Question 1

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:​

Accepted Answer

A)  ​about 4.99%. 
B)  ​about 4.88%. 
C)  ​about 4.65%. 
D)  ​about 4.43%. 
A)  ​about 4.99%. 
B)  ​about 4.88%. 
C)  ​about 4.65%. 
D)  ​about 4.43%. C

Question 2

The degree of financial information that must be provided by public companies is the same in all countries.

Accepted Answer

A) True 
 B)False  False

Question 3

Global regulations require that shareholders in all countries have the same rights wherever there are stock markets.

Accepted Answer

A) True 
 B)False  False

Question 4

A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency.

Accepted Answer

A) True 
 B)False

Question 5

Large commercial banks play a major role in the international money market by accepting short-term deposits in various currencies, and channeling the money to corporations and government agencies that need to borrow those short-term funds in the desired currencies.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following cannot be used to invest internationally?

Accepted Answer

A)  investment in MNC stocks 
B)  American depository receipts (ADRs) 
C)  exchange-traded funds (ETFs) 
D)  international mutual funds 
E)  All of these can be used to invest internationally. 
A)  investment in MNC stocks 
B)  American depository receipts (ADRs) 
C)  exchange-traded funds (ETFs) 
D)  international mutual funds 
E)  All of these can be used to invest internationally.

Question 7

Assume that $1 is equal to .85 euros and 98 yen. The value of the yen in euros is _______.

Accepted Answer

A)  .01 
B)  118 
C)  1.18 
D)  .0087 
A)  .01 
B)  118 
C)  1.18 
D)  .0087

Question 8

Global regulations prevent the internationalization of money markets.

Accepted Answer

A) True 
 B)False

Question 9

​Futures contracts are typically ____; forward contracts are typically ____.

Accepted Answer

A)  ​sold on an exchange; sold on an exchange 
B)  ​sold in an over-the-counter market; sold on an exchange 
C)  ​sold on an exchange; sold in an over-the-counter market 
D)  ​offered by commercial banks; offered by commercial banks 
A)  ​sold on an exchange; sold on an exchange 
B)  ​sold in an over-the-counter market; sold on an exchange 
C)  ​sold on an exchange; sold in an over-the-counter market 
D)  ​offered by commercial banks; offered by commercial banks

Question 10

A Japanese yen is worth $.0080, and a Fijian dollar (F$) is worth $.5900. What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?

Accepted Answer

A)  73.75. 
B)  125. 
C)  1.69. 
D)  0.014. 
E)  None of these are correct. 
A)  73.75. 
B)  125. 
C)  1.69. 
D)  0.014. 
E)  None of these are correct.

Question 11

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.

Accepted Answer

A)  $13.64 
B)  $15.00 
C)  $16.50 
D)  16.50 euros 
E)  None of these are correct. 
A)  $13.64 
B)  $15.00 
C)  $16.50 
D)  16.50 euros 
E)  None of these are correct.

Question 12

The interest rate on a syndicated loan depends all of the following except:

Accepted Answer

A)  currency denominating the loan. 
B)  maturity of the loan. 
C)  creditworthiness of the borrower. 
D)  loan provisions set by the International Monetary Fund. 
A)  currency denominating the loan. 
B)  maturity of the loan. 
C)  creditworthiness of the borrower. 
D)  loan provisions set by the International Monetary Fund.

Question 13

Contagion effects represent a decline in a country's stock market and the effects are isolated in that market.

Accepted Answer

A) True 
 B)False

Question 14

When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:​

Accepted Answer

A)  ​closing prices in the United States during the previous day. 
B)  ​closing prices in Canada during the previous day. 
C)  ​prevailing prices in locations where the foreign exchange markets are already open. 
D)  ​officially set by central banks before the U.S. market opens. 
A)  ​closing prices in the United States during the previous day. 
B)  ​closing prices in Canada during the previous day. 
C)  ​prevailing prices in locations where the foreign exchange markets are already open. 
D)  ​officially set by central banks before the U.S. market opens.

Question 15

You observe a quotation of the Japanese yen (¥) of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the ____ quotation of ____ ¥/$.​

Accepted Answer

A)  ​direct; 142.86 
B)  ​indirect; 142.86 
C)  ​indirect; 150 
D)  ​direct; 150 
E)  ​indirect; 0 
A)  ​direct; 142.86 
B)  ​indirect; 142.86 
C)  ​indirect; 150 
D)  ​direct; 150 
E)  ​indirect; 0

Question 16

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Accepted Answer

A)  ​10 
B)  ​13.28 
C)  ​30.12 
D)  ​39.84 
A)  ​10 
B)  ​13.28 
C)  ​30.12 
D)  ​39.84

Question 17

The international money market is primarily served by:​

Accepted Answer

A)  ​the governments of European countries, which directly intervene in foreign currency markets. 
B)  ​government agencies such as the International Monetary Fund that promote development of countries. 
C)  ​several large banks that accept deposits and provide loans in various currencies. 
D)  ​small banks that convert foreign currency for tourists and business visitors. 
A)  ​the governments of European countries, which directly intervene in foreign currency markets. 
B)  ​government agencies such as the International Monetary Fund that promote development of countries. 
C)  ​several large banks that accept deposits and provide loans in various currencies. 
D)  ​small banks that convert foreign currency for tourists and business visitors.

Question 18

An MNC with receivables in Japanese yen purchases yen forward to hedge its exposure to exchange rate fluctuations.

Accepted Answer

A) True 
 B)False

Question 19

Shareholders have more voting power in some countries than in others.

Accepted Answer

A) True 
 B)False

Question 20

In general, investors are attracted to stock markets in countries that allow very limited voting rights for shareholders.

Accepted Answer

A) True 
 B)False

Exam 3: International Financial Markets

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:​

The degree of financial information that must be provided by public companies is the same in all countries.

Global regulations require that shareholders in all countries have the same rights wherever there are stock markets.

A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency.

Large commercial banks play a major role in the international money market by accepting short-term deposits in various currencies, and channeling the money to corporations and government agencies that need to borrow those short-term funds in the desired currencies.

Which of the following cannot be used to invest internationally?

Assume that $1 is equal to .85 euros and 98 yen. The value of the yen in euros is _______.

Global regulations prevent the internationalization of money markets.

​Futures contracts are typically ____; forward contracts are typically ____.

A Japanese yen is worth $.0080, and a Fijian dollar (F$) is worth $.5900. What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.

The interest rate on a syndicated loan depends all of the following except:

Contagion effects represent a decline in a country's stock market and the effects are isolated in that market.

When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:​

You observe a quotation of the Japanese yen (¥) of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the ____ quotation of ____ ¥/$.​

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

The international money market is primarily served by:​

An MNC with receivables in Japanese yen purchases yen forward to hedge its exposure to exchange rate fluctuations.

Shareholders have more voting power in some countries than in others.

In general, investors are attracted to stock markets in countries that allow very limited voting rights for shareholders.

Multinational Financial Management: an Overview

International Flow of Funds

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Capital Structure and Cost of Capital

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:

Futures contracts are typically ; forward contracts are typically .

When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:

You observe a quotation of the Japanese yen (¥) of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the quotation of ¥/$.

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

The international money market is primarily served by: