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International Finance Problems
1) Relatively high Japanese inflation may result in an
increase in the supply of yen for sale and a reduction in the demand for yen.
A)true.
B)false.

2) If an actual put option premium is less than what is
suggested by the put-call parity relationship, arbitrage can be conducted.
A)true.
B)false.

3) A weak dollar is normally expected to cause:
A)high unemployment and high inflation in the U.S.
B)high unemployment and low inflation in the U.S.
C)low unemployment and low inflation in the U.S.
D)low unemployment and high inflation in the U.S.

4) If Lazer Co. desired to lock in the maximum it would have
to pay for its net payables in euros but wanted to be able to capitalize if the
euro depreciates substantially against the dollar by the time payment is to be
made, the most appropriate hedge would be:
A)a money market hedge.
B)purchasing euro put options.
C)a forward purchase of euros.
D)purchasing euro call options.
E)selling euro call options.International Finance Problems1) Relatively high Japanese inflation may result in an
increase in the supply of yen for sale and a reduction in the demand for yen.A)true.B)false.2) If an actual put option premium is less than what is
suggested by the put-call parity relationship, arbitrage can be conducted.A)true.B)false.3) A weak dollar is normally expected to cause:A)high unemployment and high inflation in the U.S.B)high unemployment and low inflation in the U.S.C)low unemployment and low inflation in the U.S.D)low unemployment and high inflation in the U.S.4) If Lazer Co. desired to lock in the maximum it would have
to pay for its net payables in euros but wanted to be able to capitalize if the
euro depreciates substantially against the dollar by the time payment is to be
made, the most appropriate hedge would be:A)a money market hedge.B)purchasing euro put options.C)a forward purchase of euros.D)purchasing euro call options.E)selling euro call options.

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