Exam 18: International Financial Management

The net present value approach is based on a basic precept of finance theory that a dollar today is worth less than a dollar in the future.

Theresa, an importer, uses a variety of payment methods when paying for goods. Which of the following forms of payment provides the most risk to Theresa?

Two firms participating in a swap must use the same currency.

The ________ is a letter of credit that cannot be altered without the written consent of both the importer and the exporter.

Thompson Exporters, a new exporting firm, provides a 5 percent discount to customers who use the safest method of payment. Which method of payment most likely receives this discount?

Exporters usually prefer their payment in the home currency.

Which form of countertrade is used when part of an exported good is produced in the importing country?

A leads and lags strategy is typically implemented by financial managers to minimize ________.

Financial managers at Parker Computers, an MNC, want to decrease the tariffs paid on components imported from Parker's subsidiaries. Which of the following would most likely accomplish this goal?

________ is the impact on the firm's consolidated financial statements of fluctuations in exchange rates that change the value of foreign subsidiaries as measured in the parent's currency.

Active income is generated by production and distribution, while passive income is generated by licensing fees and the collection of dividends.

Bilateral netting occurs when two subsidiaries net out their mutual invoices.

If exchange rates were fixed, translation exposure would not exist.

Which of the following is not a type of foreign-exchange exposure?

Which of the following strategies could result in a lost opportunity for capital gain if the home currency rises in value?

Fulsom Exporting prefers that customers who pay in advance use a wire transfer. What is the most likely reason for this preference?

How is net present value calculated?

Explain the process of documentary collection as an international payment method.

A ________ extends credit to the importer by requiring payment at some specified time after the importer receives the goods.

What document serves as a title to the goods in question under the document collection payment method?