Introduction to Finance

 1. 
(LO 6.1)
What is the purpose of an international monetary system? 
 2. 
(LO 6.1)
What is meant by the statement that the international mon-
etary system has operated mostly under a “gold standard”? What are the 
major criticisms associated with being on a gold standard?
 3. 
(LO 6.1)
Describe the Bretton Woods system for setting currency 
exchange rates. What are “special drawing rights” and how are they 
used to foster world trade? 
 4. 
(LO 6.1)
What is an international monetary system based on 
“fl exible exchange rates”? 
 5. 
(LO 6.1)
Describe the international monetary system currently in 
use.
 6. 
(LO 6.2)
What is the European Union (EU)? How did it develop? 
Who are the current members of the EU?
 7. 
(LO 6.2)
What is meant by the term eurozone members? What 
countries are eurozone members?
 8. 
(LO 6.2)
What is the euro? Identify some of its distinguishing 
characteristics.
 9. 
(LO 6.2)
What types of fi nancial crises have some countries in 
the European Union faced in recent years?
 10. 
(LO 6.3)
What are currency or foreign exchange markets? How 
are exchange rates quoted?
 11. 
(LO 6.4)
Explain the role of supply and demand in establishing 
exchange rates between countries. What other factors aff ect currency 
exchange rates?
 12. 
(LO 6.5)
How has the value of the U.S. dollar changed relative to 
other major currencies in recent years? What is “hedging” and how 
are forward contracts used to manage foreign exchange risk? 
 13. 
(LO 6.6)
What are sight and time drafts? Indicate how they 
diff er.