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ECN 306 EXAM ACTUAL QUESTIONS
2026 WITH VERIFIED ANSWERS.
A depreciation of the dollar refers to - correct answer-a fall in
the dollar price of foreign currency.
Correct! an increase in the dollar price of foreign currency.
an intervention in the international money market.
a loss of foreign-exchange reserves for the U.S.
If you have a commitment to pay a friend in Britain 1,000
pounds in 30 days, you could remove the risk of loss due to the
appreciation of the pound by - correct answer-Correct!
buying the pounds in the forward market for delivery in 30
days.
selling dollars in the forward market for delivery in 30 days.
selling the pounds in the forward market for delivery in 30 days.
buying dollars in the forward market for delivery in 30 days.
An appreciation in the value of the U.S. dollar against the
British pound would tend to - correct answer-increase the
number of dollars that could be bought with a pound.
Correct! discourage the British from buying American goods.
discourage U.S. tourists from traveling to Britain.
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discourage Americans from buying British goods.
A(n) ____ is an arrangement by which two parties exchange
one currency for another and agree that the exchange will be
reversed at a stipulated date in the future. - correct answer-
arbitrage
hedge
option
Correct! swap
If Canadian speculators believed the Swiss franc was going to
appreciate against the U.S. dollar, they would - correct answer-
sell Swiss francs.
purchase U.S. dollars.
Correct! purchase Swiss francs.
purchase Canadian dollars.
Hedging is the process of avoiding or covering a foreign-
exchange risk. - correct answer-Correct!
True
False
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A firm that buys foreign exchange in order to take advantage of
higher foreign interest rates is - correct answer-Correct!
engaging in interest rate arbitrage.
speculating.
responding to fluctuations in the business cycle.
demonstrating purchasing power parity.
Last month, the exchange rate between the U.S. dollar and the
Japanese yen was 100 yen per dollar. The exchange rate is
currently at 110 per dollar. We can say that - correct answer-
Correct! the dollar appreciated against the yen, and the yen
depreciated against the dollar.
the dollar and the yen both appreciated.
the dollar depreciated against the yen, and the yen appreciated
against the dollar.
the dollar and the yen both depreciated.
Suppose the exchange rate between the Japanese yen and the
U.S. dollar is 100 yen per dollar. A Japanese stereo with a price
of 60,000 yen will cost - correct answer-$5000.
$6000.
$60.
Correct! $600.
ECN 306 EXAM ACTUAL QUESTIONS
2026 WITH VERIFIED ANSWERS.
A depreciation of the dollar refers to - correct answer-a fall in
the dollar price of foreign currency.
Correct! an increase in the dollar price of foreign currency.
an intervention in the international money market.
a loss of foreign-exchange reserves for the U.S.
If you have a commitment to pay a friend in Britain 1,000
pounds in 30 days, you could remove the risk of loss due to the
appreciation of the pound by - correct answer-Correct!
buying the pounds in the forward market for delivery in 30
days.
selling dollars in the forward market for delivery in 30 days.
selling the pounds in the forward market for delivery in 30 days.
buying dollars in the forward market for delivery in 30 days.
An appreciation in the value of the U.S. dollar against the
British pound would tend to - correct answer-increase the
number of dollars that could be bought with a pound.
Correct! discourage the British from buying American goods.
discourage U.S. tourists from traveling to Britain.
, Page | 2
discourage Americans from buying British goods.
A(n) ____ is an arrangement by which two parties exchange
one currency for another and agree that the exchange will be
reversed at a stipulated date in the future. - correct answer-
arbitrage
hedge
option
Correct! swap
If Canadian speculators believed the Swiss franc was going to
appreciate against the U.S. dollar, they would - correct answer-
sell Swiss francs.
purchase U.S. dollars.
Correct! purchase Swiss francs.
purchase Canadian dollars.
Hedging is the process of avoiding or covering a foreign-
exchange risk. - correct answer-Correct!
True
False
, Page | 3
A firm that buys foreign exchange in order to take advantage of
higher foreign interest rates is - correct answer-Correct!
engaging in interest rate arbitrage.
speculating.
responding to fluctuations in the business cycle.
demonstrating purchasing power parity.
Last month, the exchange rate between the U.S. dollar and the
Japanese yen was 100 yen per dollar. The exchange rate is
currently at 110 per dollar. We can say that - correct answer-
Correct! the dollar appreciated against the yen, and the yen
depreciated against the dollar.
the dollar and the yen both appreciated.
the dollar depreciated against the yen, and the yen appreciated
against the dollar.
the dollar and the yen both depreciated.
Suppose the exchange rate between the Japanese yen and the
U.S. dollar is 100 yen per dollar. A Japanese stereo with a price
of 60,000 yen will cost - correct answer-$5000.
$6000.
$60.
Correct! $600.
