International Finance And Treasury - Study Mode

[#661] The __________ is especially well suited to offer hedging protection against transactions risk exposure
Correct Answer

(A) forward market

Explanation

Solution: The forward market is especially well suited to offer hedging protection against transactions risk exposure. A forward market is an over-the- counter marketplace that sets the price of a financial instrument or asset for future delivery.

[#662] Interest rate which is not reinvested but is earned is classified as
Correct Answer

(B) simple interest

Explanation

Solution: Interest rate which is not reinvested but is earned is classified as simple interest. An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed.

[#663] According to loanable funds theory, fall in interest rates results in to
Correct Answer

(C) higher demand of funds

Explanation

Solution: According to loanable funds theory, fall in interest rates results in to higher demand of funds. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. The term loanable funds includes all forms of credit, such as loans, bonds, or savings deposits.

[#664] If equilibrium interest rate decreases and curve of funding supplied shifts to right and downwards then impact on spending is
Correct Answer

(B) decrease in near term

Explanation

Solution: If equilibrium interest rate decreases and curve of funding supplied shifts to right and downwards then impact on spending is decrease in near term. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.

[#665] Value which converts series of equal payments in to value received at end time of investment is classified as
Correct Answer

(B) future value of annuity

Explanation

Solution: Value which converts series of equal payments in to value received at end time of investment is classified as future value of annuity. The future value of an annuity is the total value of annuity payments at a specific point in the future. This can help you figure out how much your future payments will be worth, assuming that the rate of return and the periodic payment does not change.