Which of the following is NOT a benefit of investing in ADRs? The dividends are received in U.S. currency.     Currency risk is minimized.     ADRs are subject to anti-fraud rules.       The transactions are done in U.S. currency.

Forward foreign currency contracts are off the balance sheet transactions True False

Which of the following statements is CORRECT? A. Foreign exchange dealers earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase. B. Training Speculators earn a profit by a bid - ask spread on currencies they purchase and sell. C. Currency trading lacks profitability for large commercial and investment banks but is maintained as a service for corporate and institutional customers. D. Arbitragers seek to profit from simultaneous exchange rate differences in different markets.

i)discuss accounting issues in risk management, and explain the following terms: fair value hedge, cash flow hedge, foreign investment hedge, speculation      ii)discuss some of the famous cases in which the lack of proper risk management policies and procedures have caused companies to incur large losses.      iii)explain some general guidelines that senior management should follow to set up and maintain an effective risk management system.       iv)explain how a currency swap can be used to hedge a stream of foreign cash flows.     v)define interest rate derivatives, and compare and contrast them against bond derivatives.

How does fractional-reserve banking influence the money supply in the United States?     Fractional-reserve banks borrow and store funds from lenders, decreasing the number of physical dollars in circulation.   Fractional-reserve banks issue depositor funds to borrowers, increasing the number of claims made on the same dollars.   Fractional-reserve banks store the entirety of every depositor's funds, limiting the amount of currency in circulation.   Fractional-reserve banks are permitted to print currency, increasing the number of physical dollars in circulation.

Leads are deliberate early payments of amounts due to be paid in foreign currency to overseassuppliers, or other foreign currency payments. Leads can avoid the risk that the sterling cost of these payments may rise if the amountsof the payments are quoted in foreign currency and the foreign currencyincreases in value. Under what circumstances can how an international company can use ‘leads and lags’ to protect itself againstforeign exchange risk?

Which statement is true of digital legal tender? a.Digital legal tender replaces physical notes and coin. b.Digital legal tender issued into the economy will not save on costs associated with printing physical notes. c.Distributed ledger technology can enable the central banks to issue a secure, transparent and efficient digital legal tender. d.Digital legal tender is worth more than physical notes

Transaction exposure gives rise to foreign exchange gains and losses that are ultimately realized in cash True False Hedging does not protect companies from exchange rate fluctuations True False Assets and liabilities translated at the historical exchange rate are not exposed to a translation adjustment True False Spot rate is the today's (current) price for purchasing or selling a foreign currency True False Foreign currency option a right to buy or sell foreign currency True False

c) In what three ways do commercial banks make a profit from the monetary system? (d) In Canada, what is the equivalent of the U.S. Federal Reserve? e) Suppose that the United States were to adopt a system of full-reserve banking; thatis, demand deposits would be illegal to lend out, and banks would only charge a nominalfee for safekeeping. Would this help to fix the problems that Mike Maloney layed out? Explain your answer.

Denomination intermediation refers to: a. The efficiency with which depository institutions provide payment services such as cheque clearing. b. Converting foreign denominated currency into local currency. c. FIs allowing small investors to overcome constraints to buying assets imposed by large minimum denomination size.