This quiz works best with JavaScript enabled. Home > Finance > International Finance > International Finance – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Organizational form of the foreign exchange market includes: A) Centralized forex marke. B) Decentralized Forex Market. C) Market of gold, silver, gems. D) Answers A and B are correct. Show Answer Correct Answer: D) Answers A and B are correct. 2. U9V-3) The relationship between a nation's exports and imports, which can result in a deficit or a surplus is known as: A) Capitalism. B) Balance of Capital. C) Balance of Trade. D) Specialization. Show Answer Correct Answer: C) Balance of Trade. 3. A monetary unit that is freely and easily converted into other currencies is: A) Soft Currency. B) Hard Currency. C) An exchange Control. D) A trade credit. Show Answer Correct Answer: B) Hard Currency. 4. Given a home country and a foreign country, purchasing power parity (PPP) suggests that: A) The home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate. B) The home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate. C) The home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. D) The home currency will appreciate if the current home interest rate exceeds the current foreign interest rate. Show Answer Correct Answer: C) The home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. 5. Financial account A) Trade balance + income balance + net unilateral transfers. B) Increase in foreign owned assets in domestic currency-increase in domestic owned assets abroad. C) Trade balance + income balance. D) None of above. Show Answer Correct Answer: B) Increase in foreign owned assets in domestic currency-increase in domestic owned assets abroad. 6. Which of the following are a part of the Capital account of the Balance of Payments? A) Foreign loans. B) Monetary movements. C) Foreign investments. D) All of the above. Show Answer Correct Answer: D) All of the above. 7. To pave the way for the European Monetary Union, the member countries of theEuropean Monetary System agreed to achieve a convergence of their economies.Which of the following is NOT a condition of convergence: A) Achieve a high degree of price stability. B) Keep gross public debts below 60 percent of GDP. C) Maintain its currency at a fixed exchange rate to the ERM. D) Keep the ratio of government budget deficits to GDP below 3 percent. Show Answer Correct Answer: C) Maintain its currency at a fixed exchange rate to the ERM. 8. Eurocurrencies and Eurocurrency Interest Rates? A) European currency. B) USD in North America. C) Domestic currencies of one country on deposit in a second country. D) None of above. Show Answer Correct Answer: C) Domestic currencies of one country on deposit in a second country. 9. A country's currency usually declines in value if the country's debt increases significantly A) True. B) False. Show Answer Correct Answer: A) True. 10. Assume that an American firm wants to engage in international business in which it establishes a large subsidiary in the foreign country. This strategy definitely represents ..... A) Direct foreign investment. B) (None). C) (None). D) (None). Show Answer Correct Answer: A) Direct foreign investment. 11. The value of currency is determined freely in the Forex market by changes in supply and demand. A) Foreign exchange market. B) Fixed exchange rate. C) Floating exchange rate. D) Managed exchange rate. Show Answer Correct Answer: C) Floating exchange rate. 12. Which of the following is not a financial derivative? A) Options. B) Stock. C) Futures. D) Forward contracts. Show Answer Correct Answer: B) Stock. 13. 8 National Bank quotes a bid price of $ 1.15 and an ask of $ 1.17 for the euro. City Bank quotes a bid price of $ 1.10 and an ask price of $ 1.14 for the euro. If you have $ 1.000.000 to invest, what would your profit be from conducting locational arbitrage? A) None of the above. B) $ 30.000. C) $ 10.000. D) $ 50.000. Show Answer Correct Answer: A) None of the above. 14. When payments of foreign exchange are more than receipts, then the Balance of Payments is ..... A) Surplus. B) Deficit. C) Balanced. D) None of the Above. Show Answer Correct Answer: B) Deficit. 15. Elimination of riskless profit opportunities in the futures market is A) Hedging. B) Speculation. C) Diversification. D) Arbitrage. Show Answer Correct Answer: D) Arbitrage. 16. The Sarbanes-Oxley Act caused corporate governance of MNCs to ..... ; it makes executives ..... accountable for verifying financial statements. A) Improve; more. B) (None). C) (None). D) (None). Show Answer Correct Answer: A) Improve; more. 17. What is the difference between MFN and Ni? A) MFN anti-discrimination in international trade. NI does not discriminate in international trade. B) NI creates an equal business environment of nations. MFN can create an equal or unequal business environment across countries. C) NI exports are not subject to taxes, fees, and business procedures. Depending on the policy of the country. D) None of above. Show Answer Correct Answer: B) NI creates an equal business environment of nations. MFN can create an equal or unequal business environment across countries. 18. Exchange rates affect the prices of goods. A) Do not choose. B) True. C) Do not choose. D) False. Show Answer Correct Answer: B) True. 19. Overseas acquisitions can be funded with ADRs only A) True. B) Partially true. C) Depends on the country. D) False. Show Answer Correct Answer: D) False. 20. Following are some of the notable international finance organizations, Except A) IFC. B) World Bank. C) IMF. D) IMC. Show Answer Correct Answer: D) IMC. 21. Decrease in a currency value is called. A) Appreciation. B) Ratio. C) Depreciation. D) Derivatives. Show Answer Correct Answer: C) Depreciation. 22. A company has accounts recievable when it purchases items on account A) False. B) True. Show Answer Correct Answer: A) False. 23. This is anything people will accept for payment. A) Medium of exchange. B) U S Dollar. C) Unit of account. D) Store of value. Show Answer Correct Answer: A) Medium of exchange. 24. This records the purchase and sale of financial assets like stocks and bonds. A) Financial account. B) Current account. C) Money market account. D) Checking account. Show Answer Correct Answer: A) Financial account. 25. This is a "pegged" system where the value of currency is fixed against another country's currency. A) Floating exchange rate. B) Managed exchange rate. C) Foreign exchange market. D) Fixed exchange rate. Show Answer Correct Answer: D) Fixed exchange rate. 26. If the Canadian dollar is worth $ .90 in the US, calculate the value of 250 Canadian dollars in US dollars A) 250. B) 200. C) 275. D) 225. Show Answer Correct Answer: D) 225. 27. For forwarding currency purchases: A) Customer accepts to buy foreign currency in the future at the rate determined today. B) The parties make the amount of foreign currency at the exchange rate now maintained in the future. C) Customer accepts to buy foreign currency in the future at the rate determined today. D) Parties make calculations today for an acceptable amount of foreign currency in the future. Show Answer Correct Answer: A) Customer accepts to buy foreign currency in the future at the rate determined today. 28. Limit on the quantity of a product that may be imported A) Protectionists. B) Quota. C) Balance of payments. D) The trade fails. Show Answer Correct Answer: B) Quota. 29. Exchange Rate If one dollar is equivalent to 0.73 pounds sterling, how many pounds sterling are in 220 dollars? A) 170.60 Pounds Sterling. B) 165.60 Pounds Sterling. C) 160.60 Pounds Sterling. D) 150.60 Pounds Sterling. Show Answer Correct Answer: C) 160.60 Pounds Sterling. 30. Futures contracts are regularly traded on the A) New York Stock Exchange. B) Chicago Board of Trade. C) Chicago Board of Options Exchange. D) American Stock Exchange. Show Answer Correct Answer: B) Chicago Board of Trade. ← PreviousNext →Related QuizzesFinance QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 4International Finance Quiz 5International Finance Quiz 6International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9International Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books