finance quiz part 2

Define ideal currency

• its purchasing power over goods and services in foreign

• is the value of money

• ideal currency is goods and services

• ideal currency is the amount of money spend on goods and services daily

Which one these is a characteristic of ideal currency?

• Durability

• Efficiency

• Limited quantity

• Accessibility

What are the golden rules of money?

• Spend more than you earn.

• Don't spend more than you earn

• take multiple loans

• spend uncessarily

What weakens a currency?

• when the demand of something goes down

• When the demand of something go up

What are the 3 major types of foreign exchange risks?

•    Economic Risk, Operational Risk, Translation Risk

•    Transaction Risk, Equilateral Risk, Translation Risk

•    Transaction Risk, Economic Risk, Translation Risk

Why is it important to protect foreign exchange risk? 

•      It is not crucial as a company will operate well without it

•       It is crucial for minimizing a company's exposure to significant exchange rate fluctuations that might negatively impact profit margins and asset values.

• all of the above

How does foreign exchange risk affect business?

• By changing the cost of supplies that are purchased from a different country

•      Changing the attractiveness of their products to overseas customers.

• A)      Both A & B

What is foreign exchange exposure?

• The risk of loss from foreign currency transactions

• ) The risk of gain from foreign currency transactions

• ) The risk of loss from domestic currency transactions

• The risk of gain from domestic currency transactions

What is one effect of foreign exchange exposure on firms?

• Increased profitability

• Decreased costs

• Increased market share

• Reduced competitiveness

What is the other name for foreign exchange exposure?

• Currency risk

• Interest rate risk

• Credit risk

• Market risk