Question 1

Assume that your firm must pay 10,000,000 rupees to an Indian firm.How much will you have to pay in U.S.dollars?

Accepted Answer

A) $1,817,670 
B) $181,767 
C) $550,155 
D) $5,502 
A) $1,817,670 
B) $181,767 
C) $550,155 
D) $5,502

Question 2

Forward contracts benefit only the customer due to a reduction in uncertainty.

Accepted Answer

A) True 
 B)False

Question 3

Assume that an investor owned 5,000 shares of Anheuser-Busch Corporation common stock prior to the acquisition by InBev of Belgium.At the time of the acquisition,the dollar was worth .77 euros.Further assume that the purchase price was equal to 54 euros per share.What was the sales price of Anheuser Busch common stock per share in U.S.dollars?

Accepted Answer

A) $41.58 
B) $54 
C) $77 
D) $70.13 
A) $41.58 
B) $54 
C) $77 
D) $70.13

Question 4

Assume that the interest rate in India is 10% while in Europe it is 3% and that the exchange rate is 65.50 rupees to the euro.What would we expect the 6 month exchange rate to be?

Accepted Answer

The higher interest rate in India implie

Question 5

The 1 year interest rate in the U.S.is 1%.The spot exchange rate for yen is 84.81 to the dollar.The 6 months forward rate is 84.78 to the dollar.These prices indicate that interest rates in Japan,on an annualized basis,are about

Accepted Answer

A) .07% lower. 
B) .07% higher. 
C) .035% higher. 
D) .7% lower. 
A) .07% lower. 
B) .07% higher. 
C) .035% higher. 
D) .7% lower.

Question 6

Assume that in 1990 a Toyota Corolla sold for 1,476,000 yen in Japan and $8,200 in the U.S.The car still sells for the same amount of yen today,but the current exchange rate is 85 yen per dollar,what is the car selling for today in U.S.dollars?

Accepted Answer

A) $14,760 
B) $17,365 
C) $18,204 
D) $9,647 
A) $14,760 
B) $17,365 
C) $18,204 
D) $9,647

Question 7

The spot exchange rate for the Thai bhat is 33.135 bhat to the dollar.The 1 year forward rate is 34.175.Ramo Corp.has undertaken a capital project in Bangkok that is expected to produce a cash flow of 17,087,500 bhat at the end of the first year.The company will discount cash flows at a rate of 14%.What is the present value of the first year cash flow in U.S.dollars.

Accepted Answer

A) $14,989,035 
B) $500,000 
C) $438,596 
D) $452,363 
A) $14,989,035 
B) $500,000 
C) $438,596 
D) $452,363

Question 8

The asked rate is the price a customer will receive from a foreign currency trader when selling a foreign currency.

Accepted Answer

A) True 
 B)False

Question 9

Spot exchange markets have the potential for arbitrage opportunities for a long period of time.

Accepted Answer

A) True 
 B)False

Question 10

Capital markets in foreign countries

Accepted Answer

A) offer lower returns than those obtainable in the domestic capital markets. 
B) provide international diversification. 
C) in general are becoming less integrated due to the widespread availability of interest rate and currency swaps. 
D) increase portfolio betas. 
A) offer lower returns than those obtainable in the domestic capital markets. 
B) provide international diversification. 
C) in general are becoming less integrated due to the widespread availability of interest rate and currency swaps. 
D) increase portfolio betas.

Question 11

The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333 dollar to the bhat.For capital budgeting purposes,Ramo Corp needs to estimate the exchange rate 5 years from now.The U.S.interest rate is 2%;the interest rate in Thailand is 6%.The estimated 5 year forward rate is

Accepted Answer

A) 24.75 bhat to the dollar. 
B) 36.36 bhat to the dollar. 
C) 40.15 bhat to the dollar. 
D) 27.17 bhat to the dollar. 
A) 24.75 bhat to the dollar. 
B) 36.36 bhat to the dollar. 
C) 40.15 bhat to the dollar. 
D) 27.17 bhat to the dollar.

Question 12

A spot transaction occurs when one currency is

Accepted Answer

A) deposited in a foreign bank. 
B) immediately exchanged for another currency. 
C) exchanged for another currency at a specified price. 
D) traded for another at an agreed-upon future price. 
A) deposited in a foreign bank. 
B) immediately exchanged for another currency. 
C) exchanged for another currency at a specified price. 
D) traded for another at an agreed-upon future price.

Question 13

Forward exchange rates

Accepted Answer

A) reduce uncertainty about future value of currencies. 
B) are always slightly lower than the spot rate. 
C) reflect expectations about the future value of currencies. 
D) both A and C. 
A) reduce uncertainty about future value of currencies. 
B) are always slightly lower than the spot rate. 
C) reflect expectations about the future value of currencies. 
D) both A and C.

Question 14

If the quote for a forward exchange contract is greater than the computed price,the forward contract is

Accepted Answer

A) overvalued. 
B) undervalued. 
C) a good buy. 
D) at equilibrium. 
A) overvalued. 
B) undervalued. 
C) a good buy. 
D) at equilibrium.

Question 15

Purchasing price parity is more likely to be the case for common commodities than for personal services.

