Question 1

The concept of interest parity describes ________________.

Accepted Answer

A)  Why spot and forward rates differ 
B)  How inflation causes exchange rates to change 
C)  Why identical products should have the same price 
D)  None of these 
A)  Why spot and forward rates differ 
B)  How inflation causes exchange rates to change 
C)  Why identical products should have the same price 
D)  None of these

Question 2

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Israeli Shekel = $0.2351

Accepted Answer

A)  0.2351 Shekel 
B)  0.7649 Shekel 
C)  1.2351 Shekel 
D)  4.2535 Shekel 
A)  0.2351 Shekel 
B)  0.7649 Shekel 
C)  1.2351 Shekel 
D)  4.2535 Shekel

Question 3

Given these two exchange rates, $1 = 12.5 Mexican peso and $1 = €0.75, compute the cross-rate between the Mexican peso and the euro. State this exchange rate in pesos.

Accepted Answer

A)  19.14 pesos 
B)  17.62 pesos 
C)  16.67 pesos 
D)  18.03 pesos 
A)  19.14 pesos 
B)  17.62 pesos 
C)  16.67 pesos 
D)  18.03 pesos

Question 4

Exchange Rate Risk In the late 1990s, many East Asian currencies suddenly and dramatically devalued. What is the percentage change in value of a $10 million investment in Indonesia when the exchange rate changes from $1 = 3,000 rupiah to $1 = 10,000 rupiah?

Accepted Answer

A)  30% 
B)  10% 
C)  70% 
D)  90% 
A)  30% 
B)  10% 
C)  70% 
D)  90%

Question 5

Convert each of the following indirect quotes to dollar direct quotes: 
- $1 = 805 Vietnam Dong
- $1 = 2,349.6 Venezuelan Bolivar
- $1 = 7.0523 South African Rand
$1 equals:

Accepted Answer

A)  0.0012 Dong; 0.0004 Bolivar; 0.1418 Rand 
B)  0.0072 Dong; 0.004 Bolivar; 0.1418 Rand 
C)  0.0012 Dong; 0.004 Bolivar; 0.1478 Rand 
D)  0.0022 Dong; 0.0004 Bolivar; 0.1418 Rand 
A)  0.0012 Dong; 0.0004 Bolivar; 0.1418 Rand 
B)  0.0072 Dong; 0.004 Bolivar; 0.1418 Rand 
C)  0.0012 Dong; 0.004 Bolivar; 0.1478 Rand 
D)  0.0022 Dong; 0.0004 Bolivar; 0.1418 Rand

Question 6

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 or sell large amounts of it in order to provide price support or resistance is referred to as ____________.

Accepted Answer

A)  Forward exchange regime 
B)  Purchasing parity regime 
C)  Freely floating regime 
D)  Managed floating regime 
A)  Forward exchange regime 
B)  Purchasing parity regime 
C)  Freely floating regime 
D)  Managed floating regime

Question 7

Currency Exchange Compute the number of dollars that can be bought with 1.5 million of foreign currency units: $1 = 0.5467 Latvian Lat

Accepted Answer

A)  $969,806.68520 
B)  $9,698,066.852 
C)  $82,003,061.45 
D)  $2,743,735.138 
A)  $969,806.68520 
B)  $9,698,066.852 
C)  $82,003,061.45 
D)  $2,743,735.138

Question 8

Which of these is defined as the currency exchange rate between two foreign currencies, each of which are not the currency of the domestic country?

Accepted Answer

A)  exchange rates 
B)  spot rates 
C)  indirect rates 
D)  cross rates 
A)  exchange rates 
B)  spot rates 
C)  indirect rates 
D)  cross rates

Question 9

Which of the following is the definition of political risk?

Accepted Answer

A)  The possibility that changes in the corporation will occur that reduce the profitability of doing business in that country. 
B)  The possibility that changes in the business environment will occur that reduce the profitability of doing business in that country. 
C)  The possibility that changes in the business environment will occur that increase the profitability of doing business in that country. 
D)  The possibility that international rules will occur that reduce the profitability of doing business in one particular country. 
A)  The possibility that changes in the corporation will occur that reduce the profitability of doing business in that country. 
B)  The possibility that changes in the business environment will occur that reduce the profitability of doing business in that country. 
C)  The possibility that changes in the business environment will occur that increase the profitability of doing business in that country. 
D)  The possibility that international rules will occur that reduce the profitability of doing business in one particular country.

Question 10

Given these two exchange rates, $1 = 1.32 Australian dollars and $1 = £0.56, compute the cross-rate between the Australian dollar and the pound. State this exchange rate in Australian dollars and in pounds.

