This quiz works best with JavaScript enabled. Home > Finance > International Finance > International Finance – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. While in India, you purchasd a hat for $ 15 U.S. dollars. How many rupees would you pay if each rupee was 0.32 U.S. dollars? A) 233.33 Rupees. B) 450 Rupees. C) 48 Rupees. D) 468.75 Rupees. Show Answer Correct Answer: D) 468.75 Rupees. 2. Assume U.S. and Swiss investors require a real rate of return of 3 percent. Assume the nominal U.S. interest rate is 6 percent and the nominal Swiss rate is 4 percent. According to the international Fisher effect, the franc will ..... by about ..... A) Depreciate; 3 percent. B) Appreciate; 2 percent. C) Appreciate; 3 percent. D) Depreciate; 2 percent. Show Answer Correct Answer: B) Appreciate; 2 percent. 3. A European importer wishing to protect himself against a rising dollar buys a zero premium option (or zero premium). This operation consists for him in: A) To buy a USD/EUR call and sell a USD/EUR put. B) To buy a USD/EUR call and to sell a USD/EUR call. C) To buy a USD/EUR put and sell a USD/EUR call. D) To buy a USD/EUR put and to sell a USD/EUR put. Show Answer Correct Answer: A) To buy a USD/EUR call and sell a USD/EUR put. 4. The total value of the shares issued by a corporation is known as the market ..... A) Funding. B) Capitalization. C) Score. D) None of the above. Show Answer Correct Answer: B) Capitalization. 5. A disadvantage of a forward contract is that A) It may be difficult to locate a counterparty. B) The forward market suffers from lack of liquidity. C) These contracts have default risk. D) All of the above. Show Answer Correct Answer: D) All of the above. 6. This allows you to save value you have earned. A) Unit of account. B) Medium of exchange. C) Money. D) Store of value. Show Answer Correct Answer: D) Store of value. 7. U9V-4) When a nation exports more than they import, that nation has a A) Trade free economic system. B) Trade fails. C) Trade surplus. D) Free trade agreement. Show Answer Correct Answer: C) Trade surplus. 8. The president of MIGA is ..... ? A) Charles Michael. B) Robert Zoellick. C) Hiroshi Matano. D) Odile Renaud-Basso. Show Answer Correct Answer: C) Hiroshi Matano. 9. Relative PPP, if e increases A) Appreciation, domestic country more expensive. B) Depreciation, domestic country less expensive. C) Depreciation, domestic country more expensive. D) Appreciation, domestic country less expensive. Show Answer Correct Answer: B) Depreciation, domestic country less expensive. 10. According to the IRP, which of the following statements is true? A) When the foreign interest rate is higher than the domestic interest rate, the forward rate of the domestic currency will (listed directly) will decrease. B) When the foreign interest rate is higher than the domestic interest rate, the forward rate of the domestic currency will (directly listed) increase. C) When IRP exists, CIA is not viable. D) When the CIA didn't exist, the IRP certainly existed. Show Answer Correct Answer: C) When IRP exists, CIA is not viable. 11. Advantages of a flexible exchange rates include: A) National policy autonomy. B) Easier external adjustments. C) The government can use monetary and fiscal policies to pursue whatever economicgoals it chooses. D) All of the above. Show Answer Correct Answer: D) All of the above. 12. Which of the following could reduce agency problems for an MNC? A) Stock options as managerial compensation. B) Hostile takeover threat. C) Investor monitoring. D) All of these are forms of corporate control that could reduce agency problems for an MNC. Show Answer Correct Answer: D) All of these are forms of corporate control that could reduce agency problems for an MNC. 13. The value of one currency for the purpose of conversion to another A) Conversion rate. B) Exchange rate. C) Fiscal rate. D) Monetary rate. Show Answer Correct Answer: B) Exchange rate. 14. A country's ability to produce a product relatively moreefciently than another country A) International trade. B) Absolute advantage. C) Comparative advantage. D) Exports. Show Answer Correct Answer: C) Comparative advantage. 