Question Description
I’m working on a Business exercise and need support.
Question 1
AnswerThe least risky method by which firms conduct
international business is:Franchising.
The acquisitions of existing
operations.International
Trade.The establishment of new
subsidiaries.Licensing
5 points
Question 2
AnswerAssume that an American firm wants to engage in
international business without major investment in the foreign country. Which
method is least appropriate in this situation?International
TradeLicensing
Franchising
Direct foreign
investment
5 points
Question 3
AnswerWhich of the following does not constitute a
form of direct foreign investment?Franchising
International
tradeJoint
venturesAcquisitions of existing
operationsEstablishment of new foreign
subsidiaries
5 points
Question 4
AnswerAn MNC may be more exposed to agency problems
if most of its shares are held by:a few mutual
fundsa widely dispersed set of
individual investorsa few pension
fundsindividual
stockholders
5 points
Question 5
AnswerWith regard to corporate goals, an MNC is
mostly concerned with maximizing ____, and a purely domestic firm is mostly
concerned with maximizing ____.shareholder wealth; short-term
earningsshareholder wealth; shareholder
wealthshort-term earnings; sales
volumeshort-term earnings; shareholder
wealth
5 points
Question 6
Answer____ purchases more U.S. exports than the
other countries listed here.Italy
Spain
Mexico
Canada
5 points
Question 7
Answer____ represent aid, grants, and gifts from one
country to another.Transfer
paymentsFactor
incomeThe balance of
tradeThe balance of
paymentsThe capital
account
5 points
Question 8
AnswerThe World Bank was established
to:enhance development solely in Asia
through grants.enhance economic development
through non-subsidized loans (at market interest rates).enhance economic development
through low-interest rate loans (below-market rates).enhance economic development of the
private sector through investment in stock of
corporations.
5 points
Question 9
AnswerA General Agreement on Tariffs and Trade
(GATT) accord in 1993 called for:increased trade restrictions
outside of North America.lower trade restrictions around the
world.uniform environmental standards
around the world.uniform worker health
laws.
5 points
Question 10
AnswerThe ____, an accord among 117 nations, called
for lower tariffs around the world.General Agreement on Tariffs and
Trade (GATT)North American Free Trade Agreement
(NAFTA)Single European Act of
1987European Union
Accord
5 points
Question 11
AnswerIf a U.S. firm desires to avoid the risk from
exchange rate fluctuations, and it will need C$200,000 in 90 days to make
payment on imports from Canada, it could:obtain a 90-day forward purchase
contract on Canadian dollars.obtain a 90-day forward sale
contract on Canadian dollars.purchase Canadian dollars 90 days
from now at the spot rate.sell Canadian dollars 90 days from
now at the spot rate.
5 points
Question 12
AnswerIf companies can rely on stock markets to
obtain funds, they will have to rely more heavily on the ____ market to raise
long-term funds.derivative
long-term
creditmoney
foreign
exchange
5 points
Question 13
AnswerFutures contracts are typically ____; forward
contracts are typically ____.sold on an exchange; sold on an
exchangeoffered by commercial banks; sold
on an exchangesold on an exchange; offered by
commercial banksoffered by commercial banks;
offered by commercial banks
5 points
Question 14
AnswerWhich currency is used the most to denominate
Eurobonds?the British
pound.the Japanese
yen.the U.S.
dollar.the Swiss
franc.
5 points
Question 15
AnswerA syndicated loan:represents a loan by a single bank
to a syndicate of corporations.represents a loan by a single bank
to a syndicate of country governments.represents a direct loan by a
syndicate of oil-producing exporters to a less developed
country.represents a loan by a group of
banks to a borrower.
5 points
Question 16
AnswerAssume that Swiss investors have francs
available to invest in securities, and they initially view U.S. and British
interest rates as equally attractive. Now assume that U.S. interest rates
increase while British interest rates stay the same. This would likely
cause:the Swiss demand for dollars to
decrease and the dollar will depreciate against the
pound.the Swiss demand for dollars to
increase and the dollar will depreciate against the Swiss
franc.the Swiss demand for dollars to
increase and the dollar will appreciate against the Swiss
franc.the Swiss demand for dollars to
decrease and the dollar will appreciate against the
pound.
5 points
Question 17
AnswerWhich of the following events would most
likely result in an appreciation of the U.S. dollar?U.S. inflation is very
high.The Fed indicates that it will
raise U.S. interest rates.Future U.S. interest rates are
expected to decline.Japan is expected to increase
interest rates in the near
future.
5 points
Question 18
AnswerWhen the "real" interest rate is relatively
low in a given country, then the currency of that country is typically expected
to be:weak, since the country's quoted
interest rate would be high relative to the inflation
rate.strong, since the country's quoted
interest rate would be low relative to the inflation
rate.strong, since the country's quoted
interest rate would be high relative to the inflation
rate.weak, since the country's quoted
interest rate would be low relative to the inflation
rate.
