Question 1

A fully owned foreign subsidiary is a form of MNC in which

Accepted Answer

A)  a local entrepreneur buys the firm in her own foreign country.
B)  the MNC owns and operates the firm by itself.
C)  the foreign government gives its full cooperation.
D)  None of these options are true.E) A) and B)
F) None of the above

Question 2

Three years ago, the U.S. dollar's exchange rate with the Iceland krona was .0008 dollars per krona. Today, the exchange rate is .0006 dollars per krona. These figures indicate that over this three-year period, the dollar

Accepted Answer

A)  strengthened against the krona.
B)  weakened against the krona.
C)  is not highly correlated to the krona.
D)  The answer cannot be determined without knowing the number of kronas needed to buy a dollar.E) C) and D)
F) None of the above

Question 3

Multinational corporations may take several forms. An exporter could be described as

Accepted Answer

A)  a MNC that produces a product within its own borders, but sells in a foreign market.
B)  the least risky political arrangement.
C)  a MNC willing to commit itself to long-term foreign investment.
D)  More than one of the options.E) A) and B)
F) B) and C)

Question 4

Currency exchange rates may be either floating or fixed.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following kinds of risk is NOT uniquely associated with MNCs?

Accepted Answer

A)  Exchange rate risk
B)  Business risk
C)  Political risk
D)  None of these options are uniquely associated with MNCs.E) None of the above
F) C) and D)

Question 6

The value of a country's currency may increase by

Accepted Answer

A)  continuous excessive government spending.
B)  a stock market rally in that country.
C)  an increase in that country's money supply.
D)  More than one of the optionsE) All of the above
F) B) and C)

Question 7

Which of the following is not a reason for U.S. firms operating in foreign markets?

Accepted Answer

A)  Less expensive labor
B)  Better economic and political environment (in the U.S.) 
C)  Tax incentives
D)  To achieve international diversificationE) A) and B)
F) C) and D)

Question 8

Assume that you had U.S. dollar quotes for the Japanese yen and the British pound. If you want to know the yen/pound exchange rate, you would rely on

Accepted Answer

A)  forward rates.
B)  cross rates.
C)  The Wall Street Journal.
D)  hedge ratios.E) A) and B)
F) B) and C)

Question 9

As exchange rates change, they

Accepted Answer

A)  change the relative purchasing power between countries.
B)  can affect imports and exports between those two countries.
C)  will affect the flow of funds between the countries.
D)  All of these options are true.E) A) and D)
F) C) and D)

Question 10

Which of the following hedging strategies involves a loan without a futures contract?

Accepted Answer

A)  The Eurobond market
B)  The forward exchange market
C)  The money market
D)  An IMM contractE) B) and C)
F) A) and C)

Question 11

The following are the prices in the foreign exchange market between the U.S. dollar and another local currency (LC) .   Spot $0.03112/LC3-month forvard $0.03117/LC6-month forward $0.03118/LC\begin{array} { l l } 	ext { Spot } & \$ 0.03112 / \mathrm { LC } \3 	ext {-month forvard } & \$ 0.03117 / \mathrm { LC } \6 	ext {-month forward } & \$ 0.03118 / \mathrm { LC }\end{array} Spot 3-month forvard 6-month forward ​$0.03112/LC$0.03117/LC$0.03118/LC​  What was the approximate discount or premium on a three-month forward for LC?

Accepted Answer

A)  0.643% premium
B)  .013% premium
C)  .013% discount
D)  0.643% discount E) A) and B)
F) C) and D)

Question 12

You travel to Cancun Mexico for spring break. The current exchange rate is 13 pesos to the dollar. When you arrive, you convert $1,000 into how many pesos?

Accepted Answer

A)  1,300
B)  80
C)  13,000
D)  Not enough information is given to determine an answer.E) B) and D)
F) A) and D)

Exam 21: International Financial Management

Three years ago, the U.S. dollar's exchange rate with the Iceland krona was .0008 dollars per krona. Today, the exchange rate is .0006 dollars per krona. These figures indicate that over this three-year period, the dollar

Correct Answer
verified

As exchange rates change, they

Correct Answer
verified

The value of a country's currency may increase by

Correct Answer
verified

Which of the following hedging strategies involves a loan without a futures contract?

Correct Answer
verified

Assume that you had U.S. dollar quotes for the Japanese yen and the British pound. If you want to know the yen/pound exchange rate, you would rely on

Correct Answer
verified

Which of the following kinds of risk is NOT uniquely associated with MNCs?

Correct Answer
verified

A fully owned foreign subsidiary is a form of MNC in which

Correct Answer
verified

Correct Answer
verified

Which of the following is not a reason for U.S. firms operating in foreign markets?

Correct Answer
verified

You travel to Cancun Mexico for spring break. The current exchange rate is 13 pesos to the dollar. When you arrive, you convert $1,000 into how many pesos?

Correct Answer
verified

Currency exchange rates may be either floating or fixed.

Correct Answer
verified

Multinational corporations may take several forms. An exporter could be described as

Correct Answer
verified

Exam 21: International Financial Management

Three years ago, the U.S. dollar's exchange rate with the Iceland krona was .0008 dollars per krona. Today, the exchange rate is .0006 dollars per krona. These figures indicate that over this three-year period, the dollar

Correct AnswerverifiedShow Answer

As exchange rates change, they

Correct AnswerverifiedShow Answer

The value of a country's currency may increase by

Correct AnswerverifiedShow Answer

Which of the following hedging strategies involves a loan without a futures contract?

Correct AnswerverifiedShow Answer

Assume that you had U.S. dollar quotes for the Japanese yen and the British pound. If you want to know the yen/pound exchange rate, you would rely on

Correct AnswerverifiedShow Answer

Which of the following kinds of risk is NOT uniquely associated with MNCs?

Correct AnswerverifiedShow Answer

A fully owned foreign subsidiary is a form of MNC in which

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a reason for U.S. firms operating in foreign markets?

Correct AnswerverifiedShow Answer

You travel to Cancun Mexico for spring break. The current exchange rate is 13 pesos to the dollar. When you arrive, you convert $1,000 into how many pesos?

Correct AnswerverifiedShow Answer

Currency exchange rates may be either floating or fixed.

Correct AnswerverifiedShow Answer

Multinational corporations may take several forms. An exporter could be described as

Correct AnswerverifiedShow Answer

Correct Answer
verified

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