To purchase this material click
below link:-
For More Tutorials Click Below link:-
FIN 403 Final Exam Guide
Set of 50 Questions
Multiple Choice and True/False
1. The current currency
in Italy is called:
2. A Forward contract:
3. If the US Dollar
appreciates compared to the Euro:
4. All else equal,
if the Fed increases interest rates:
5. In general, when
speculating on exchange rate movements, the speculator will borrow the currency
that is expected to appreciate and invest in the country whose currency is
expected to depreciate.
6. To force the value of the
pound to appreciate against the dollar, the Federal Reserve should:
7. A strong dollar is
normally expected to cause:
8. The value of the Canadian
dollar, Japanese yen, and Australian dollar with respect to the U.S. dollar are
part of a:
9. Graylon, Inc., based in
Washington, exports products to a German firm and will receive payment of
€200,000 in three months. On June1, the spot rate of the euro was $1.12, and
the 3-month forward rate was $1.10. On June 1, Graylon negotiated a forward
contract with a bank to sell €200,000 forward in three months.The spot rate of
the euroon September 1 is $1.15. Graylon will receive $_________ for the euros.
10. The demand for
U.S. exports tends to increase when:
11. Which of the
following theories identifies specialization as a reason for international
business?
12. As a result of the
European Union, restrictions on exports between _______ were reduced or
eliminated.
13. Which of the
following is an example of direct foreign invest¬ment?
14. Which of the
following industries would most likely take advantage of lower costs in some
less developed foreign countries?
15.Direct foreign
investment into the U.S. represents a ________.
16.
Suppose the United States and Great Britain are on the gold standard and the
price of gold in the U.S. is fixed at $100 per ounce and the price of gold in
Britain is fixed at £50. What exchange rate must prevail between the dollar and
the pound?
17.The Euro is
18. Assume the Canadian
dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value
of the Peruvian Sol in Canadian dollars is:
19. Which of the following is
not true with respect to spot market liquidity?
20. _________ is not a
factor that causes currency supply and demand schedules to change.
21. One advantage of
monetary union
22. A large increase in
the income level in Mexico along with no growth in the U.S. income level is
normally expected to cause (assuming no change in interest rates or other
factors) a(n) ______ in Mexican demand for U.S. goods, and the Mexican peso
should _______.
23. A forward contract can be
used to lock in the __________ of a specified currency for a future point in
time.
24. When the “real”
interest rate is relatively low in a given country, then the currency of that
country is typically expected to be:
25. Currency futures
contracts sold on an exchange:
26. Which of the
following is the most likely strategy for a U.S. firm that will be receiving
Swiss francs in the future and desires to avoid exchange rate risk (assume the
firm has no offsetting position in francs)?
27. If you expect the
euro to depreciate, it would be appropriate to _______ for speculative
purposes.
28. If U.S. inflation suddenly
increased while European inflation stayed the same, there would be:
29. Countries that
have adopted the euro must agree on a single ________ policy.
30. It has been
argued that the exchange rate can be used as a policy tool. Assume that the
U.S. government would like to reduce unemployment. Which of the following is an
appropriate action given this scenario?
31. Assume a two country
world: Country A and Country B. Which of the following is correct
about purchasing power parity (PPP) as related to these two countries?
32. Based on interest rate
parity, the larger the degree by which the foreign interest rate exceeds the
U.S. interest rate, the:
33. If interest rates on
the euro are consistently below U.S. interest rates, then for the international
Fisher effect (IFE) to hold:
34. Translation exposure
reflects:
35. Depreciation of the
euro relative to the U.S. dollar will cause a U.S.-based multinational firm’s
reported earnings (from the consolidated income statement) to _______. If
a firm desired to protect against this possi¬bility, it could stabilize its
reported earnings by _______ euros forward in the foreign exchange market.
36. If
revenues and costs are equally sensitive to exchange rate movements, MNCs may
reduce their economic exposure by restructuring their operations to shift the
sources of costs or revenues to other locations so that:
37.When a foreign currency is
perceived by a firm to be undervalued, the firm may consider direct foreign
investment in that country, as the initial outlay should be relatively low.
38. Long-term
forward contracts are a possible way to hedge the distant sale of fixed assets
in foreign countries, but they may not be available for many emerging market
currencies.
39. If a U.S. parent is
setting up a French subsidiary, and funds from the subsidiary will be
periodically sent to the parent, the ideal situation from the parent’s
perspective is a ____ after the subsidiary is established.
40.
Like income tax treaties, ____________ help to avoid double taxation and
stimulate direct foreign investment.
41.
When a foreign subsidiary is not wholly owned by the parent and a foreign
project is partially financed with retained earnings of the parent and of the
subsidiary, then:
42.
The dominant world currency since the end of World War II has been the
43. Consider a country
that presently has a high level of unemployment because of weak economic
conditions. Its income levels are very low. This country may be an
attractive target as a result of ______ motives by U.S. firms that engage
in direct foreign investment.
44. Which of the
following is a reason to consider interna¬tional business?
45. Direct foreign investment would typically be welcomed
if:
46. A macro assessment of
country risk:
47. An MNC has a foreign
manufacturing plant to capitalize on cheap production costs; the MNC exports
all the goods pro¬duced. It should be most concerned about the country’s:
48.
Country risk can affect an MNC’s cash flows but cannot affect its cost of
capital.
49.
When entering into a forward contract, the forward rate usually contains a
premium (or discount) that reflects the difference between:
50. Transaction exposure
reflects:
No comments:
Post a Comment