Accepted Answer

A) True 
 B)False

Question 16

As December 26,2012,the spot rate for Swiss francs was 1.0917.The 3 month forward rate was 1.0939.
Compute the annualized percentage rate premium or discount for Swiss francs.

Accepted Answer

(1.0939 - 1.0917)/1.

Question 17

In 2012,the U.S.comprised approximately ________ of the world's stock market capitalization.

Accepted Answer

A) 20% 
B) 53% 
C) 75% 
D) 90% 
A) 20% 
B) 53% 
C) 75% 
D) 90%

Question 18

The price of a Big Mac is more or less the same everywhere in the world.

Accepted Answer

A) True 
 B)False

Question 19

The forward price of currencies can be either higher,lower or even the same as the spot price.

Accepted Answer

A) True 
 B)False

Question 20

According to the domestic Fisher effect,if the inflation rate is 5%,and the nominal rate of interest is 7%,the real rate of interest is

Accepted Answer

A) 2.00%. 
B) 1.904%. 
C) 4.65%. 
D) 0.5252%. 
A) 2.00%. 
B) 1.904%. 
C) 4.65%. 
D) 0.5252%.

Assume that your firm must pay 10,000,000 rupees to an Indian firm.How much will you have to pay in U.S.dollars?

Forward contracts benefit only the customer due to a reduction in uncertainty.

Assume that the interest rate in India is 10% while in Europe it is 3% and that the exchange rate is 65.50 rupees to the euro.What would we expect the 6 month exchange rate to be?

The 1 year interest rate in the U.S.is 1%.The spot exchange rate for yen is 84.81 to the dollar.The 6 months forward rate is 84.78 to the dollar.These prices indicate that interest rates in Japan,on an annualized basis,are about

Assume that in 1990 a Toyota Corolla sold for 1,476,000 yen in Japan and $8,200 in the U.S.The car still sells for the same amount of yen today,but the current exchange rate is 85 yen per dollar,what is the car selling for today in U.S.dollars?

The asked rate is the price a customer will receive from a foreign currency trader when selling a foreign currency.

Spot exchange markets have the potential for arbitrage opportunities for a long period of time.

Capital markets in foreign countries

The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333 dollar to the bhat.For capital budgeting purposes,Ramo Corp needs to estimate the exchange rate 5 years from now.The U.S.interest rate is 2%;the interest rate in Thailand is 6%.The estimated 5 year forward rate is

A spot transaction occurs when one currency is

Forward exchange rates

If the quote for a forward exchange contract is greater than the computed price,the forward contract is

Purchasing price parity is more likely to be the case for common commodities than for personal services.

As December 26,2012,the spot rate for Swiss francs was 1.0917.The 3 month forward rate was 1.0939. Compute the annualized percentage rate premium or discount for Swiss francs.

In 2012,the U.S.comprised approximately ________ of the world's stock market capitalization.

The price of a Big Mac is more or less the same everywhere in the world.

The forward price of currencies can be either higher,lower or even the same as the spot price.

According to the domestic Fisher effect,if the inflation rate is 5%,and the nominal rate of interest is 7%,the real rate of interest is

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

Corporate Risk Management

Filters

Exam 19: International Business Finance

Assume that your firm must pay 10,000,000 rupees to an Indian firm.How much will you have to pay in U.S.dollars?

Forward contracts benefit only the customer due to a reduction in uncertainty.

Assume that the interest rate in India is 10% while in Europe it is 3% and that the exchange rate is 65.50 rupees to the euro.What would we expect the 6 month exchange rate to be?

The 1 year interest rate in the U.S.is 1%.The spot exchange rate for yen is 84.81 to the dollar.The 6 months forward rate is 84.78 to the dollar.These prices indicate that interest rates in Japan,on an annualized basis,are about

Assume that in 1990 a Toyota Corolla sold for 1,476,000 yen in Japan and $8,200 in the U.S.The car still sells for the same amount of yen today,but the current exchange rate is 85 yen per dollar,what is the car selling for today in U.S.dollars?

The asked rate is the price a customer will receive from a foreign currency trader when selling a foreign currency.

Spot exchange markets have the potential for arbitrage opportunities for a long period of time.

Capital markets in foreign countries

The spot exchange rate for the Thai bhat is 30.000 bhat to the dollar or .00333 dollar to the bhat.For capital budgeting purposes,Ramo Corp needs to estimate the exchange rate 5 years from now.The U.S.interest rate is 2%;the interest rate in Thailand is 6%.The estimated 5 year forward rate is

A spot transaction occurs when one currency is

Forward exchange rates

If the quote for a forward exchange contract is greater than the computed price,the forward contract is

Purchasing price parity is more likely to be the case for common commodities than for personal services.

As December 26,2012,the spot rate for Swiss francs was 1.0917.The 3 month forward rate was 1.0939. Compute the annualized percentage rate premium or discount for Swiss francs.

In 2012,the U.S.comprised approximately ________ of the world's stock market capitalization.

The price of a Big Mac is more or less the same everywhere in the world.

The forward price of currencies can be either higher,lower or even the same as the spot price.

According to the domestic Fisher effect,if the inflation rate is 5%,and the nominal rate of interest is 7%,the real rate of interest is

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

Corporate Risk Management

Filters