Exploring International Finance

What is the primary importance of International Finance?

• The primary importance of International Finance is to facilitate global trade and investment.

• To limit foreign investment opportunities

• To promote local currency stability

• To regulate domestic financial markets

How does the Balance of Payments (BoP) reflect a country's economic transactions?

• The Balance of Payments is solely focused on government spending.

• The Balance of Payments only tracks domestic transactions.

• The Balance of Payments reflects a country's economic transactions by recording all trade, capital, and financial exchanges with other countries.

• The Balance of Payments does not include financial exchanges.

What are the main components of the Balance of Payments?

• Current Account and Capital and Financial Account

• Trade Balance and Foreign Exchange Reserves

• Government Budget and National Debt

• Export and Import Tariffs

Who are the major participants in the Forex market?

• Stock market investors

• Insurance companies

• Central banks, commercial banks, hedge funds, corporations, retail traders, institutional investors

• Real estate agents

What types of transactions occur in the Foreign Exchange Market?

• Stock market trades

• Currency exchange fees

• Bank loan transactions

• Spot transactions, forward transactions, swap transactions, options.

How are foreign exchange quotations expressed?

• Foreign exchange quotations are expressed as currency pairs.

• As individual currencies

• As fixed rates

• In percentages

What factors influence foreign exchange rates?

• Historical events

• Cultural traditions

• Weather patterns

• Interest rates, inflation rates, political stability, economic performance, and market speculation.

What is the meaning of an options contract in finance?

• An options contract is a financial derivative that grants the right to buy or sell an asset at a set price before a certain date.

• An options contract is a type of stock that pays dividends.

• An options contract is a loan agreement between two parties.

• An options contract is a guarantee of profit in the stock market.

What are the different types of options contracts?

• Stock options and bond options

• Call options and put options

• Equity options and commodity options

• Future options and index options

Why are options contracts important in international finance?

• Options contracts are only used for speculation.

• Options contracts eliminate all financial risks.

• Options contracts are important for risk management and flexibility in international finance.

• Options contracts are not relevant in global markets.