1 (Fisher effect).

According to the Fisher effect, what would happen if the real

interest rate was 2%, the inflation rate was 11.5%, and the nominal interest rate
was 14%?
A. This is an invalid question because the real interest rate is usually as high as 2%;
B. The inflation rate will increase to 12%;
C. Real interest rates will increase to 3%;
D. Borrowing becomes more attractive, causing nominal interest rates to increase to
14.5%;
E. Borrowing will no longer be attractive, but individuals are willing to lend
more, therefore lowering lending rates
nominal > real r + inflation

2. Eurodollars is: ơ
A. A currency issued by the World Bank and pegged to the US Dollar;
B. Are dollars deposits deposited at banks located outside the United States;
C. Is a paper dollar issued by the Bank for International Settlements (BIS) in
Switzerland;
D. Another name for Special Drawing Rights;
E. There is no correct answer

3(Fisher effect). The Fisher Effect says: i = r + pi

A. Differences in national interest rates are equal for securities with the same risk and
maturity, but have opposite signs for increases or decreases in foreign currency
forward rates; => Interest Rate Parity
B. In any country, the real interest rate equals the nominal public interest rate given
expected inflation;
C. The spot rate between two currencies is determined by the difference between the
actual inflation rates between the two currencies;
D. In any country, the nominal interest rate is equal to, or approximately equal
to, the real interest rate plus expected inflation;
E. There is no correct answer

4 (Fisher effect)..The interest rate on 1-year Swiss government bonds is 4% and

expected inflation over that period is 2%. The US government bond interest rate
for the same 1-year term ís 5% and US inflation is expected to be 3% for the next
year. Spot exchange rate USD/CHF = 0.89 (1 USD=0.89 CHF). Using the
international Fisher effect, what is the spot exchange rate in 1 year? (1 USD=?)
A. CHF 0.881 = $1
B. CHF 0.871= $1
C. CHF 0.861 = $1
D. CHF 0.891 = $1
E. CHF 0.901 = $1

5. A forex trader, trading US $6 3 million, is faced with the following facts:

Spot exchange rate: $1.5= £1;
Six-month forward exchange rate: $1.5625 = £1;
Six-month dollar interest rate; 6%,
Six-month British pound interest rate: 5%.
Calculate the trader's possible profit when taking advantage of the Arbitrage
opportunity?

- 3M*3% = A
- US => Pound => US => B (3M:1.5*1.025*1.5625)
=> arbitrage profit = B-A
A.$180,000; B. $90,000; C. $203,200; D. $113,100

6. If a product or service is sold simultaneously in two markets, sales barriers are

ignored and the cost of shipping the product between the two markets is zero, the
product price will be the same in both markets.
This theory is called:
A. Efficient market theory
B. Fisher effect
C. Law of purchasing power parity
D. Law of one price
E. Theory of market parity

7. The law of interest rate parity (IRP) indicates that:

A. Interest rates in the two countries change by the same amount but in the direction
of the difference in inflation rates;
B. Interest rates in two countries start at an equilibrium point; any change in the
difference in inflation rates between countries results in a long-run equilibrium by an
equal amount of change but opposite directions in the spot exchange rate;
C. The nominal interest rate in each country is equal to the real required interest rate
plus expected inflation;
D. The long-term real interest rates between the two countries are equal;
E. The difference in interest rates between currencies for securities with the same
risk and maturity is identical to the increase or decrease in the forward rate with
the foreign currency
8. Currency futures trading is:
A. Delivery of a currency at a specified future date at an unknown spot rate;
B. Delivery and payment must be made within the same business day (US/Canada) or
2 business days after the transaction date;
C. The forward exchange rate is always greater than the spot exchange rate;
D. Execute future currency transactions at agreed exchange rates;
E. There is no correct answer

9. Singapore Dollar spot quote: buy: S$1.7160 = USS1, sell: S$1.7200 = USS1.
The direct quotation of the exchange rate in the US rounded to the 4th decimal
place after the comma is?
A.2.3310% premium
B. Buy: S$1.7200 = US$1, sell: S$1.7160 = US$1
C. Buy: US$0.5828 = S$1, sell US$0.5815 = US$1
D. Buy:S$1.7160 = USS1, Sold: S$1.7200 = USS1
E. Buy:US$0.5814 = S$1, Sold: US$0.5828 = S$1

