This quiz works best with JavaScript enabled. Home > Finance > International Finance > International Finance – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 10 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The goal of a multinational corporation (MNC) is A) The minimization of taxes remitted from foreign subsidiaries. B) The establishment of subsidiaries in any country where operations would provide a return over and above the cost of capital, even if better projects are available domestically. C) The maximization of shareholder wealth. D) The maximization of social benefits resulting from actions such as the employment of foreign managers. Show Answer Correct Answer: C) The maximization of shareholder wealth. 2. The primary market is: A) The main compartment of the stock market. B) The new issues market. C) Reserved for large companies. D) None of above. Show Answer Correct Answer: B) The new issues market. 3. What is Purchasing Power Parity? A) Is an economic theory that allows the comparison of the purchasing power of various world currencies. B) Difference between all money flowing into the country in a particular period of time. C) Societies and countries have differing levels of "development" on an international scale. D) None of them. Show Answer Correct Answer: A) Is an economic theory that allows the comparison of the purchasing power of various world currencies. 4. Once capital markets are integrated, it is difficult for a country to maintain a fixedexchange rate. Why? A) The market forces may be stronger than the exchange rate intervention that thegovernment can muster. B) Portfolio managers will not invest in countries with fixed exchange rates. C) Because of the Tobin Tax. D) None of the above. Show Answer Correct Answer: A) The market forces may be stronger than the exchange rate intervention that thegovernment can muster. 5. A "good" (or ideal) international monetary system should provide: A) Liquidity, elasticity, and flexibility. B) Elasticity, sensitivity, and reliability. C) Liquidity, adjustments, and confidence. D) None of the above. Show Answer Correct Answer: C) Liquidity, adjustments, and confidence. 6. International organization that settles trade disputes andorganizes trade negotiations A) World Trade Organization (WTO). B) North America Free Trade Agreement (NAFTA). C) United Nations (UN). D) European Union (EU). Show Answer Correct Answer: A) World Trade Organization (WTO). 7. According to the text, a disadvantage of licensing is that: A) It prevents a firm from importing. B) It is difficult to ensure quality control of the production process. C) It prevents a firm from exporting. D) None of these. Show Answer Correct Answer: B) It is difficult to ensure quality control of the production process. 8. Increase in a currency value is called. A) Derivatives. B) Depreciation. C) Appreciation. D) Ratio. Show Answer Correct Answer: C) Appreciation. 9. Foreign exchange rate is understood as: A) Comparative relationship in the value of the currencies involved. B) One country's currency represents the quantity of another country's currency. C) The price of 1 unit of one country's currency represents the number of units of another country's currency. D) All answers. Show Answer Correct Answer: C) The price of 1 unit of one country's currency represents the number of units of another country's currency. 10. Floating exchange rate regime A) There are no forex reserve changes. B) Can change as a result of changes in the domestic credit. C) Can change as a result of changes in the forex reserves. D) Can change as a result of changes in the forex reserves and domestic credit. Show Answer Correct Answer: A) There are no forex reserve changes. 11. If you bought a long contract on financial futures you hope that interest rates A) Rise. B) Fall. C) Are stable. D) Fluctuate. Show Answer Correct Answer: B) Fall. 12. This measures the value of goods and services. A) Store of value. B) Medium of exchange. C) Unit of account. D) Price. Show Answer Correct Answer: C) Unit of account. 13. Which agency focuses on the needs of Latin America? A) European Bank for Reconstruction and Development. B) Inter-American Development Bank. C) African Development Bank. D) Asian Development Bank. Show Answer Correct Answer: B) Inter-American Development Bank. 14. In domestic business currency of domesticcountry is used. A) False. B) True. Show Answer Correct Answer: B) True. 15. Relative PPP, if e decreases A) Appreciation, domestic country less expensive. B) Depreciation, domestic country more expensive. C) Appreciation, domestic country more expensive. D) Depreciation, domestic country less expensive. Show Answer Correct Answer: C) Appreciation, domestic country more expensive. 