Question : 111.Which of the following premises technical analysis, an approach to : 1299379

111.Which of the following premises is technical analysis, an approach to exchange rate forecasting, based on?  

A. Price and volume data cannot be used to determine past trends.

B. Econometric models drawn from economic theory are best suited to predict exchange rate movements.

C. The foreign exchange market is efficient and forward exchange rates are best predictors of future spot exchange rates.

D. Previous market trends and waves can be used to predict future market trends and waves.

E. Since forward exchange rates are best predictors of future spot rates, it makes no sense to invest in forecasting.

112.Which of the following observations is true of technical analysis, an approach to exchange rate forecasting?  

A. It draws on economic theory to construct models for predicting exchange rate movements.

B. The variables contained in this model typically include relative money supply growth rates, inflation rates, and interest rates.

C. There is a sound theoretical rationale for the assumption of predictability underlying this approach.

D. Owing to its drawbacks, this approach has declined in importance over the last few years giving way to fundamental analysis.

E. It does not rely on a consideration of economic fundamentals.

113.A country’s currency is said to be _____ when the country’s government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it.  

A. externally convertible

B. nonconvertible

C. leading

D. freely convertible

E. lagging

114.A currency is said to be _____ when only nonresidents may convert it into a foreign currency without any limitations.  

A. externally convertible

B. nonconvertible

C. leading

D. freely convertible

E. lagging

115.The government of Beryllia tightly controls the ability of its residents to convert its currency into other currencies. However, all foreign businesses with deposits in banks of Beryllia may, at any time, convert all their currency into foreign currency and take them out of the country. Beryllia’s currency is said to be _____.  

A. leading

B. nonconvertible

C. externally convertible

D. freely convertible

E. lagging

116.Which of the following is a reason why governments limit convertibility of their currency?  

A. To encourage foreign investments

B. To control currency appreciation

C. To encourage capital flight

D. To preserve their foreign exchange reserves

E. To promote neo-mercantilism

117.The phenomenon of _____ occurs when residents and nonresidents of a country rush to convert their holdings of domestic currency into a foreign currency.  

A. deflation

B. arbitrage

C. liquidity rush

D. capital flight

E. currency swap

118.When is the phenomenon of capital flight most likely to occur?  

A. When the recovery phase post an economic depression nears its end

B. When the value of domestic currency depreciates rapidly because of hyperinflation

C. When a country’s economic prospects are stable and indicate growth

D. When interest rates are low for a prolonged period of time

E. When governments lift convertibility restrictions on their currency

119.Companies can deal with the problem of nonconvertibility of currency by engaging in _____.  

A. price discrimination

B. countertrade

C. arbitrage

D. price skimming

E. currency speculation

120.Which of the following refers to countertrade?  

A. A short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates

B. The exchange rate at which a foreign exchange dealer will convert one currency into another that particular day

C. Simultaneous purchase and sale of a given amount of foreign exchange for two different value dates

D. The purchase of securities in one market for immediate resale in another to profit from a price discrepancy

E. A range of barter-like agreements by which goods and services can be exchanged for other goods and services