Exam 31: International Corporate Finance

The implicit exchange rate between two currencies when both are quoted in some third currency is called a(n):

Suppose the spot exchange rate is 2 U.S. dollars per British pound. The forward exchange rate is 1.9 dollars per pound. Which of the following is true?

Which one of following statements is not correct?

In international capital budgeting,there are two approaches- the home currency approach and the foreign currency approach. Describe both and explain the key difference from the aspect of capital budgeting for international firms.

When the German mark is quoted as $.52,this quote is a(n):

You just returned from some extensive traveling throughout the Americas. You started your trip with $10,000 in your pocket. You spent 1.4 million pesos while in Chile. You spent another 40,000 bolivars in Venezuela. Then on the way home,you spent 34,000 pesos in Mexico. How many dollars did you have left by the time you returned to the U.S. given the following exchange rates?

The current spot rate is C$1.362 and the one-year forward rate is C$1.371. The nominal risk-free rate in Canada is 6 percent while it is 3.5 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested $1 in the U.S.

Are exchange rate changes between the U.S. dollar and the Japanese yen necessarily good or bad for Japanese automakers? Explain your reasoning.

Interest rate parity:

The most important complication of international finance is the:

The foreign exchange market is where:

Assume that you can buy 250 Canadian dollars with 100 British pounds. Which one of the following statements is correct given the following exchange rates? Assume that you start out with British pounds.

Which one of the following statements is correct assuming that exchange rates are quoted as units of foreign currency per dollar?

The condition stating that the expected percentage change in the exchange rate is equal to the difference in interest rates between the countries is called:

You want to import $45,000 worth of rugs from India. How many rupees will you need to pay for this purchase if one rupee is worth $.0218?

In the spot market,$1 is currently equal to A$1.42. The expected inflation rate is 3 percent in Australia and 2 percent in the U.S.. What is the expected exchange rate one year from now if relative purchasing power parity exists?

When the German mark is quoted as 1.923 marks to the dollar,this quote is a(n):

You are expecting a payment of C$100,000 four years from now. The risk-free rate of return is 3 percent in the U.S. and 4 percent in Canada. The inflation rate is 3 percent in the U.S. and 2 percent in Canada. The current exchange rate is C$1 = $.72. How much will the payment four years from now be worth in U.S. dollars?

An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a _____ trade.

A foreign bond issued in the United States and denominated in dollars is called a(n):