A US multinational company is required to report its financial results in US dollars. How does this create currency exchange risk for the company? What is the term which most accurately describes this particular risk? a. Currency risk- if unexpected changes in currency values affect the value of the firm 4.
12) The term ___ means that a currency’s value is determined by the forces of supply and demand. 11) The World Bank is also known as the ________ CHAPTER 5: INTERNATIONAL MONETARY SYSTEM 3) Which country was the first to adopt the gold standard? 13) ________ are those that bear significant risk of not being repaid. 4) __________ is the price of one currency in terms of a second currency. 14) What is the primary purpose of the IFC?
Answer: D - The Fed uses three policy tools to manipulate the money supply: ________, which affect reserves and the monetary base; changes in ________, which affect the monetary base; and changes in ________, which affect the money multiplier. A) open market operations; borrowed reserves; margin requirements B) open market operations; borrowed reserves; reserve requirements C) borrowed reserves; open market operations; margin requirements D) borrowed reserves; open market operations; reserve requirements Answer: B - The primary indicator of the Fedʹs stance on monetary policy is A) the discount rate. B) the federal funds rate. C) the growth rate of the monetary base. D) the growth rate of M2.
The four fundamental factors that affect the cost of money are production opportunities, time preferences for consumption, risk, and expected inflation. k. What are some economic conditions (including international aspects) that affect the cost of money? Some economic conditions are budgets deficits, federal reserve policies, budget surpluses, level of business activity and international trade deficits or surpluses. The international aspects are country risk and exchange rate
Explain the meaning of money multiplier and its role? (6) The money multiplier calculates the maximum amount of money that an initial deposit can be expanded to with a given reserve ratio. Money multiplier can also be expressed as a ratio of a change in money supply divided by a change in money base. The role of the multiplier is that it explains why output fluctuates.the money multiplier is a multiple of reserves; this multiple is the reciprocal of the reserve ratio, and it is an economic multiplier.In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money under a fractional-reserve banking system. Most often, it measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.
The Federal Open Market Committee utilizes three tools to affect money and to manipulate the market; open market operations, altering reserve requirements, and adjusting the discount. Money is an asset and functions as a medium of exchange, a unit of account, a store of value, or a standard of deferred payment. Monetary policies affect labor employment and production in a fluctuating market. International trade is on the rise and though the past two years have been tough, the economy is showing a few signs of
Normally, a reconciliation is required between the proprietary fund financial statements and the business-type activities column in the government-wide financial statements. C. Statements include the Statement of Net Assets (Balance Sheet); Statement of Revenues, Expenses and Changes in Fund Net Assets: and Statement of Cash Flows. D. The Statement of Cash Flows may be prepared using either the direct or indirect methods. 7. Which of the following choices regarding the fiduciary fund financial statements is true?
Taxpayers have, therefore, entered into transactions structured to accrue liability for deductible expenses prior to actual payment. Thus, taxpayers derive benefits in part from the time value of money, because eventually the taxpayer must either pay in full or reflect in taxable income-perhaps at capital gain rates-all the accrued amounts. Of particular concern to the Internal Revenue Service (the Service) has been the use of accrual accounting in connection with the deduction of interest on long-term debt under section 163 of the Internal Revenue Code (the Code).2 The Tax Reform Act of 1984 (the 1984 Act),3 which was signed into law by President Reagan onJuly 18, 1984, contains provisions specifically addressing this perceived abuse. Under section 461(a) of the Code, "[t]he amount of any deduction. .
In Problem 1-3A, you are asked to create financial statements. The financial statements should be created in a certain order. First is the Income Statement, second is the Statement of Owner’s Equity, third is the Balance Sheet and last is the Statement of Cash Flows. The order is very important because the statements are all interconnected and rely on the proceeding statement to be completed. The Income Statement presents the
Federal Reserve Paper ECO/212 May 14, 2012 Dr. Mohamed El-Kaissy This paper has the purpose to cover the many topics and aspects of the Federal Reserve as it pertains to monetary policy. The fact that monetary policy can have an indirect effect on the economy is a crucial and valid point. The beginning of the paper talks about the functionality of money and its purpose in government. The analysis will go onto explore the tools that the banking system has at its disposal and give examples as to how their use affects the monetary system. The Federal Reserve has the ability to create many avenues of economic power with just a minimal amount of resources, however; these minimal amounts of resources are very powerful.