International Business

Chapter 7: Currency and Risk Management

Practice Tests

1.
Throughout history, money has been accepted in many forms, including
A)paper.
B)stones.
C)beads.
D)all of the above.
2.
What are the five characteristics of money?
A)acceptability, scarcity, durability, divisibility, and portability
B)acceptability, market value, simplicity, divisibility, and portability
C)acceptability, scarcity, durability, divisibility, and stability
D)acceptability, permanence, durability, divisibility, and portability
3.
Which is not one of the main purposes of money in the business world?
A)measure of value
B)scarcity
C)medium of exchange
D)savings mechanism
4.
What is a currency exchange rate?
A)the exchange of goods and services
B)the currency used in the country of trade
C)the rate at which one country's currency can be traded for another country's currency
D)all of the above
5.
The symbol $ is the international symbol for currencies of the United States and
A)Germany.
B)The European Union.
C)Mexico.
D)Canada.
6.
If the currency exchange rate between the U.S. dollar and the British pound were 1 pound sterling to 1.5 U.S. dollars, how many dollars would 500 pounds buy?
A)$333.33
B)$750.00
C)$1,500
D)$500
7.
What is the difference between the amount of money a nation pays to other countries and the amount of money it receives from them?
A)balance of payments
B)annual budget
C)trade deficit
D)balance of profits
8.
The total value of all goods and services sold in a country during a year is the
A)GDP.
B)GNP.
C)GOP.
D)GPO.
9.
The exchange rate between two currencies at the immediate time of a trade is the
A)forward rate.
B)spot rate.
C)flash rate.
D)rate hike.
10.
Which of the following is not a method of reducing transaction risk?
A)cash in advance
B)letter of credit
C)sale on account
D)balance of payments
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