International Finance Quiz

What does "International Finance" primarily focus on?

Free trade allows for the movement of which of the following without restrictions?

___ is a commerce activity that are not subject to any market frictions (tariffs, quotas, ...etc.) when such activities cross borders.

Which of the following is an example of "Free Trade" in practice?

Which of the following is NOT a feature of Free Trade?

The theory suggesting countries should specialize in goods they produce most efficiently is called

The measure of all economic transactions between residents of a country and the rest of the world is known as the _______.

Which term describes a situation where the total payments for imports exceed the receipts from exports?

Which of the following is an example of a "Current Account" transaction in the Balance of Payments?

Which of the following is an example of a "Debit" in the current account of the Balance of Payments?

Which of the following is a "Credit" in the current account of the Balance of Payments?

Which of the following explains a "surplus" in the Balance of Payments?

A Saudi bank lends $50 million to a company in India for a five-year period. How is this transaction recorded in Saudi Arabia's Balance of Payments?

Which of the following would improve a country's current account balance?

When a country has a surplus in its Balance of Payments, it usually means...

Which of the following terms best describes the difference in interest rates between two countries affecting currency demand?

____ is the risk that exchange rate changes between the initiation of a contract and its settlement can increase or decrease the cost of international transactions.

____ arises when a company’s financial statements are consolidated from foreign subsidiaries. The exchange rate fluctuations affect the value of these foreign operations.

____ relates to long-term changes in exchange rates, which affect a country’s international competitiveness and economic structure.

Which of these is NOT considered part of the current account in the Balance of Payments?

What impact would a devaluation of currency have according to the J-Curve?

When a country’s inflation rate is higher than that of its trade partners, its exports become

Which of the following best describes a “trade deficit”?

In fixed exchange rate___.

Exchange rates refer to___.

Which of the following is a feature of a “Fixed Exchange Rate” system?

Which of the following is a key role of a country’s central bank in a fixed exchange rate system?

Which of the following describes a “Managed Float Exchange Rate” system?

Which of the following is the main advantage of a “Floating Exchange Rate” system?

Which of the following is an example of “Currency Depreciation”?

Which of the following is a characteristic of a “Currency Crisis”?

Which of the following correctly describes the spot rate?

Which of the following is NOT a method of managing foreign exchange risk?

If the SAR/USD exchange rate changes from 3.75 to 4.00, what has happened to the value of the SAR relative to the USD?

If the real interest rate in Saudi Arabia is 3% and the inflation rate is 2%, what is the nominal interest rate according to the Fisher Effect?

Which of the following conditions links inflation, interest rates, and exchange rates?

Which of the following would be classified as a Credit in the Financial Account of the Balance of Payments?

A Saudi government bond is purchased by a foreign investor. How is this transaction recorded in the Saudi Balance of Payments?

____ is a financial strategy used by individuals, businesses, and financial institutions to protect themselves against potential losses caused by unfavourable changes in market conditions.

Which of the following is the main objective of hedging foreign exchange risk?

If a Saudi importer agrees to pay €1 million in six months to avoid the risk of the euro strengthening against the SAR, this is called___

If a Saudi airline hedges against rising jet fuel prices by entering into futures contracts for fuel at a fixed price, this is called___

If a Saudi bank hedges its exposure to rising interest rates by using interest rate swaps, this is called___

____ is a private agreement between two parties to exchange a fixed amount of currency at a predetermined rate on a specified future date.

____ gives the holder the right, but not the obligation, to buy or sell a currency at a predetermined rate on or before a specific date.

............ involves transferring the responsibility of foreign exchange risk to another party, typically a trading partner, through contractual terms.

____ is a collaborative approach where both parties agree to share the burden of exchange rate fluctuations beyond a certain range.

____ involves consolidating and offsetting multiple currency exposures within a company to determine the net exposure that needs to be hedged.

Which of the following instruments allows a company to limit its maximum loss from unfavorable exchange rate movements while still benefiting from favorable movements?