Question 1

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 the above 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 the above can be used to invest internationally.

Question 2

Which of the following is not true about syndicated loans?​

Accepted Answer

A) A borrower that receives a syndicated loan incurs various fees besides the interest rate. 
B) The loans are only denominated in U.S. dollars. 
C) The loans are provided by a group of banks to a borrower. 
D) All of the above are true 
A) A borrower that receives a syndicated loan incurs various fees besides the interest rate. 
B) The loans are only denominated in U.S. dollars. 
C) The loans are provided by a group of banks to a borrower. 
D) All of the above are true

Question 3

A quotation representing the value of a foreign currency in dollars is referred to as a(n) ____ quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) ____ quotation.

Accepted Answer

A) direct; indirect 
B) indirect; direct 
C) direct; direct 
D) indirect; indirect 
E) cannot be answered without more information 
A) direct; indirect 
B) indirect; direct 
C) direct; direct 
D) indirect; indirect 
E) cannot be answered without more information

Question 4

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 5

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 the above 
A) 73.75. 
B) 125. 
C) 1.69. 
D) 0.014. 
E) none of the above

Question 6

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 7

The government enforcement of securities laws varies among countries.

Accepted Answer

A) True 
 B)False

Question 8

If there is a large supply of savings relative to the demand for short-term funds, the interest rate for that country will be relatively low.

Accepted Answer

A) True 
 B)False

Question 9

As a result of the Sarbanes-Oxley Act, financial reporting costs were reduced, and many non-U.S. firms decided to place new issues of their stock in the United States.

Accepted Answer

A) True 
 B)False

Question 10

Eurobonds:​

Accepted Answer

A) are usually issued in bearer form. 
B) typically carry several protective covenants. 
C) cannot contain call provisions. 
D) A and B 
A) are usually issued in bearer form. 
B) typically carry several protective covenants. 
C) cannot contain call provisions. 
D) A and B

Question 11

A forward contract can be used to lock in the ____ of a specified currency at a future point in time.

Accepted Answer

A) purchase price 
B) sale price 
C) A or B 
D) none of the above 
A) purchase price 
B) sale price 
C) A or B 
D) none of the above

Question 12

In general, common-law countries such as the United States, Canada, and the United Kingdom allow for more legal protection of shareholders than civil-law countries such as France and Italy.

Accepted Answer

A) True 
 B)False

Question 13

____ is not a bank characteristic important to customers in need of foreign exchange.

Accepted Answer

A) Quote competitiveness 
B) Speed of execution 
C) Forecasting advice 
D) Advice about current market conditions 
E) All of the above are important bank characteristics to customers in need of foreign exchange. 
A) Quote competitiveness 
B) Speed of execution 
C) Forecasting advice 
D) Advice about current market conditions 
E) All of the above are important bank characteristics to customers in need of foreign exchange.

Question 14

The Basel III accord requires banks to:​

Accepted Answer

A) maintain higher levels of capital if they have riskier assets. 
B) increase lending to less developed countries. 
C) pay higher premiums for deposit insurance. 
D) reduce their short-term loans. 
A) maintain higher levels of capital if they have riskier assets. 
B) increase lending to less developed countries. 
C) pay higher premiums for deposit insurance. 
D) reduce their short-term loans.

Question 15

Which of the following is true?​

Accepted Answer

A) Non-U.S. firms may desire to issue bonds in the United States due to less regulation there. 
B) U.S. firms may desire to issue bonds in the United States due to less regulation there. 
C) U.S. firms may desire to issue bonds in non-U.S. markets due to less regulation in some other countries. 
D) A and B 
A) Non-U.S. firms may desire to issue bonds in the United States due to less regulation there. 
B) U.S. firms may desire to issue bonds in the United States due to less regulation there. 
C) U.S. firms may desire to issue bonds in non-U.S. markets due to less regulation in some other countries. 
D) A and B

Question 16

Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide to hedge your position by selling Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $.0095. You expect the spot rate in 60 days to be $.0090. How many dollars will you receive for the 5,000,000 yen 60 days from now if you sell yen forward?​

