Case ch.10

How does the exchange rate between the South Korean won and the U.S. dollar

affect the cost of purchasing jet fuel on the world market for a South Korean airline?

• It has no impact on the cost of jet fuel

• It decreases the cost of jet fuel for the South Korean airline

• It increases the cost of jet fuel for the South Korean airline

• It causes the cost of jet fuel to fluctuate unpredictably

Korean airlines have to purchase jet craft in U.S dollars because when compared to debt in won,

the initial interest rates on this debt were significant_______ in dollars

What is Lead and Lag strategies refer to?

• Timing of payment

• Forward contract

• Carry trade

• Exchange rate

What should we do if the US dollar is anticipated to appreciate?

• Pay after the due date

• Postpone the due date

• Remove the due date

• Pay before the due date

In the second method what exposure that companies should pay attention more?

• dealing with economic exposure

• reducing transaction exposure

• reducing translation exposure

• reducing transaction and translation exposure

How many steps that have in other steps for managing foreign exchange risk?

• 7

• 5

• 3

• 4

Which monetary policy measure was a contributing factor to inflation concerns in United States?

• Reducing government spending

• Investing in US dollar

• Raising Interest Rate

• Implementing quantitative easing

Which organization has the authority to raise the interest rate of the U.S dollar?

• US Federal Reserve

• Bank of America

• The World Bank

• The International Monetary Fund (IMF)

Which one of the following is not a factor that caused dollar to depreciate in 2020

• balance of payments deficit

• Shift in demand and supply

• Increases imports than exports

• Decreasing inflation

How does decline in value of U.S Dollar impacted Korean airlines?

• Higher profit margin

• Higher operating cost and interest payment

• Reduced dollar denominated cost

• Reduced dollar denominated debt