10. The following currency pairs are available: ¥64.00 = SF1, SF1.6000 = $1 and,
¥105.00 = $1.You have $100,000. Can you find Arbitrage profits from the above 3
currency pairs? If so, how much? Assume there is no difference between the
buying rate and the selling rate.
Dollar => Yen => SF => Dollar
A. Yes. Profit is $102,539 - $100,000 = $2,539;
B. No. The market is in equilibrium
C. Yes. Profit is $100,000 - $97,524 = $2,476;
D. No. Loss is $100,000 - $102,539 = $2,539
E. No. The loss is $100,000 - $97,524 = $2,476

11. Balance sheet in zloty of a company in Poland, whose headquarter is in the

US (Poland's currency is zloty, abbreviated Z):

Cash 4200,000 Short-term debt 8400,000

Receivables 6300,000 Long-term 2100,000
liabilities
Inventory 8400,000
Factory machinery 51000,000 Equity 1,88900,000
Total assets 1,42800,000 Total capital 28001,400,000
The Zloty depreciated from Z4/$ to Z5/$. Thus, at the current exchange rate, the
investment in the parent company's subsidiary in the US:
A. Increases $20,000
B. Increases $45,000;
C. No change because the subsidiary is on the parent company's balance sheet;
D. Reduced by $20,000
E. Reduced by $45,000
Equity = 900Z
Exchange rate = 4 => 225$
Exchange rate = 5 => 180$
12. An American company with a subsidiary in India has net assets of Rp 90
million and the Rupee depreciates from Rp45/$ to Rp50/$, so the American
company:
A. Loss of $25,000
B. Profit Rp25,000
C. Loss $200,000
D. Profit $25,000
E. Profit $20,000
ER = 45 => 20$
ER = 50 => 18$
=> Loss 2$

13. If a 'Big Mac' costs 50 Czech korunas in Prague and 30 Ruritanian doppels in
Stelsau, the capital of Ruritania, the Big Mac product shows the exchange rate
as:
A. CKr 0.6000 = 1 doppel
B.CKr 1.6667 = 1 doppel;
C. 0.6667 doppels = 1 CKr:
D.Both (A) and (B)
E. Neither answer is correct

14(Fisher effect). Suppose British and American investors require an expected

return of 3% per year. If the nominal interest rate on the European dollar is 11%
and that of the European pound is 9%, then according to the Fisher effect,
inflation expectations in the UK …inflation in the US, and the British pound is
expected ….against the dollar.
A. 3% lower, about 3% price decrease;
B. 3% lower, about 3% price increase;
C. 3% higher, about 3% lower price;
D. 2% higher, about 2% price decrease
E. 2% lower, about 2% price increase
pi (inflation) = nominal - real

15(Fisher effect). The US dollar interest rate for 5 years is 5% per year, and the
Danish Krone interest rate for 5 years is 8% per year. Current spot exchange
rate is S(USD/DKK) = 5.00? According to the international Fisher effect, what is
the spot exchange rate of S(DKK/USD) after 5 years?
A. USD0.174;
B. USD0.140;
C. USD0.131;
D. USD0.262;
E. USD0.226

S(DKK/$) = ⅕
delta = 0.03*5/ 1+(0.05*5)
=> new S = 0.224
16. Relative PPP. If inflation in the UK is expected to be 5% higher than in
Switzerland then:
A. Under a fully floating exchange rate regime, the efficient market assumption
cannot be predicted
B. Expectations theory indicates that the spot exchange rate between two currencies
will remain constant in the long run;
C. Purchasing power parity theory predicts that the British Pound spot exchange
rate will decrease by 5%;
D. Purchasing power parity theory predicts that sterling nominal interest rates will
decrease by approximately 5%;
deltaS (A/B) = inflation A - inflation B
inflation UK > Sw => UK currency depreciates against Switzerland
=> Lạm phát cao hơn bao nhiêu% thì tiền sẽ mất giá bấy nhiêu %

