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Practice Questions
Covered Interest Parity Practice Questions
Covered interest parity is a relationship between __________ interest rates and __________ exchange rates.
*
a. real; spot
b. nominal; spot
c. real: forward
d. nominal; forward
How much one currency falls with respect to another currency over the course of a year is known as:
*
a. forward depreciation
b. forward appreciation
c. backward depreciation
d. backward appreciation
According to the covered interest parity equation [(1+i$)=(Ft/St)(1+iC)], if the US interest rate is 2%, the Canadian interest rate is 3%, and the spot exchange rate is 1:1, then the forward exchange rate must be:
*
a. 0.9801
b. 0.9903
c. 1. 0021
d. 1.0116
Let’s say that interest rates in the US are 3% and interest rates in Canada are 1%. If the forward rate is 1:1, investing in _____________ would bring you a higher return.
*
a. US Dollars
b. Canadian Dollars
c. Both
d. Neither
The covered interest parity equation tries to find the ____________ that allows your return to be the same whether you invest in US dollars or Canadian dollars.
*
a. spot exchange rate
b. forward depreciation exchange rate
c. buying exchange rate
d. selling exchange rate
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International Finance
Course
(55 videos)
Introduction to International Trade and Finance
Balance of Payments
Practice Questions
Purchasing Power Parity
Practice Questions
David Hume on the Balance of Trade
Practice Questions
Isaac Gervaise
Practice Questions
Exchange Rates
Real Exchange Rates
Practice Questions
Real and Nominal Exchange Rates
Practice Questions
Are Devaluations Contractionary?
Practice Questions
Forward Exchange Rates
Practice Questions
Covered Interest Parity
Practice Questions
Uncovered Interest Parity and the Carry Trade
Practice Questions
Speculative Attacks
Practice Questions
The “Peso Problem”
Practice Questions
Long Swings in Exchange Rates
Practice Questions
Swiss Franc Peg
Practice Questions
Bela Balassa
Practice Questions
Currency Issues
The Classical Gold Standard
Practice Questions
Gold Exchange Standard
Practice Questions
Bretton Woods
Practice Questions
Reserve Currencies
Practice Questions
Safe Haven Currencies
Practice Questions
Capital Controls
Practice Questions
Currency Manipulation
Practice Questions
Chinese Currency Manipulation
Practice Questions
Borrowing in Your Own Currency
Practice Questions
The Euro Crisis
The Three Sides of the Crisis
Practice Questions
The Case for Optimism
Practice Questions
The Case for Pessimism
Practice Questions
European Central Bank
Practice Questions
The Bailout Funds
Practice Questions
Why are high bond yields a problem?
Practice Questions
The Italian Crisis of 2013
Practice Questions
The costs of leaving the Eurozone
Practice Questions
Remarks on individual countries
Practice Questions
Currency union collapse in history
Practice Questions
Indicators for Eurozone progress
Practice Questions
Life on the precipice
Practice Questions
Will austerity work?
Practice Questions
Effects on other multilateral agreements
Practice Questions
Optimum currency areas
Practice Questions
Optimum currency areas and the Euro
Practice Questions
Why is the Euro so bland?
Tyler Cowen lecture at the Bruno Leoni Institute (Optional)
Understanding the Eurocrisis (Optional)
Iceland: Causes of the Crisis
Iceland: Collapse
International Trade Overview
Trade Imbalances
Practice Questions
Dark Matter
Practice Questions
The “Dutch Disease”
Practice Questions
Introduction to Mercantilism
Practice Questions
Home Bias
Practice Questions
Adam Smith on Mercantile Systems
Practice Questions
Adam Smith on Mercantile Conclusions
Practice Questions
Crises and Responses to Them
Asian Financial Crisis of 1997
Practice Questions
Mexico and the 2008 Financial Crisis
Sudden Stops
Practice Questions
