main reason that U.S. currency cannot be turned in to the government in exchange for a tangible asset such as gold is that: This gives the government more freedom to manage the nation's money supply U.S. currency is the debt of the Federal Reserve Banks Government officials enjoy acquiring assets and don't want to lose anything tangible People prefer tangible item

main reason that U.S. currency cannot be turned in to the government in exchange for a tangible asset such as gold is that: This gives the government more freedom to manage the nation's money supply U.S. currency is the debt of the Federal Reserve Banks Government officials enjoy acquiring assets and don't want to lose anything tangible People prefer tangible item

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required: e) True or False: Central Bank of China tend to borrow domestically to buy foreign asset with in the local economy as a sterilization policy.
Which statement is true of digital legal tender? a.Digital legal tender replaces physical notes and coin. b.Digital legal tender issued into the economy will not save on costs associated with printing physical notes. c.Distributed ledger technology can enable the central banks to issue a secure, transparent and efficient digital legal tender. d.Digital legal tender is worth more than physical notes
Transaction exposure gives rise to foreign exchange gains and losses that are ultimately realized in cash True False Hedging does not protect companies from exchange rate fluctuations True False Assets and liabilities translated at the historical exchange rate are not exposed to a translation adjustment True False Spot rate is the today's (current) price for purchasing or selling a foreign currency True False Foreign currency option a right to buy or sell foreign currency True False
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Consider that, until the Federal Reserve System was created, there was no one single US currency. In colonial days, most of each of the states even had its own money. What benefits might result from a political entity, like a state or a country, having its own currency and what problems might occur?
Which of the following is not true Large Value Transfer System is an electronic, real time net settlement network The Bank of Canada implements monetary policy by lending money at the prime rate LVTS and ACSS are operated by the Canadian Payments Association The market for settlement balances is where overnight interest rate is determined Financial innovation has caused banks to suffer declines in their cost advantages in acquiring funds, although it has not caused a decline in income advantages banks to suffer a simultaneous decline of cost and income advantages banks to suffer declines in their income advantages in acquiring funds, although it has not caused a decline in cost advantages banks to achieve competitive advantages in both costs and income
Investors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.
If a country’s par exchange rate is overvalued, what kind of intervention would that country’s central bank be forced to undertake, and what kind of effect would it have on its international reserves? What must happen if this country’s central bank decides not to intervene anymore?
Why would the U.S. government consider reinstitutingthe “wall” between investment banking and commercialbanking?
Explain why the following statement is true or false: “Direct intervention for currency valuation involves limiting the ability to exchange domestic currency for foreign currency.”
If a country runs a deficit on its current account, it has to be financed by running a capital account surplus which limited to borrowing from abroad TRUE OR FALSE?
What type of banking risk includes deterioration of the value of the local currency in terms of the bank’s base currency; convertibility or transfer risks. a. Credit Risk b. Liquidity Risk c. Foreign Exchange Risk d. Interest Rate Risk