Question 1

A large amount of foreign direct investment into a country will most likely result in:

Accepted Answer

A) more jobs. 
B) higher inflation. 
C) higher tariffs. 
D) lower taxes. 
A) more jobs. 
B) higher inflation. 
C) higher tariffs. 
D) lower taxes.

Question 2

Discount Rates A financial manager has determined that the appropriate discount rate for a foreign project is 15 percent.However,that discount rate applies in the United States using dollars.What discount rate should be used in the foreign country using the foreign currency? The inflation rate in the United States and in the foreign country is expected to be 8 percent and 4 percent,respectively.

Accepted Answer

A) 11 percent 
B) 19 percent 
C) 21 percent 
D) 12 percent 
A) 11 percent 
B) 19 percent 
C) 21 percent 
D) 12 percent

Question 3

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 4

All of the following are ways to conduct international business EXCEPT:

Accepted Answer

A) direct ownership investment. 
B) import/export operations. 
C) partnership arrangements. 
D) all of these. 
A) direct ownership investment. 
B) import/export operations. 
C) partnership arrangements. 
D) all of these.

Question 5

What is meant when it is said that the U.S.dollar is weakening? How would it impact your vacation abroad and foreign visitors to the United States?

Accepted Answer

A weakening U.S.dollar means that the va

Question 6

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 7

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 8

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 9

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 these 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 these are risks inherent in making investments in foreign countries.

Question 10

Who are the three counties represented in the North American Free Trade Agreement (NAFTA)?

Accepted Answer

Canada,Mex

Question 11

Which of these is defined as the currency exchange rate between two foreign currencies,each of which is 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 12

Which of these is defined as the possibility that the spot currency exchange rate will change and reduce the value of foreign assets and cash flows?

Accepted Answer

A) Foreign rate risk 
B) Exchange rate risk 
C) Spot rate risk 
D) Value rate risk 
A) Foreign rate risk 
B) Exchange rate risk 
C) Spot rate risk 
D) Value rate risk

Question 13

Currency Exchange Compute the number of dollars that can be bought with 2 million of foreign currency units:
$1 = 15,990 Vietnam dong

Accepted Answer

A) $125.0782 
B) $3,198.00 
C) $12,507.82 
D) $198.7577 
A) $125.0782 
B) $3,198.00 
C) $12,507.82 
D) $198.7577

Question 14

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote:
1 Thai baht = $0.03057

Accepted Answer

A) 0.03057 baht 
B) 1.03057 baht 
C) 0.96943 baht 
D) 32.7118 baht 
A) 0.03057 baht 
B) 1.03057 baht 
C) 0.96943 baht 
D) 32.7118 baht

Question 15

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 16

Law of One Price If the price of silver in England is £6.85 per ounce,what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5426?

Accepted Answer

A) $7.3926 per ounce 
B) $7.921 per ounce 
C) $3.7168 per ounce 
D) $12.6244 per ounce 
A) $7.3926 per ounce 
B) $7.921 per ounce 
C) $3.7168 per ounce 
D) $12.6244 per ounce

Question 17

What are the advantages of borrowing money in the country you plan to invest in?

Accepted Answer

One advantage is that it reduces exchang

Question 18

Which of these is a company that operates production and/or sales facilities in multiple countries?

Accepted Answer

A) World trade corporation 
B) Multinational corporation 
C) Free trade corporation 
D) Managed-floating corporation 
A) World trade corporation 
B) Multinational corporation 
C) Free trade corporation 
D) Managed-floating corporation

Question 19

Which of these is defined as a contractual agreement that states the exchange rate to be used at a future exchange date?

Accepted Answer

A) Fixed peg rate 
B) Forward exchange rate 
C) Managed exchange rate 
D) Future strategy rate 
A) Fixed peg rate 
B) Forward exchange rate 
C) Managed exchange rate 
D) Future strategy rate

Question 20

Which of these is defined as exchanging one currency for another today?

Accepted Answer

A) Exchange rate 
B) Spot transaction 
C) Indirect quote 
D) Direct quote 
A) Exchange rate 
B) Spot transaction 
C) Indirect quote 
D) Direct quote

A large amount of foreign direct investment into a country will most likely result in:

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?

All of the following are ways to conduct international business EXCEPT:

What is meant when it is said that the U.S.dollar is weakening? How would it impact your vacation abroad and foreign visitors to the United States?

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?

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.

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:

Risks inherent in making investments in foreign countries include:

Who are the three counties represented in the North American Free Trade Agreement (NAFTA)?

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

Which of these is defined as the possibility that the spot currency exchange rate will change and reduce the value of foreign assets and cash flows?

Currency Exchange Compute the number of dollars that can be bought with 2 million of foreign currency units: $1 = 15,990 Vietnam dong

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Thai baht = $0.03057

Which of the following is the definition of political risk?

Law of One Price If the price of silver in England is £6.85 per ounce,what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5426?

What are the advantages of borrowing money in the country you plan to invest in?

Which of these is a company that operates production and/or sales facilities in multiple countries?

Which of these is defined as a contractual agreement that states the exchange rate to be used at a future exchange date?

Which of these is defined as exchanging one currency for another today?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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

A large amount of foreign direct investment into a country will most likely result in:

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?

All of the following are ways to conduct international business EXCEPT:

What is meant when it is said that the U.S.dollar is weakening? How would it impact your vacation abroad and foreign visitors to the United States?

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?

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.

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:

Risks inherent in making investments in foreign countries include:

Who are the three counties represented in the North American Free Trade Agreement (NAFTA)?

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

Which of these is defined as the possibility that the spot currency exchange rate will change and reduce the value of foreign assets and cash flows?

Currency Exchange Compute the number of dollars that can be bought with 2 million of foreign currency units: $1 = 15,990 Vietnam dong

Exchange Rate Quote Convert the following direct quote to a dollar indirect quote: 1 Thai baht = $0.03057

Which of the following is the definition of political risk?

Law of One Price If the price of silver in England is £6.85 per ounce,what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5426?

What are the advantages of borrowing money in the country you plan to invest in?

Which of these is a company that operates production and/or sales facilities in multiple countries?

Which of these is defined as a contractual agreement that states the exchange rate to be used at a future exchange date?

Which of these is defined as exchanging one currency for another today?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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