Accepted Answer

A) $44,500 
B) $45,000 
C) $526 million 
D) $47,500 
E) $556 million 
A) $44,500 
B) $45,000 
C) $526 million 
D) $47,500 
E) $556 million

Question 17

Assume that the bank's bid quote for the Mexican peso is $.126 and the ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?​

Accepted Answer

A) 12,600 
B) 775,194 
C) 793,651 
D) 12,900 
A) 12,600 
B) 775,194 
C) 793,651 
D) 12,900

Question 18

Global regulations prevent the internationalization of moeny markets.

Accepted Answer

A) True 
 B)False

Question 19

The interest rate commonly charged for loans between banks is called the cross rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not true with respect to spot market liquidity?​

Accepted Answer

A) The more willing buyers and sellers there are, the more liquid a market is. 
B) The spot markets for heavily traded currencies such as the Japanese yen are very liquid. 
C) A currency's liquidity affects the ease with which an MNC can obtain or sell that currency. 
D) If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate. 
A) The more willing buyers and sellers there are, the more liquid a market is. 
B) The spot markets for heavily traded currencies such as the Japanese yen are very liquid. 
C) A currency's liquidity affects the ease with which an MNC can obtain or sell that currency. 
D) If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate.

Which of the following cannot be used to invest internationally?

Which of the following is not true about syndicated loans?

A quotation representing the value of a foreign currency in dollars is referred to as a(n) quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) quotation.

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

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)?

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

The government enforcement of securities laws varies among countries.

If there is a large supply of savings relative to the demand for short-term funds, the interest rate for that country will be relatively low.

As a result of the Sarbanes-Oxley Act, financial reporting costs were reduced, and many non-U.S. firms decided to place new issues of their stock in the United States.

Eurobonds:

A forward contract can be used to lock in the ____ of a specified currency at a future point in time.

In general, common-law countries such as the United States, Canada, and the United Kingdom allow for more legal protection of shareholders than civil-law countries such as France and Italy.

____ is not a bank characteristic important to customers in need of foreign exchange.

The Basel III accord requires banks to:

Which of the following is true?

Assume that the bank's bid quote for the Mexican peso is $.126 and the ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?

Global regulations prevent the internationalization of moeny markets.

The interest rate commonly charged for loans between banks is called the cross rate.

Which of the following is not true with respect to spot market liquidity?

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 Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 3: International Financial Markets

Which of the following cannot be used to invest internationally?​

Which of the following is not true about syndicated loans?​

A quotation representing the value of a foreign currency in dollars is referred to as a(n) ____ quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) ____ quotation.

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

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)?​

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

The government enforcement of securities laws varies among countries.

If there is a large supply of savings relative to the demand for short-term funds, the interest rate for that country will be relatively low.

As a result of the Sarbanes-Oxley Act, financial reporting costs were reduced, and many non-U.S. firms decided to place new issues of their stock in the United States.

Eurobonds:​

A forward contract can be used to lock in the ____ of a specified currency at a future point in time.

In general, common-law countries such as the United States, Canada, and the United Kingdom allow for more legal protection of shareholders than civil-law countries such as France and Italy.

____ is not a bank characteristic important to customers in need of foreign exchange.

The Basel III accord requires banks to:​

Which of the following is true?​

Assume that the bank's bid quote for the Mexican peso is $.126 and the ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?​

Global regulations prevent the internationalization of moeny markets.

The interest rate commonly charged for loans between banks is called the cross rate.

Which of the following is not true with respect to spot market liquidity?​

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 Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Which of the following cannot be used to invest internationally?

Which of the following is not true about syndicated loans?

A quotation representing the value of a foreign currency in dollars is referred to as a(n) quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) quotation.

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

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)?

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

Eurobonds:

The Basel III accord requires banks to:

Which of the following is true?

Assume that the bank's bid quote for the Mexican peso is $.126 and the ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?

Which of the following is not true with respect to spot market liquidity?