Question 1

Convert the following indirect quote to a dollar direct quote: $1 = 7.2501 South African rand

Accepted Answer

A)  $0.1379 
B)  $0.72501 
C)  $1.00 
D)  $1.1379 
A)  $0.1379 
B)  $0.72501 
C)  $1.00 
D)  $1.1379

Question 2

What is the percentage change in the value of a $50 million investment in Russia when the exchange rate changes from $1 = 7 rubles to $1 = 12 rubles?

Accepted Answer

A)  41.67 percent 
B)  58.33 percent 
C)  36.84 percent 
D)  63.16 percent 
A)  41.67 percent 
B)  58.33 percent 
C)  36.84 percent 
D)  63.16 percent

Question 3

Which of these is defined as an exchange rate regime where the country's central bank allows its currency price to float freely between an upper and lower bound and may buy and sell large amounts of it in order to provide price support or resistance?

Accepted Answer

A)  Foreign market regime 
B)  Freely floating regime 
C)  Currency market regime 
D)  Managed-floating regime 
A)  Foreign market regime 
B)  Freely floating regime 
C)  Currency market regime 
D)  Managed-floating regime

Question 4

Risks inherent in making investments in foreign countries include:

Accepted Answer

A)  the value of their investment changes as the exchange rates change. 
B)  cash flows to be received in the future may be worth less when actually received if the foreign exchange rate fluctuates dramatically. 
C)  political risks due to an unstable government. 
D)  All of the options are risks inherent in making investments in foreign countries. 
A)  the value of their investment changes as the exchange rates change. 
B)  cash flows to be received in the future may be worth less when actually received if the foreign exchange rate fluctuates dramatically. 
C)  political risks due to an unstable government. 
D)  All of the options are risks inherent in making investments in foreign countries.

Question 5

The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.6607. If the interest rate in the United States is 6 percent and in New Zealand is 4 percent, then what should be the three-month forward exchange rate?

Accepted Answer

A)  $0.5368 per NZD 
B)  $0.6051 per NZD 
C)  $0.7614 per NZD 
D)  $0.8075 per NZD 
A)  $0.5368 per NZD 
B)  $0.6051 per NZD 
C)  $0.7614 per NZD 
D)  $0.8075 per NZD

Question 6

Which of these is an organization of 189 countries that monitors currency exchange, examines financial stability, and watches the global financial system?

Accepted Answer

A)  World Monetary Union 
B)  World Monetary Organization 
C)  International Monetary Fund 
D)  International Monetary Union 
A)  World Monetary Union 
B)  World Monetary Organization 
C)  International Monetary Fund 
D)  International Monetary Union

Question 7

If the law of one price does not hold, then:

Accepted Answer

A)  investors will not be compensated for their risk. 
B)  inflation rates will be very volatile. 
C)  arbitrageurs can make large profits. 
D)  None of the options will occur. 
A)  investors will not be compensated for their risk. 
B)  inflation rates will be very volatile. 
C)  arbitrageurs can make large profits. 
D)  None of the options will occur.

Question 8

Given these two exchange rates, $1 = 11.25 Mexican peso and $1 = €0.7521, compute the cross rate between the Mexican peso and the euro. State this exchange rate in pesos and in euros.

Accepted Answer

A)  0.0669 euros, 14.9589 pesos 
B)  1.3296 euros, 0.0889 pesos 
C)  14.9589 euros, 0.0669 pesos 
D)  0.0889 euros, 1.3296 pesos 
A)  0.0669 euros, 14.9589 pesos 
B)  1.3296 euros, 0.0889 pesos 
C)  14.9589 euros, 0.0669 pesos 
D)  0.0889 euros, 1.3296 pesos

Question 9

If the price of silver in England is £7.10 per ounce, what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5275?

Accepted Answer

A)  $7.6275 per ounce 
B)  $7.429 per ounce 
C)  $3.74525 per ounce 
D)  $13.4597 per ounce 
A)  $7.6275 per ounce 
B)  $7.429 per ounce 
C)  $3.74525 per ounce 
D)  $13.4597 per ounce

Question 10

A golf club costs $100 in the United States. The same club costs AU$129 in Australia. Assume that purchasing power parity holds. What is the exchange rate between the U.S. and Australian dollars?

Accepted Answer

A)  $1 U.S. = AU$1.25 
B)  $1 U.S. = AU$0.7752 
C)  AU$1 = $0.7752 U.S. 
D)  AU$1 = $1.50 U.S. 
A)  $1 U.S. = AU$1.25 
B)  $1 U.S. = AU$0.7752 
C)  AU$1 = $0.7752 U.S. 
D)  AU$1 = $1.50 U.S.

Question 11

Which of these is defined as long-term investment in capital in a business operation located in an economy other than that in which the company is based?

Accepted Answer

A)  Managed-floating corporation 
B)  Multinational investment 
C)  Multinational corporation 
D)  Foreign direct investment 
A)  Managed-floating corporation 
B)  Multinational investment 
C)  Multinational corporation 
D)  Foreign direct investment

Convert the following indirect quote to a dollar direct quote: $1 = 7.2501 South African rand

What is the percentage change in the value of a $50 million investment in Russia when the exchange rate changes from $1 = 7 rubles to $1 = 12 rubles?

Which of these is defined as an exchange rate regime where the country's central bank allows its currency price to float freely between an upper and lower bound and may buy and sell large amounts of it in order to provide price support or resistance?

Risks inherent in making investments in foreign countries include:

The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.6607. If the interest rate in the United States is 6 percent and in New Zealand is 4 percent, then what should be the three-month forward exchange rate?

Which of these is an organization of 189 countries that monitors currency exchange, examines financial stability, and watches the global financial system?

If the law of one price does not hold, then:

Given these two exchange rates, $1 = 11.25 Mexican peso and $1 = €0.7521, compute the cross rate between the Mexican peso and the euro. State this exchange rate in pesos and in euros.

If the price of silver in England is £7.10 per ounce, what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5275?

A golf club costs $100 in the United States. The same club costs AU$129 in Australia. Assume that purchasing power parity holds. What is the exchange rate between the U.S. and Australian dollars?

Which of these is defined as long-term investment in capital in a business operation located in an economy other than that in which the company is based?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

Mergers and Acquisitions and Financial Distress

Filters

Exam 19: International Corporate Finance

Convert the following indirect quote to a dollar direct quote: $1 = 7.2501 South African rand

What is the percentage change in the value of a $50 million investment in Russia when the exchange rate changes from $1 = 7 rubles to $1 = 12 rubles?

Which of these is defined as an exchange rate regime where the country's central bank allows its currency price to float freely between an upper and lower bound and may buy and sell large amounts of it in order to provide price support or resistance?

Risks inherent in making investments in foreign countries include:

The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.6607. If the interest rate in the United States is 6 percent and in New Zealand is 4 percent, then what should be the three-month forward exchange rate?

Which of these is an organization of 189 countries that monitors currency exchange, examines financial stability, and watches the global financial system?

If the law of one price does not hold, then:

Given these two exchange rates, $1 = 11.25 Mexican peso and $1 = €0.7521, compute the cross rate between the Mexican peso and the euro. State this exchange rate in pesos and in euros.

If the price of silver in England is £7.10 per ounce, what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5275?

A golf club costs $100 in the United States. The same club costs AU$129 in Australia. Assume that purchasing power parity holds. What is the exchange rate between the U.S. and Australian dollars?

Which of these is defined as long-term investment in capital in a business operation located in an economy other than that in which the company is based?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

Mergers and Acquisitions and Financial Distress

Filters