16. McDonalds is an example of franchising: A) False. B) True. Show Answer Correct Answer: B) True. 17. A document prepared by the exporter, providing a description of the merchandise and the terms of sale. A) Commercial Invoice. B) Insurance Certificate. C) Letter of Credit. D) Promissory Note. Show Answer Correct Answer: A) Commercial Invoice. 18. Which of the following theories identifies the non-transferability of resources as a reason for international business? A) Theory of comparative advantage. B) Imperfect markets theory. C) Product cycle theory. D) None of these. Show Answer Correct Answer: B) Imperfect markets theory. 19. The study of the effect of exchange rate changes on the current balance through the export and import value elasticities is called? A) Coefficient of elasticity approach. B) Target approach. C) J curve effect. D) External trade condition effect. Show Answer Correct Answer: A) Coefficient of elasticity approach. 20. The Shenzhen Stock Exchange and Shanghai Stock Exchange are: A) Regulated stock markets. B) Over-the-counter markets. C) None of the above answers is correct. D) None of above. Show Answer Correct Answer: A) Regulated stock markets. 21. In comparing exporting to direct foreign investment (DFI), an exporting operation will likely incur ..... fixed production costs and ..... transportation costs than DFI. A) Lower; lower. B) Higher; lower. C) Higher; higher. D) Lower; highe. Show Answer Correct Answer: D) Lower; highe. 22. A Currency Future is: A) A contract. B) A floating currency. C) An exchange rate. D) An exchange control. Show Answer Correct Answer: A) A contract. 23. How can government policies increase imports? A) Restrictions on piracy. B) Environmental restrictions. C) Subsidies for exporters. D) Restrictions on imports. Show Answer Correct Answer: C) Subsidies for exporters. 24. A contract that requires the investor to buy securities on a future date is called a A) Long contract. B) Short contract. C) Hedge. D) Cross. Show Answer Correct Answer: A) Long contract. 25. When the government (central bank) of a country decides what its currency will be worth relative to other currencies A) Foreign Exchange. B) Fixed Exchange Rate. C) Exchange Rate. D) Floating Exchange Rate. Show Answer Correct Answer: B) Fixed Exchange Rate. 26. Which of the following theories identifies specialization as a reason for international business? A) Theory of comparative advantage. B) Imperfect markets theory. C) Product cycle theory. D) None of these. Show Answer Correct Answer: A) Theory of comparative advantage. 27. According to the text, the valuation of an MNC with foreign subsidiaries is directly affected by all of the following except ..... A) A. exchange rate fluctuations. B) Foreign political conditions. C) Foreign economic conditions. D) It is affected by all of the above. Show Answer Correct Answer: D) It is affected by all of the above. 28. The stocks that are bought back from the public. A) Treasury. B) Common. C) Preferred. D) Dual class. Show Answer Correct Answer: A) Treasury. 29. The current USD/CAD spot rate is 0.82. The CAD call option premium is 0.04. The strike rate is 0.81. European style options. If the spot rate at expiration is 0.87, the percentage return on the initial investment (taking into account the option premium paid) is: A) 0%. B) 25%. C) 150%. D) 50%. Show Answer Correct Answer: D) 50%. 30. In order to protect itself against exchange rate risk, an American exporter holding a 3-month receivable in euro sells a EUR/USD call option at the exchange rate at a strike price of EUR 1 = USD 0.94. The present spot rate is EUR/USD = 1, 000. The option costs 4 cents (i.e., USD 0.04). 3 months later, the spot exchange rate is EUR 1 = USD =0.96. After the hedging operation ends the exporter will be left with: A) A cost of 6 cents per euro. B) A cost of 4 cents per euro. C) A gain of 4 cents per euro. D) A cost of 2 cents per euro. E) A gain of 6 cents per euro. Show Answer Correct Answer: A) A cost of 6 cents per euro. ← PreviousNext →Related QuizzesFinance QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 6International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books