2.1) “Ideal” currency attributes include monetary independence, exchange rate stability, and full financial integration.

TRUE or FALSE

2.2) European Monetary Union member countries are responsible for their domestic level of government debt.

TRUE or FALSE

2.3) European Monetary Union member countries give control of inflation and interest rates to the European Union.

TRUE or FALSE

2.4) A Canadian dollar deposit held at a Japanese Bank in Osaka, Japan is an example of a euro-currency.

TRUE or FALSE

2.5) The current International Monetary System regime is the Fixed Exchange Rates system of Bretton Woods.

TRUE or FALSE

Chapter 3 (10 points – 5 questions, 2 points each)

3.1) The balance of payments adds up the value of all assets and liabilities of a country during a specific period.

TRUE or FALSE

3.2) Net Transfers is part of the Current Account and is usually large relative to the Balance of Trade.

TRUE or FALSE

3.3) Net Transfers is usually negative for the U.S. and represents aid, gifts, and donations to foreign countries.

TRUE or FALSE

3.4) Capital mobility and the trading of financial assets does not influence the Capital Account.

TRUE or FALSE

3.5) Capital flight can include movement of currency, precious metals, or collectables out of an indebted country.

TRUE or FALSE

Chapter 4 (10 points – 5 questions, 2 points each)

4.1) Shareholder Wealth Maximization sets a goal of maximizing rewards to shareholders over the long-term.

TRUE or FALSE

4.2) Stakeholder Capitalism is common outside of the Anglo-American markets and sets a goal of maximizing rewards for all stakeholders.

TRUE or FALSE

4.3) Shareholder Wealth Maximization is associated with the following governance responses to poor performance: selling shares, changing management, and initiating a takeover.

TRUE or FALSE

4.4) Ownership models vary between countries with market, family, bank, and government-based solutions occurring in most countries.

TRUE or FALSE

4.5) Corporate governance philosophies are divergent globally and lead to widely varying business practices.

TRUE or FALSE

3.2) Over the last year, the Norwegian Official Foreign Currency Reserves decreased on the Balance of Payments Schedule, this suggests that the Norwegian Krone (NOK) ________ against other currencies in general.

(Appreciated / Strengthened) or (Depreciated / Weakened)

3.3) Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds.Today, an ounce of gold cost $1,576.20 in U.S. dollars and £1215.76 in British pounds.According to financial markets, the current exchange rate is $1.2953/£.What is the current exchange rate of dollars per pound implied by the current gold prices?

Exchange rate = $ _________ / £

5.5) The spot exchange rate for the Nigerian Naira / U.S. Dollar is 363.00N/$.What is the one-month forward midrate (N/$) if the respective quotes are a bid of –125 and an ask of –325?