International Finance Quiz

<p>Saudi Arabia removes tariffs and quotas on imported goods from its trade partners. (B)</p> Signup and view all the answers

<p>Protection of domestic industries by imposing high tariffs. (A)</p> Signup and view all the answers

<p>Comparative advantage (C)</p> Signup and view all the answers

<p>Balance of Payments (A)</p> Signup and view all the answers

<p>Trade deficit (C)</p> Signup and view all the answers

<p>Export of oil to Japan by Saudi Arabia. (D)</p> Signup and view all the answers

<p>Payment for imports of cars from Germany. (D)</p> Signup and view all the answers

<p>Exports of goods and services. (C)</p> Signup and view all the answers

<p>The value of total exports is greater than the value of total imports. (B)</p> Signup and view all the answers

<p>Debit in the financial account (D)</p> Signup and view all the answers

<p>A decrease in imports of luxury cars (C)</p> Signup and view all the answers

<p>Exports are greater than imports (C)</p> Signup and view all the answers

<p>Interest Rate Parity (IRP) (C)</p> Signup and view all the answers

<p>Transaction risk</p> Signup and view all the answers

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

<p>Economic risk (E)</p> Signup and view all the answers

<p>Foreign direct investment (C)</p> Signup and view all the answers

<p>Initial worsening, then eventual improvement in trade balance (B)</p> Signup and view all the answers

<p>More expensive (C)</p> Signup and view all the answers

<p>When imports exceed exports (B)</p> Signup and view all the answers

<p>The currency value is set by the government and does not fluctuate (B)</p> Signup and view all the answers

<p>The price of one country's currency in terms of another currency (D)</p> Signup and view all the answers

<p>The value of the currency is pegged to another currency or basket of currencies. (A)</p> Signup and view all the answers

<p>To intervene in the foreign exchange market to maintain the peg. (D)</p> Signup and view all the answers

<p>The central bank allows the currency to float, but intervenes when necessary to stabilize it. (C)</p> Signup and view all the answers

<p>The government does not need to maintain large foreign currency reserves. (B)</p> Signup and view all the answers

<p>A decrease in the value of the SAR relative to the USD. (B)</p> Signup and view all the answers

<p>A sharp depreciation of a country’s currency relative to other major currencies. (A)</p> Signup and view all the answers

<p>The exchange rate at which a currency can be immediately exchanged. (B)</p> Signup and view all the answers

<p>Buying stocks of foreign companies. (B)</p> Signup and view all the answers

<p>The SAR has depreciated. (C)</p> Signup and view all the answers

<p>5% (A)</p> Signup and view all the answers

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

<p>A foreign investor buys shares in a Saudi company listed on the stock market. (A)</p> Signup and view all the answers

<p>Credit in the financial account (C)</p> Signup and view all the answers

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

<p>To protect a company from potential losses due to unfavorable currency movements. (C)</p> Signup and view all the answers

<p>Foreign Exchange Hedging (A)</p> Signup and view all the answers

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

<p>Interest Rate Hedging (C)</p> Signup and view all the answers

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

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

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

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

<p>Exposure netting (C)</p> Signup and view all the answers

<p>Currency Option (C)</p> Signup and view all the answers

The study of financial transactions across national borders, encompassing exchange rate fluctuations, risk management, and international trade.

A situation where goods, services, and factors of production like labor and capital can move freely between countries without restrictions.

A country's record of all economic transactions between its residents and the rest of the world, encompassing trade, investment, and income flows.

A component of the BOP that measures the flow of goods, services, income, and transfers between a country and the rest of the world.

A component of the BOP that measures the flow of capital, including foreign direct investment (FDI), portfolio investments, and other financial assets.

A situation where a country's imports of goods and services exceed its exports.

A situation where a country's exports of goods and services exceed its imports.

The difference between the value of a country's exports and imports, excluding services, income, and transfers.

A theory that suggests countries should specialize in producing goods or services in which they have a lower opportunity cost of production compared to other countries.

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

The risk that a company's financial statements may be affected by exchange rate fluctuations when consolidating foreign subsidiaries.

The risk that a company's long-term profitability and competitiveness may be affected by changes in exchange rates.

The rate at which one currency can be exchanged for another currency in the foreign exchange market.

A system where the value of a currency is fixed to another currency or a basket of currencies.

A system where the value of a currency is allowed to float freely in the foreign exchange market, determined by supply and demand forces.

A system where the central bank allows the currency to float freely but intervenes in the market to stabilize its value.

A decrease in the value of a currency relative to another currency.

An increase in the value of a currency relative to another currency.

A sudden and dramatic depreciation of a country's currency, often accompanied by instability in the financial system.

The exchange rate at which currencies can be exchanged for immediate delivery.

A contract that locks in the exchange rate for a future transaction, eliminating the risk of currency fluctuations.

An agreement to exchange currencies at a predetermined rate on a future date.

A financial strategy used to reduce or eliminate the risk of losses due to unfavorable changes in market conditions, including exchange rates.

A financial instrument that gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price on or before a specific date.

The difference between the bid price (buying price) and ask price (selling price) of a currency in the foreign exchange market.

A theory that suggests that the difference in interest rates between two countries should be equal to the expected change in the exchange rate between their currencies.

An agreement between two parties to exchange a predetermined amount of currency at a fixed future date.

A theory that suggests that the exchange rate between two currencies should adjust to reflect the relative price levels in their respective countries.

The cost of producing one good or service in terms of the amount of another good or service that must be forgone.