Question 1

An MNC's parent or subsidiary in need for funds commonly determines whether there are any available internal funds before searching for outside funding.

Accepted Answer

A) True 
 B)False

Question 2

To avoid exchange rate risk when borrowing a foreign currency, an MNC could hedge its position by using interest rate swaps.

Accepted Answer

A) True 
 B)False

Question 3

A risk-averse firm would prefer to borrow ____ when the expected financing costs in a foreign country are similar to the costs in the local country.

Accepted Answer

A)  locally 
B)  in the foreign country 
C)  locally OR in the foreign country 
D)  part of the funds locally, and part from the foreign country 
A)  locally 
B)  in the foreign country 
C)  locally OR in the foreign country 
D)  part of the funds locally, and part from the foreign country

Question 4

A negative effective financing rate for a U.S. firm indicates that the firm:

Accepted Answer

A)  will incur a loss on the project financed with the funds. 
B)  paid more interest on the funds than what it would have paid if it had borrowed dollars. 
C)  will be unable to repay the loan. 
D)  None of these are correct. 
A)  will incur a loss on the project financed with the funds. 
B)  paid more interest on the funds than what it would have paid if it had borrowed dollars. 
C)  will be unable to repay the loan. 
D)  None of these are correct.

Question 5

The interest rate of Euronotes is based on the T-bill rate.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a source of external short-term financing for MNCs?

Accepted Answer

A)  Eurobonds 
B)  Euro-commercial paper 
C)  Euronotes 
D)  ADRs 
E)  Eurobands AND ADRs 
A)  Eurobonds 
B)  Euro-commercial paper 
C)  Euronotes 
D)  ADRs 
E)  Eurobands AND ADRs

Question 7

​Which of the following statements is false?

Accepted Answer

A)  ​If interest rate parity holds, foreign financing and a simultaneous hedge of that position in the forward market will result in financing costs similar to those in domestic financing. 
B)  ​If interest rate parity holds, and the forward rate is an accurate forecast of the future spot rate, uncovered foreign financing will result in financing costs similar to those in domestic financing. 
C)  ​If interest rate parity holds, and the forward rate is expected to overestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing. 
D)  ​If interest rate parity holds, and the forward rate is expected to underestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing. 
A)  ​If interest rate parity holds, foreign financing and a simultaneous hedge of that position in the forward market will result in financing costs similar to those in domestic financing. 
B)  ​If interest rate parity holds, and the forward rate is an accurate forecast of the future spot rate, uncovered foreign financing will result in financing costs similar to those in domestic financing. 
C)  ​If interest rate parity holds, and the forward rate is expected to overestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing. 
D)  ​If interest rate parity holds, and the forward rate is expected to underestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing.

An MNC's parent or subsidiary in need for funds commonly determines whether there are any available internal funds before searching for outside funding.

To avoid exchange rate risk when borrowing a foreign currency, an MNC could hedge its position by using interest rate swaps.

A risk-averse firm would prefer to borrow ____ when the expected financing costs in a foreign country are similar to the costs in the local country.

A negative effective financing rate for a U.S. firm indicates that the firm:

The interest rate of Euronotes is based on the T-bill rate.

Which of the following is not a source of external short-term financing for MNCs?

Which of the following statements is false?

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

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

International Cash Management

Filters

Exam 20: Short-Term Financing

An MNC's parent or subsidiary in need for funds commonly determines whether there are any available internal funds before searching for outside funding.

To avoid exchange rate risk when borrowing a foreign currency, an MNC could hedge its position by using interest rate swaps.

A risk-averse firm would prefer to borrow ____ when the expected financing costs in a foreign country are similar to the costs in the local country.

A negative effective financing rate for a U.S. firm indicates that the firm:

The interest rate of Euronotes is based on the T-bill rate.

Which of the following is not a source of external short-term financing for MNCs?

​Which of the following statements is false?

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

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

International Cash Management

Filters

Which of the following statements is false?