Accepted Answer

A)  A$2.49 
B)  A$2.36 
C)  A$2.91 
D)  A$2.17 
A)  A$2.49 
B)  A$2.36 
C)  A$2.91 
D)  A$2.17

Question 11

Convert each of the following indirect quotes to dollar direct quotes: 
- $1 = 3.05 Saudi Arabian Riyal
- $1 = 41.45 Philippine Peso
- $1 = 0.52 Latvian Lat
$1 equals:

Accepted Answer

A)  .33 Riyal; .02 Peso; 1.92 Lat 
B)  .33 Riyal; .02 Peso; 1.95 Lat 
C)  .38 Riyal; .05 Peso; 1.92 Lat 
D)  .38 Riyal; .02 Peso; 1.95 Lat 
A)  .33 Riyal; .02 Peso; 1.92 Lat 
B)  .33 Riyal; .02 Peso; 1.95 Lat 
C)  .38 Riyal; .05 Peso; 1.92 Lat 
D)  .38 Riyal; .02 Peso; 1.95 Lat

Question 12

Currency Exchange Compute the number of dollars that can be bought with 1 million of foreign currency units: $1 = 3.8249 Saudi Arabian Riyal

Accepted Answer

A)  $261,444.7437 
B)  $4,824,900.00 
C)  $382,490.00 
D)  $1,000,000 
A)  $261,444.7437 
B)  $4,824,900.00 
C)  $382,490.00 
D)  $1,000,000

Question 13

Compute the number of dollars that can be bought with 1 million of each foreign currency units: 
 $1 = 3.9 Saudi Arabian Riyal
 $1 = 0.52 Philippine Peso
 $1 = 0.75 Latvian Lat

Accepted Answer

A)  $258,410.26; $1,923,076.92; $1,333,888.33 
B)  $256,410.26; $1,928,076.92; $1,333,333.33 
C)  $256,410.26; $1,923,076.92; $1,333,333.33 
D)  $258,410.26; $1,928,076.92; $1,333,333.33 
A)  $258,410.26; $1,923,076.92; $1,333,888.33 
B)  $256,410.26; $1,928,076.92; $1,333,333.33 
C)  $256,410.26; $1,923,076.92; $1,333,333.33 
D)  $258,410.26; $1,928,076.92; $1,333,333.33

Question 14

Currency Exchange Compute the number of dollars that can be bought with 8 million of foreign currency units: $1 = 7.2501 South African Rand

Accepted Answer

A)  $1,103,433.056 
B)  $5,800,080.00 
C)  $8,000,000.00 
D)  $9,103,200.00 
A)  $1,103,433.056 
B)  $5,800,080.00 
C)  $8,000,000.00 
D)  $9,103,200.00

Question 15

Currency Exchange Compute the amount of foreign currency that can be purchased for $400,000: 1 Indian Rupee = $0.02250

Accepted Answer

A)  400,000 Rupee 
B)  360,000,000 Rupee 
C)  9,000 Rupee 
D)  17,777,777.78 Rupee 
A)  400,000 Rupee 
B)  360,000,000 Rupee 
C)  9,000 Rupee 
D)  17,777,777.78 Rupee

Question 16

The current spot rate between the U.S. dollar and the Swedish krona is $1 = 7.5500 krona. If the inflation rate in the United States is 4 percent and in Sweden is 1 percent, then what is the expected spot rate in one year?

Accepted Answer

A)  $0.1908 per krona 
B)  $0.2116 per krona 
C)  $0.1529 per krona 
D)  $0.1364 per krona 
A)  $0.1908 per krona 
B)  $0.2116 per krona 
C)  $0.1529 per krona 
D)  $0.1364 per krona

Question 17

If you are told that $1 will buy 25 Korean Wons, then you were given a(n) ___________.

Accepted Answer

A)  Indirect quote 
B)  Direct quote 
C)  Cross-rate 
D)  None of the above 
A)  Indirect quote 
B)  Direct quote 
C)  Cross-rate 
D)  None of the above

Question 18

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Malaysian Ringget = $0.2875

Accepted Answer

A)  0.2875 Ringget 
B)  1.2875 Ringget 
C)  3.4783 Ringget 
D)  4.4783 Ringget 
A)  0.2875 Ringget 
B)  1.2875 Ringget 
C)  3.4783 Ringget 
D)  4.4783 Ringget

Question 19

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Indian Rupee = $0.02250

Accepted Answer

A)  0.02250 Rupee 
B)  0.9775 Rupee 
C)  1.0225 Rupee 
D)  44.44 Rupee 
A)  0.02250 Rupee 
B)  0.9775 Rupee 
C)  1.0225 Rupee 
D)  44.44 Rupee

Question 20

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

The concept of interest parity describes ________________.

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Israeli Shekel = $0.2351

Given these two exchange rates, $1 = 12.5 Mexican peso and $1 = €0.75, compute the cross-rate between the Mexican peso and the euro. State this exchange rate in pesos.

