IF Quiz 2

------------------- holds that the forward premium or discount should be equal to the interest rate differential between two countries.

• IRP

• PPP

• Absolute PPP

• Comparative PPP

If ----------- is violated, one can lock in guaranteed profit by borrowing in one currency and lending in another, with exchange risk hedged via forward contract.

• PPP

• IRP

• Fischer Effect

• BoP Equilibrium

----------- implies that in the short run, the exchange rate depends on: a. the relative ------------------ between two countries and b.the expected future exchange rate

• PPP, Inflation rate

• PPP, interest rate

• IRP, interest rate

• IRP, inflation rate

--------------------------- states that the exchange rate between two countries' currencies should be equal to the ratio of their price levels

• Absolute PPP

• International Fischer Effect

• IRP

• PPP

PPP is the manifestation of the law of ------------ applied internationally to a standard commodity basket

• one price

• equal price

• standard price

• minimum price

The three approaches to exchange rate forecasting are: the efficient market approach, the fundamental approach and the ------------ approach

• probability

• technical

• random walk

• empirical

The two types of equity related bonds are convertible bonds and bonds with -------------

• coupons

• option warrants

• equity warrants

• conversion warrants

A ------------- bond is a straight fixed-rate bond issued in one currency and pays coupon interest in the same currency, but the principal is repaid in another currency

• dual currency

• multiple currency

• variant currency

• changed currency

A ---------- issue is a very large bond issue that would be difficult to sell if any one country or region of the world.

• international

• multinational

• multicontinent

• global

------------------- bonds are usually bearer bonds.

• Global

• International

• Multinational

• Euro