Question

1.

A product not on the Commerce Control List, or whose Export Control Classification Number does not call for an export license, is classified as:

Group of answer choices

N.L.R.

S.E.D.

B.I.S.

U.C.C.

None of the above

2.

A characteristic of options hedging is that options are commonly traded for many different currencies.

Group of answer choices

True

False

3.

S.D.R.s of the International Monetary Fund can be used in exchanges:

Group of answer choices

instead of open accounts.

as letters of credit.

as an artificial currency.

All of the above

None of the above

4.

An options market hedge is, in effect, an insurance policy against unfavorable exchange rate fluctuations.

Group of answer choices

True

False

5.

If it is agreed that an international exchange will be in the currency of the exporter’s country, then there is no exchange rate fluctuation risk for the importer.

Group of answer choices

True

False

Answer 1

1. None of the above.

The correct answer to this question is EAR99

2. FALSE - options are not commonly traded for various types of different currencies.

3. as an artificial currency

SDR is a form of artificial currency whose value is determined by the value of a basket of the four currencies - Euro, Yen, Dollar, and British pound.

4. TRUE - The option contract will provide the means to hedge against the fluctuation for the value of the currency to become fixed due to the contract.

5. FALSE - The importer now has all the risk of fluctuation.