Exchange Rate Risk In the late 1990s, many East Asian currencies suddenly and dramatically devalued. What is the percentage change in value of a $10 million investment in Indonesia when the exchange rate changes from $1 = 3,000 rupiah to $1 = 10,000 rupiah?

Convert each of the following indirect quotes to dollar direct quotes: - $1 = 805 Vietnam Dong - $1 = 2,349.6 Venezuelan Bolivar - $1 = 7.0523 South African Rand $1 equals:

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 or sell large amounts of it in order to provide price support or resistance is referred to as ____________.

Currency Exchange Compute the number of dollars that can be bought with 1.5 million of foreign currency units: $1 = 0.5467 Latvian Lat

Which of these is defined as the currency exchange rate between two foreign currencies, each of which are not the currency of the domestic country?

Which of the following is the definition of political risk?

Given these two exchange rates, $1 = 1.32 Australian dollars and $1 = £0.56, compute the cross-rate between the Australian dollar and the pound. State this exchange rate in Australian dollars and in pounds.

Convert each of the following indirect quotes to dollar direct quotes: - $1 = 3.05 Saudi Arabian Riyal - $1 = 41.45 Philippine Peso - $1 = 0.52 Latvian Lat $1 equals:

Currency Exchange Compute the number of dollars that can be bought with 1 million of foreign currency units: $1 = 3.8249 Saudi Arabian Riyal

Compute the number of dollars that can be bought with 1 million of each foreign currency units: $1 = 3.9 Saudi Arabian Riyal $1 = 0.52 Philippine Peso $1 = 0.75 Latvian Lat

Currency Exchange Compute the number of dollars that can be bought with 8 million of foreign currency units: $1 = 7.2501 South African Rand

Currency Exchange Compute the amount of foreign currency that can be purchased for $400,000: 1 Indian Rupee = $0.02250

The current spot rate between the U.S. dollar and the Swedish krona is $1 = 7.5500 krona. If the inflation rate in the United States is 4 percent and in Sweden is 1 percent, then what is the expected spot rate in one year?

If you are told that $1 will buy 25 Korean Wons, then you were given a(n) ___________.

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Malaysian Ringget = $0.2875

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Indian Rupee = $0.02250

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

The concept of interest parity describes ________________.

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Israeli Shekel = $0.2351

Given these two exchange rates, $1 = 12.5 Mexican peso and $1 = €0.75, compute the cross-rate between the Mexican peso and the euro. State this exchange rate in pesos.

Exchange Rate Risk In the late 1990s, many East Asian currencies suddenly and dramatically devalued. What is the percentage change in value of a $10 million investment in Indonesia when the exchange rate changes from $1 = 3,000 rupiah to $1 = 10,000 rupiah?

Convert each of the following indirect quotes to dollar direct quotes: - $1 = 805 Vietnam Dong - $1 = 2,349.6 Venezuelan Bolivar - $1 = 7.0523 South African Rand $1 equals:

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 or sell large amounts of it in order to provide price support or resistance is referred to as ____________.

Currency Exchange Compute the number of dollars that can be bought with 1.5 million of foreign currency units: $1 = 0.5467 Latvian Lat

Which of these is defined as the currency exchange rate between two foreign currencies, each of which are not the currency of the domestic country?

Which of the following is the definition of political risk?

Given these two exchange rates, $1 = 1.32 Australian dollars and $1 = £0.56, compute the cross-rate between the Australian dollar and the pound. State this exchange rate in Australian dollars and in pounds.

Convert each of the following indirect quotes to dollar direct quotes: - $1 = 3.05 Saudi Arabian Riyal - $1 = 41.45 Philippine Peso - $1 = 0.52 Latvian Lat $1 equals:

Currency Exchange Compute the number of dollars that can be bought with 1 million of foreign currency units: $1 = 3.8249 Saudi Arabian Riyal

Compute the number of dollars that can be bought with 1 million of each foreign currency units: $1 = 3.9 Saudi Arabian Riyal $1 = 0.52 Philippine Peso $1 = 0.75 Latvian Lat

Currency Exchange Compute the number of dollars that can be bought with 8 million of foreign currency units: $1 = 7.2501 South African Rand

Currency Exchange Compute the amount of foreign currency that can be purchased for $400,000: 1 Indian Rupee = $0.02250

The current spot rate between the U.S. dollar and the Swedish krona is $1 = 7.5500 krona. If the inflation rate in the United States is 4 percent and in Sweden is 1 percent, then what is the expected spot rate in one year?

If you are told that $1 will buy 25 Korean Wons, then you were given a(n) ___________.

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Malaysian Ringget = $0.2875

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Indian Rupee = $0.02250

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