Question 1

Lockboxes are post office box numbers assigned to employees for picking up their paychecks.

Accepted Answer

A) True 
 B)False

Question 2

Since each subsidiary may be more concerned with its own operations than with the overall operations of the MNC, a centralized management group may need to monitor the parent-subsidiary and intersubsidiary cash flows.

Accepted Answer

A) True 
 B)False

Question 3

Generally, if interest rate parity holds and the forward rate is an unbiased predictor of the future spot rate, then the international Fisher effect will also hold.

Accepted Answer

A) True 
 B)False

Question 4

To ____, MNCs can use preauthorized payments.

Accepted Answer

A)  accelerate cash inflows 
B)  minimize currency conversion costs 
C)  manage blocked funds 
D)  manage intersubsidiary cash transfers 
A)  accelerate cash inflows 
B)  minimize currency conversion costs 
C)  manage blocked funds 
D)  manage intersubsidiary cash transfers

Question 5

According to the text:

Accepted Answer

A)  banks in the U.S. are prohibited from facilitating cash transfers for MNCs. 
B)  banks in most non-U.S. countries are more advanced than the U.S. in facilitating cash transfers for MNCs. 
C)  an MNC with subsidiaries in several different countries has no problems in coordinating its cash transfers since a uniform global banking system exists. 
D)  none of the above 
A)  banks in the U.S. are prohibited from facilitating cash transfers for MNCs. 
B)  banks in most non-U.S. countries are more advanced than the U.S. in facilitating cash transfers for MNCs. 
C)  an MNC with subsidiaries in several different countries has no problems in coordinating its cash transfers since a uniform global banking system exists. 
D)  none of the above

Question 6

Assume that in recent months, most currencies of industrialized countries depreciated substantially against the dollar. Assume that their interest rates were similar to the U.S. interest rate. If non-U.S. firms invested in U.S. Treasury securities during this period, their effective yield would have been:

Accepted Answer

A)  negative. 
B)  zero. 
C)  positive, but less than the interest rate of their respective countries. 
D)  more than the interest rate of their respective countries. 
A)  negative. 
B)  zero. 
C)  positive, but less than the interest rate of their respective countries. 
D)  more than the interest rate of their respective countries.

Question 7

A ____ allows customers to send payments to a post office box number.

Accepted Answer

A)  bilateral netting system 
B)  multilateral netting system 
C)  lockbox 
D)  preauthorized payment 
A)  bilateral netting system 
B)  multilateral netting system 
C)  lockbox 
D)  preauthorized payment

Question 8

Assume that a U.S. investor invests in a British CD offering a six-month interest rate of 5%. Over this six-month period, the pound depreciates by 9%. The effective yield on the British CD for the U.S. investor is:

Accepted Answer

A)  14.45%. 
B)  -4.45%. 
C)  14.00%. 
D)  -4.00%. 
A)  14.45%. 
B)  -4.45%. 
C)  14.00%. 
D)  -4.00%.

Question 9

Which of the following is true?

Accepted Answer

A)  Some countries may prohibit netting. 
B)  Some countries may prohibit forms of leading and lagging. 
C)  A and B 
D)  None of the above 
A)  Some countries may prohibit netting. 
B)  Some countries may prohibit forms of leading and lagging. 
C)  A and B 
D)  None of the above

Question 10

In what is known as dynamic hedging, banks always hedge open positions in any foreign currencies.

Accepted Answer

A) True 
 B)False

Question 11

____ may complicate cash flow optimization.

Accepted Answer

A)  The use of a zero-balance account 
B)  Government restrictions 
C)  Leading and lagging 
D)  None of the above 
A)  The use of a zero-balance account 
B)  Government restrictions 
C)  Leading and lagging 
D)  None of the above

Lockboxes are post office box numbers assigned to employees for picking up their paychecks.

Since each subsidiary may be more concerned with its own operations than with the overall operations of the MNC, a centralized management group may need to monitor the parent-subsidiary and intersubsidiary cash flows.

Generally, if interest rate parity holds and the forward rate is an unbiased predictor of the future spot rate, then the international Fisher effect will also hold.

To ____, MNCs can use preauthorized payments.

According to the text:

A ____ allows customers to send payments to a post office box number.

Assume that a U.S. investor invests in a British CD offering a six-month interest rate of 5%. Over this six-month period, the pound depreciates by 9%. The effective yield on the British CD for the U.S. investor is:

Which of the following is true?

In what is known as dynamic hedging, banks always hedge open positions in any foreign currencies.

____ may complicate cash flow optimization.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

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

Filters

Exam 21: International Cash Management

Lockboxes are post office box numbers assigned to employees for picking up their paychecks.

Since each subsidiary may be more concerned with its own operations than with the overall operations of the MNC, a centralized management group may need to monitor the parent-subsidiary and intersubsidiary cash flows.

Generally, if interest rate parity holds and the forward rate is an unbiased predictor of the future spot rate, then the international Fisher effect will also hold.

To ____, MNCs can use preauthorized payments.

According to the text:

A ____ allows customers to send payments to a post office box number.

Assume that a U.S. investor invests in a British CD offering a six-month interest rate of 5%. Over this six-month period, the pound depreciates by 9%. The effective yield on the British CD for the U.S. investor is:

Which of the following is true?

In what is known as dynamic hedging, banks always hedge open positions in any foreign currencies.

____ may complicate cash flow optimization.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

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

Filters