>In either of the two currencies involved (B)</p> Signup and view all the answers

What is the primary confusion regarding exchange rates?

<p>The concepts of ask and bid prices being the same (C)</p> Signup and view all the answers

What is the defined purpose of a currency?

<p>A system of money used in a country. (D)</p> Signup and view all the answers

Which ISO code corresponds to the currency of Japan?

<p>JPY (B)</p> Signup and view all the answers

What distinguishes domestic currency from foreign currency?

<p>Domestic currency is used in the home country, foreign currency is not. (C)</p> Signup and view all the answers

Which country uses the currency known as the Hryvnia?

<p>Ukraine (D)</p> Signup and view all the answers

What is the currency of Canada?

<p>Canadian Dollar (B)</p> Signup and view all the answers

What ISO code represents the currency of Argentina?

<p>ARS (B)</p> Signup and view all the answers

Which currency uses the symbol '€'?

<p>Euro (B)</p> Signup and view all the answers

What type of organization established the ISO codes for currencies?

<p>International Organization for Standardization (A)</p> Signup and view all the answers

Which of these is NOT a currency listed in the content?

<p>Bahraini Dinar (A)</p> Signup and view all the answers

What is the currency of Norway?

<p>Norwegian Krone (A)</p> Signup and view all the answers

Flashcards

Exchange rate

The value of one currency expressed in terms of another currency. It determines how much of one currency is needed to purchase a unit of another.

Currency risk

The risk that the value of a company's assets, liabilities, or revenues will be affected by changes in exchange rates.

Multinational company

A company that operates in multiple countries, with activities in different currencies.

Final examination

An examination that assesses a student's understanding of course material. It involves open-ended questions and numerical exercises on slides and class discussions.

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Moodle

A platform where course materials, such as lecture recordings and slides, are uploaded and made available to students.

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Lecture

A formal academic meeting where a teacher presents information to a group of students.

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International Financial Modelling

A course that aims to provide an understanding of how exchange rates function and how multinational companies navigate currency fluctuations.

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What is a currency?

A system of money used in a particular country.

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Domestic currency

The currency used within a country.

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Foreign currency

The currency used in another country.

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What is an ISO code?

A unique code assigned to each currency, established by the International Organization for Standardization.

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What is a currency symbol?

A currency’s symbol is a special mark or character used to represent it, often used for convenience.

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Currency conversion

The process of converting one currency into another.

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Fixed exchange rate

The official rate at which one currency can be exchanged for another, set by a central bank or government.

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What is money?

Money is any object that is used as a medium of exchange in an economic system. It acts as a substitute for direct barter, allowing people to buy and sell goods and services more easily.

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What makes money stable?

Money needs to be stable in purchasing power. This means that the value of money should not change drastically over time, ensuring that the goods and services it can buy remain consistent.

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How must money be practical?

Money needs to be easy to carry and store, so it can be used efficiently in everyday transactions.

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How has money evolved through history?

In ancient times, commodities like salt or cattle were used as money. Later, precious metals like gold, silver, and bronze became the dominant forms of money.

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When did metal coins first appear?

Coins were first minted around 550 BC in ancient Greece. Government-issued coins ensured the stability of metallic money by preventing counterfeiting.

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What were the origins of paper money?

Paper receipts known as banknotes were first issued by money changers and bankers in the 1200s. These receipts were initially redeemable for a specific amount of deposited money.

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How did the focus from coins shift to banknotes?

Over time, banknotes replaced real money. Central banks eventually took over the issuance of money to control and ensure its stability.

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How has money evolved in modern times?

Today, electronic bank records represent the majority of money in circulation. The concept has moved from tangible objects to digital information.

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ISO code

A unique code assigned to each currency, established by the International Organization for Standardization.

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Currency symbol

A special mark or character used to represent a currency, often used for convenience.

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Study Notes

Course Information

  • Course Title: International Financial Modelling
  • Lecturer: Cosimo Munari
  • Department: Department of Economics, University of Verona
  • Lecture Date: October 2, 2024 (Lecture 1)

Logistics

  • Office Location: Room 5, Floor 3, Viale Margherita 87, Vicenza
  • Email: [email protected]
  • Office Hours: Contact via email to schedule

Course Schedule

  • Tentative Schedule: Provided with specific dates and times for each lecture
  • Variations: Any changes will be announced in advance
  • Lecture 01: Wednesday, October 2nd, 11:00 AM - 1:30 PM
  • Lecture 13: Wednesday, November 27th, 11:00 AM - 1:30 PM
  • (Other lectures have specific days and times in the table)*

Lectures and Exam

  • Lectures: Audio-recorded and available on Moodle with slides uploaded weekly.
  • Final Exam: Closed-book exam covering open and numerical questions
  • Exam Content: Based on class lectures, slides, and discussed exercises.
  • No Intermediate Exam: There is no mid-term exam

Bibliography

  • Textbook Recommendations: A list of relevant books for further study:
    • Benk, J., DeMarzo, P.: Corporate Finance, Pearson, 2011.
    • Jacque, L.L.: International Corporate Finance, Wiley, 2020.
    • Madura, J., Fox, R.: International Financial Management, Cencage, 2023.
    • Sercu, P.: International Finance, Princeton University Press, 2009.
    • Smithson, C.W.: Managing Financial Risk, McGraw-Hill, 1998.
  • Slides As Primary Source: The slides are sufficient for exam preparation

Course Goal

  • Exchange Rates: Understanding how exchange rates function
  • Currency Risk: Understanding how multinational companies are exposed to currency risk
  • Currency Risk Management: Learning how to manage currency risk for multinational companies

Money

  • Medium of Exchange: Money is anything used as a medium of exchange
  • Stability: Money's value should be stable to be useful
  • Transactions Volatility: The money supply shouldn't rise faster than the transaction volume
  • Portability: Easy to carry and store.

Money History

  • Ancient Money: Initially, commodities like salt or cattle were used.
  • Precious Metals: Later, precious metals like gold, silver, and bronze became more common.
  • Coinage: Coinage introduced in ancient Greece around 550 BC
  • Paper Money: International trade later necessitated paper banknotes as receipts for deposits, becoming true money, and central banking took over production by approximately 1850
  • Modern Money: Today money is primarily in electronic bank records.

Currencies

  • Definition: A currency is a system of money in a country.
  • Categories: Domestic and foreign currencies.
  • Identification: Currencies are identified by ISO codes
  • ISO Organization: International Organization for Standardization (ISO) is the body that created these codes.
  • Examples: Table listing many countries, their currencies, and ISO codes

Special Currency Symbols

  • Specific Symbols: EUR (€), USD ($), GBP (£), JPY (Â¥)

Currencies in History

  • Latin "currere": Word originated from the Latin word meaning "to flow."
  • Weight systems: Early currencies were connected to weight systems
  • Minting Authorities: Coin authorities were also responsible for stamping coins to maintain quality.
  • Joachimsthaler: Origin of the name "dollar," referring to the place where coins were minted.

Exchange Rates

  • Exchange Rate Definition: The relative price at which one currency is exchanged for another
  • Multiple Expressions Per Currency: Different ways to express exchange rates leading to confusion
  • Ask and Bid Prices: There exist distinct ask and bid prices for exchange rates, but transaction fees are commonly neglected for convenience during calculation.

Currency Exchange Office

  • Visual representation: A typical currency exchange office
  • Data from a Screen: Detail of a display from a currency exchange office with currency exchange rates provided in this table.

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Description

This quiz covers key aspects of the economics course, including course structure, examination details, and the evolution of money. Test your knowledge on course materials, scheduling, and the historical context of monetary systems.

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