17. If the inflation rate in the US is expected to be 5% per year and the Danish
Krone is expected to depreciate 3% per year relative to the Dollar, how much
Danish Krone must be spent on importing raw materials from the US by a
Danish company will:
A. Increase 5% per year;
B. Increase 3% per year;
C. Increase about 8% per year;
D. Increase about 2% per year;
Giả sử Price = 100$; S($/DKK) =5
=> Price = 20 DKK
Inflation 5% => Price = 105$; Depreciation 3% => S = 4.85
New price = 21.649 DKK
=> Delta = (21.6 - 20)/20 = 8,..%
18. Considering a host country and another country, the law of purchasing
power parity (PPP) indicates that:
A. The local currency will depreciate if the local currency interest rate is higher than
the foreign currency interest rate;
B. The local currency will appreciate if the domestic inflation rate is higher than the
foreign inflation rate;
C. The local currency will depreciate if the domestic inflation rate is higher than
the foreign inflation rate;
(higher inflation rate => depreciation)
D. The local currency will depreciate if the
domestic inflation rate is higher than the foreign currency interest rate

19. If the spot exchange rate is $1.1600 = 1 euro, the 180-day US Dollar interest
rate is 6%/year and the Euro interest rate is 4.8%/year, then:
A. The 180-day forward rate is $1.1668 = 1 euro, the euro appreciates in the
future;
forward rate = spot rate * (1+i1)/(1+i2) (spot rate: currency 1/ currency 2)
lưu ý: chuyển đổi interest rate/ year theo số ngày kì hạn
=> Forward rate = 1.16* (1+0.03)/(1+0.024)
B. The 180-day forward rate is $1.1532 = euro 1, euro depreciates in the future;
C. The 180-day forward rate is $1.1668 = euro I, euro depreciates in the future;
D. The 180-day forward rate is $1.1532 = 1 euro, the euro appreciates in the future;
E. The 180-day forward rate is $1.1600 = 1 euro, the euro will not appreciate or
depreciate in the future

20. If a US company will receive Swiss Francs in the future and to avoid
exchange rate risk, what should the company do if it does not take an offsetting
position?

A. Enter into a forward contract to buy Swiss Francs;

B. Sell a Swiss Franc futures contract.
C. Buy a Swiss Franc call option;
D. Borrow Swiss Francs at the moment, make deposits them at banks, then pay back
when you receive your receivables

21. You buy a Swiss Frane put option with a premium of 2 cents and a strike
price of $0.61.
This option will not be exercised until the expiration date. Assuming the spot rate
at maturity is $0.58, the profit/loss per unit is:
A. Loss 1c
B. There is no correct answer. (= 0.61-0.58-0.02)
C. Profit 2c;
D. Loss 2c
E. Loss 3c;

22. An American company has receivables worth CHF 10 million due in the next
60 days. The company's management predicts that the Swiss Franc will
depreciate during this time. Assuming the company's expectations are correct,
the company will profit by
A. Buy a Swiss Franc call option;
B. Buy Swiss Frane forward;
C. Buy a Swiss Franc put option;
D. Forward sale of Swiss Franc;
E. Do nothing.

23. Which of the following statements is true about the foreign exchange market?
A. The futures market is mainly used for hedging purposes while the forward market
is mainly used for speculative purposes
B. The futures market and the forward market are both used primarily for speculative
purposes
C. Futures markets and forward markets are both used for hedging purposes
D. The futures market is mainly used for speculative purposes while the forward
market is mainly used for hedging purposes.

24. Under a fixed exchange rate regime (A) … is an exogenous instrument of

monetary policy while under a floating exchange rate regime (B) ... is an
exogenous instrument of monetary policy:
A. (A) exchange rate, (B) exchange rate
B. (A) exchange rate, (B) interest rate
C. (A) interest rate, (B) exchange rate
D. (A) interest rate, (B) interest rate

25. Suppose a country under a fixed exchange rate regime decides to devalue its
currency and maintain the new fixed exchange rate, this implies (A)... in the
demand for goods, and (B)... monetary policy
A. (A) tighten, (B) tighten
B. (A) tighten, (B) expansion
C. (A) expand, (B) tighten
D. (A) expand, (B) expansion