5 points
Question 19
AnswerAny event that reduces the U.S. demand for
Japanese yen should result in a(n) ____ in the value of the Japanese yen with
respect to ____, other things being equal.increase; U.S.
dollarincrease; nondollar
currenciesdecrease; nondollar
currenciesdecrease; U.S.
dollar
5 points
Question 20
AnswerThe equilibrium exchange rate of pounds is
$1.70. At an exchange rate of $1.72 per pound:U.S. demand for pounds would exceed
the supply of pounds for sale and there would be a shortage of pounds in the
foreign exchange market.U.S. demand for pounds would be
less than the supply of pounds for sale and there would be a shortage of pounds
in the foreign exchange market.U.S. demand for pounds would exceed
the supply of pounds for sale and there would be a surplus of pounds in the
foreign exchange market.U.S. demand for pounds would be
less than the supply of pounds for sale and there would be a surplus of pounds
in the foreign exchange market.U.S. demand for pounds would be
equal to the supply of pounds for sale and there would be a shortage of pounds
in the foreign exchange
market.
5 points
Question 21
AnswerCurrency options are commonly traded through
the ____ system.robot
Euro
GLOBEX
Scope
5 points
Question 22
AnswerEuropean currency options can be exercised
____; American currency options can be exercised
____.any time up to the expiration
date; any time up to the expiration dateany time up to the expiration
date; only on the expiration dateonly on the expiration date; only
on the expiration dateonly on the expiration date; any
time up to the expiration
date
5 points
Question 23
AnswerIf you have a position where you might be
obligated to buy Euros, you are:a call
writer.a put
writer.a put
buyer.a futures
seller.
5 points
Question 24
AnswerCurrency futures contracts sold on an
exchange:contain a commitment to the owner,
and are standardized.contain a commitment to the owner,
and can be tailored to the desire of the owner.contain a right but not a
commitment to the owner, and can be tailored to the desire of the
owner.contain a right but not a
commitment to the owner, and are
standardized.
5 points
Question 25
AnswerIf the spot rate of the euro increased
substantially over a one-month period, the futures price on euros would likely
____ over that same period.increase
slightlydecrease
substantiallyincrease
substantiallystay the
same
5 points
Question 26
AnswerWhich of the following countries have not
adopted the euro?Germany
Italy
Switzerland
France
5 points
Question 27
AnswerCountries that have adopted the euro must
agree on a single ____ policy.monetary
fiscal
worker
compensationforeign
relations
5 points
Question 28
AnswerDuring the period 1944-1971, the U.S. used a
____ system.euro exchange
ratefixed
dirty
floatflexible
5 points
Question 29
AnswerA weak dollar is normally expected to
cause:high unemployment and high
inflation in the U.S.high unemployment and low
inflation in the U.S.low unemployment and low inflation
in the U.S.low unemployment and high
inflation in the U.S.
5 points
Question 30
AnswerWhich of the following is the most likely
reason for revaluation of a currency?To reduce
inflation.To stimulate the local
economy.To increase the amount of
exports.To increase balance-of-trade
surplus.
5 points
Question 31
AnswerAssume that interest rate parity holds. U.S.
interest rate is 13% and British interest rate is 10%. The forward rate on
British pounds exhibits a ____ of ____ percent.discount;
2.73premium;
2.73discount;
3.65premium;
3.65
5 points
Question 32
AnswerBased on interest rate parity, the larger the
degree by which the foreign interest rate exceeds the U.S. interest rate,
the:larger will be the forward
discount of the foreign currency.larger will be the forward premium
of the foreign currency.smaller will be the forward
premium of the foreign currency.smaller will be the forward
discount of the foreign
currency.
5 points
Question 33
AnswerIf interest rate parity exists, then ____ is
not feasible.forward realignment
arbitragetriangular
arbitragecovered interest
arbitragelocational
arbitrage
5 points
Question 34
AnswerPoints above the IRP line represent
situations where:covered interest arbitrage is
feasible from the perspective of domestic investors and results in the same
yield as investing domestically.covered interest arbitrage is
feasible from the perspective of domestic investors and results in a yield above
what is possible domestically.covered interest arbitrage is
feasible from the perspective of foreign investors and results in a yield above
what is possible in their local markets.covered interest arbitrage is not
feasible for neither domestic nor foreign
investors.
5 points
Question 35
AnswerWhich of the following is an example of
triangular arbitrage initiation?buying a currency at one bank's
ask and selling at another bank's bid, which is higher than the former bank's
ask.buying Singapore dollars from a
bank (quoted at $.55) that has quoted the South African rand (SAR)/Singapore
dollar (S$) exchange rate at SAR2.50 when the spot rate for the rand is
$.20.buying Singapore dollars from a
bank (quoted at $.55) that has quoted the South African rand/Singapore dollar
exchange rate at SAR3.00 when the spot rate for the rand is
$.20.converting funds to a foreign
currency and investing the funds
overseas.
5 points
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