finance quiz part 1

As an investor, you notice that South Korea has raised interest rates. You predict an increase in investment in this economy, but forecast in my life you using

• Purchasing Power Parity (PPP)

• Econometric model

• time series model

• Relative economic strength 

What is exchange rate determination?

• The process by which a country fixes its exchange rate to another currency

• The process by which the market forces of supply and demand determine the value of one currency relative to another

• The process by which a country sets its interest rates based on the value of its currency

• The process by which a country's central bank intervenes in the foreign exchange market to influence its currency's value.

Which is a model used in exchange rate determination?

• The consumer price index (CPI)

• The production possibility frontier (PPF)

• The Balance of Paymebts model

• The Lorenz curve

What is Purchasing Power parity (PPP)?

• A measurement of a country's GDP in terms of its purchasing power

• A calculation of a country's inflation rate based on the prices of a basket of goods

• A theory that suggests exchange rates adjust to equalize the purchasing power of different currencies

• A policy tool used by central banks to manipulate the value of their currency

There are tree (3) types of foreign exchange exposure

• Transaction, transnational, economic 

• Economic, translation, financial 

• Transaction, Translation, Economic

Name the forex exposure risk that is mainly influenced by fluctuation of currencies

• Economic exposure

• Transaction exposure

• Translate exposure 

, forwarding, options and future are all techniques used to mitigate forex risk through Diversification

• true

• false