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- 3. which of the following is an example of idiosyncratic risk? Covid 2008 financial crisis 2019 US-China trade war Tesla recalling 1,200 Model S due to potential power issuesWhich of the following statements are true about exchange rate risk? Check all that apply: A Canadian investor with an investment in U.S Treasury bills faces exchange rate risk. Exchange rate risk arises from the uncertainty in asset returns due to changes in the exchange rate between the currency of the investor and the foreign currency. Exchange rate risk can't be perfectly hedged, even if the return earned in the foreign currency is known beforehand. Exchange rate risk can be hedged using a futures or forward contract in foreign exchange. SubmitForeign exchange risk may be best defined as:a. the chance of value change in foreign exchange ratesb. the chance that the demand for your currency will dropc. the chance that exchange rates will be fixedd. the political risk posed by foreign governments
- If a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time. Group of answer choices True FalseIn recent years the global economy has experienced recession levelsunprecedented since the Great Depression and the instability of the Euro continuesto cause volatility in stock and bond markets. Why might it be important for you toconsider current economic events as part of planning an audit?Which one of the following will have little if any, effect on a well-diversified portfolio? terroristic attack on the U.S. explosion at a distribution warehouse sudden increase in market interest rates increase in exchange rate
- Due to the immense failure of banking institutions in response to the global financial crisis haswitnessed an increase of development on risk management. However Islamic banking is much less affected by the destruction for a variety of reasons probably because it is still a very small part of the global system and has yet to develop enough connectivity to catch the cold. Thecurrent wave of financial liberalization and globalization naturally stimulates the question of risk management in Islamic banking. a. As outlined above, critically discuss the issues and challenges of risk management faced by Islamic banking.A Chinese investor invests in U.S. Treasury bills. If the Chinese renminbi (RMB) appreciates during the holding period against the U.S. dollar (USD), this investment increases in value but default risk remains unchanged. declines in value and decreases in default risk. declines in value but default risk remains unchanged. increases in value and decreases in default risk.Other things being constant, if the U.S. real rate of interest exceeds that of its trading partners, we expect a. political instability in the United States. b. a worsening of the U.S. balance of payments. c. an appreciation of U.S. currency. d. that a "dirty float" will emerge.
- Question based on the picture attached. (c) Classify each of the following events as a source of systematic or unsystematic risk with explanations: i. After the current election, Donald Trump is no more the President of United States of America and Joe Biden is appointed to take over his place. ii. Harlie Davidson is convicted of insider trading and is sentenced to 10 years of prison. iii. An OPEC embargo raises the world market price of oil. iv. A major consumer product, Ribena loses a product liability case due to misleading Vitamin C advertisement. v. The Supreme Court rules that no employer can layoff an employee without first giving 30-days notice.Because capital flows were an important element in the currency crises, it has been advocated that emerging markets countries avoid the financial instability by restricting capital mobility. Assess the extent to which you agree with this statement.Effect of 9/11 on Forward Rate Forecasts The September 11, 2001, terrorist attack on the United States was quickly followed by lower interest rates in the United States. How would this affect a fundamental forecast of foreign currencies? How would this affect the forward rate forecast of foreign currencies?