15. System under which the price of one currency remains unchanged in relation to the value of another currency A) Protective tariff. B) North American Free Trade Agreement. C) Dumping. D) Fixed exchange rate. Show Answer Correct Answer: D) Fixed exchange rate. 16. If you think that the dollar is going to appreciate against the euro, you should A) Buy call options on the euro. B) Buy put options on the euro. C) Sell call options on the euro. D) None of the above. Show Answer Correct Answer: A) Buy call options on the euro. 17. An economist will define the exchange rate between two currencies as the: A) Amount of one currency that must be paid in order to obtain one unit of another currency. B) Difference between total exports and total imports within a country. C) Price at which the sales and purchases of foreign goods takes place. D) Ratio of import prices to export prices for a particular country. Show Answer Correct Answer: A) Amount of one currency that must be paid in order to obtain one unit of another currency. 18. U9V-12) Free trade agreements among countries in a region A) Trade organizations. B) Trade federations. C) Trading blocs. D) Trade deficits. Show Answer Correct Answer: C) Trading blocs. 19. Suppose an American company imports bicycles from China. On the American BOP will arise:A. A credit entry on the current account and a debit entry on the current account B. A credit entry on the trade balance and a debit entry on the current account C. A credit entry on the balance of services and a debit entry on the current account D. AA credit entry on the balance of services and a debit entry on the current account A) A credit entry on the current account and a debit entry on the income balance. B) A credit entry on the balance of services and a debit entry on the current account. C) A credit entry on the trade balance and a debit entry on the current account. D) A credit entry on the current account and a debit entry on the current account. Show Answer Correct Answer: D) A credit entry on the current account and a debit entry on the current account. 20. The Shanghai stock exchange (SSE) is: A) A public regulatory authority. B) A financial intermediary. C) An independent private stock exchange platform. D) None of above. Show Answer Correct Answer: C) An independent private stock exchange platform. 21. An over-the-counter market: A) Is a regulated market. B) Relates to derivative assets only (Options, forwards). C) Is an unregulated market. D) None of above. Show Answer Correct Answer: C) Is an unregulated market. 22. Current account surplus A) Increases net external debt. B) Decreases net external debt. Show Answer Correct Answer: B) Decreases net external debt. 23. Under the Bretton Woods system A) There was an explicit set of rules about the conduct of international monetary policies. B) Each country was responsible for maintaining its exchange rate within 1 percent of the adopted par value by buying or selling foreign exchanges as necessary. C) The U.S. dollar was the only currency that was fully convertible to gold. D) All of the above. Show Answer Correct Answer: D) All of the above. 24. Which of these is not a type of exposure in international finance? A) Operating. B) Transporting. C) Transaction. D) Translation. Show Answer Correct Answer: B) Transporting. 25. Services is also known as visibletrade. A) False. B) True. Show Answer Correct Answer: A) False. 26. If a bank manager chooses to hedge his portfolio of treasury securities by selling futures contracts, he A) Gives up the opportunity for gains. B) Removes the chance of loss. C) Increases the probability of a gain. D) Both A and B are true. Show Answer Correct Answer: D) Both A and B are true. 27. MNCs can improve their internal control process by all of the following, except: A) Establishing a centralized data base of information. B) Ensuring that all data are reported consistently among subsidiaries. C) Ensuring that the MNC always borrows from countries where interest rates are lowest. D) Using a system that checks internal data for unusual discrepancies. Show Answer Correct Answer: C) Ensuring that the MNC always borrows from countries where interest rates are lowest. 28. Assume the inflation rate of the US dollar is 5% and the Japanese Yen is 7%. What is the forecast for the USD/SPY exchange rate according to PPP next year? A) 117.76. B) 122.28. C) 117.7560. D) 122.0028. Show Answer Correct Answer: B) 122.28. 29. Net unilateral transfers A) Exports-Imports. B) Investment income and International compensation to employees. C) Gifts and government transfers. D) None of above. Show Answer Correct Answer: C) Gifts and government transfers. 30. Shift to right in demand line A) Excess demand, appreciation. B) Excess demand, depreciation. C) Excess supply, appreciation. D) Excess demand, depreciation. Show Answer Correct Answer: A) Excess demand, appreciation. ← PreviousNext →Related QuizzesFinance QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9International Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books