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International Finance Quiz 13 (30 MCQs)

Quiz Instructions

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1. U9V-13) What is an exchange rate?
2. Parties who have bought a futures contract and thereby agreed to ..... (take delivery of) the bonds are said to have taken a ..... position.
3. U9V-11) Government payments to exporters, this payment helps reduce an exporter's cost of production.
4. A sponsored American depository receipt (ADR) is:
5. Which of these activities is not carried out by the Middle Office in a trading room:
6. Financial derivatives include
7. A country's ability to produce a given product withgreater output per unit of input than another country
8. If you sold a short contract on financial futures you hope interest rates
9. International Finance Analyzes the following areas of study:
10. U9V-2) When a country has the ability to produce a product at a lower opportunity cost than another country.
11. David Ricardo introduced this theory in the year 1817.
12. What is the major objective of the World Trade Organization (WTO)?
13. Angel investors prefer to hold off on providing advice until after they have invested so they can focus on maximizing their returns.
14. Assume that the U.S. inflation rate is higher than the New Zealand inflation rate. This will cause U.S. consumers to ..... their imports from New Zealand and New Zealand consumers to ..... their imports from the United States. According to purchasing power parity (PPP), this will result in a(n) ..... of the New Zealand dollar (NZ$ ).
15. The point below (to the right) of the IRP line describes:
16. Salt was used as money once but would not work well today because:
17. Which of the following forms of arbitrage takes advantage of cross-rates?
18. With regard to corporate goals, an MNC is mostly concerned with maximizing ....., and a purely domestic firm is mostly concerned with maximizing .....
19. Covered interest rate parity applies whether risk averse or risk neutral
20. If purchasing power parity were to hold even in the short run, then:
21. Risk is calculated through .....
22. When a country has favorable trade balances, its currency is usually stable or rising
23. Which of the following methods of entering international markets is the most complex and requires the most risk?
24. Assume 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?
25. The one-year forward rate of the British pound is quoted at $ 1.60, and the spot rate of the British pound is quoted at $ 1.63. The forward ..... is ..... percent.
26. What would be the cost in U.S. dollars for a hotel room in Canada that costs 109 Canadian dollars if each Canadian dollar is worth.73 U.S. dollars?
27. By hedging a portfolio, a bank manager
28. Assume an investor has USD 2, 000, 000 to invest. Spot rate GBP/USD = 1.2230. 90-day forward rate GBP/USD = 1.2228. The interest rate on 3-month deposit in USD is 1.5% and GBP is 3.4%. If the investor implements CIA for 90 days, the rate of return on CIA activity is?
29. In which theory it is mentioned that, Country's wealth was calculated through "gold and silver holdings of that country" .
30. Of the following situations, the one that does NOT usually cause an increased interest rate is:
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