26. In a country under a fixed exchange rate regime, which of the following
statements is false?
A. A fixed exchange rate regime imposes strict central bank discipline
B. The economy usually faces to volatilities in foreign demand but not domestic
demand
C. Interest rate fluctuations around the world can pose risks to the sustainability of the
fixed exchange rate regime

27. The Mundell-Fleming model studies (A) .. and (B)... economies, in the world
with (C).... financial markets and (D) ... capital flows
A. (A) small; (B) open; (C) internationally integrated; (D) free
B. (A) large; (B) open; (C) internationally integrated; (D) free
C. (A) small; (B) open to foreign investment: (C) internationally integrated, (12) free
D. (A) large; (B) open; (C) strictly regulated; (D) free

28. The Mundell-Fleming model is very relevant to Europe, What reasons do not
support this view?
A. Most European countries are small and have open economies
B. Monetary union provides an extremely strong case for a fixed exchange nate
regime
C. Low inflation
D. Countries outside the European Union have different views on policy

29. The Mundell-Fleming model uses concepts of small, open economies. Which
of the following statements is correct?
A. Brings a lot of influences to the rest of the world, and depends on a country's
development;
B. Compared to the world's GDP, Japan is a typical example;
C. Open means there are no transaction costs;
D. Financial openness is the ability to borrow freely across borders.

30. How to measure the openness of a financial model?

A. Similar to net external position;
B. The value that households, banks, companies and some agencies lend or
borrow from abroad;
C. A rating by monetary organizations that includes restrictions on financial
transactions;
D. Investment from abroad as a component of GDP

31. If the currency of A is overvalued against the currency of B, the result will be:
A. Economic entities of A will tend to import more goods of B
B. Economic entities of B will tend to import more goods of A
C. This does not change the import trend of 2 countries
A overvalue => giá trị tiền A cao hơn => A cần ít tiền hơn để mua hàng của B => A
mua nhiều hàng của B hơn

32. ( Marshall-Lerner condition ) In order for currency devaluation to have a

positive impact on the balance of payments, the absolute value of the sum of two
price elasticity of exports and imports must:
A. >1
B. =1
C. <1
PED > 1 => devaluation - improvement in the CA balance
PED < 1 => devaluation - worsens…

33. Benefits of gold standard

A. The value of national currency is stable, as it is guaranteed by gold
B. The exchange rate between national currencies is stable
C. Create public trust in fiat money, as fiat money can be freely exchanged for
gold
D. Curb excessive banknote issuance by central bank
E. All of the above

34. Why did Bretton Woods collapse?

A. Countries Fiat currencies are no longer pegged to gold
B. Governments can't keep exchange rates fixed when the trade balance
between countries is always changing
C. Due to high inflation in the world

35. The role of ADB (Asian Development Bank) does not include:
A. make loans to member countries
B. technical assistance to reduce poverty in member countries
C. promote and support free trade agreements among member countries

36. The role of AIIB (Asian Infrastructure Investment Bank) does not include:
 A. solve imbalance in member countries’ balance of payments
B. support the infrastructure development of member countries
C. cooperate with member countries in addressing environmental issues
37. The advantage of fixed exchange rate regime are:
A. help stabilize inflation
B. avoid excessive fluctuations in exchange rate
C. both
38. The advantage of floating exchange rate regime are:
A. stabilize inflation
B. there is a mechanism for self-adjustment of imbalances in the balance of
international payment
C. facilitate independent monetary policy implementation
D. both a,b,c
(câu này không rõ lắm vì nếu chọn đáp án a thì lại trùng với fixed)
39. The conditions of an Optimum Currency Area are:
A. workers may move freely to work between member countries
B. capital is freely moved between member countries
C. prices and wages are elastic (not rigid)
D. there is a mechanism for budget redistribution between rich and poor countries
E. all
40. Currency crises are:
A. when the country raises tax too high
B. when the national currency is depreciated so sharply against foreign
countries that the central bank does not have enough foreign exchange
reserves to intervene
C. the stock market fell sharply
(A + C liên quan đến financial crisis = Gov finance + market + financial institution )