This quiz works best with JavaScript enabled. Home > Finance > International Finance > International Finance – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Goods and services that one country buys from other countries A) Absolute advantage. B) Exports. C) Imports. D) Comparative advantage. Show Answer Correct Answer: C) Imports. 2. On the expiration date of a futures contract, the price of the contract A) Always equals the purchase price of the contract. B) Cannot be determined. C) Always equals the average price over the life of the contract. D) Always equals the price of the underlying asset. Show Answer Correct Answer: D) Always equals the price of the underlying asset. 3. Scope of IFM covers A) International Trade. B) Financial Services. C) Financial Markets. D) All of above. Show Answer Correct Answer: D) All of above. 4. When an emerging market suffers an economic decline, foreign investors usually A) Help the emerging market to recover economically. B) Use the opportunity to invest more in the emerging market. C) Quickly withdraw their money from the emerging market. D) Pay less for each transaction in the emerging market. Show Answer Correct Answer: C) Quickly withdraw their money from the emerging market. 5. If interest rate parity exists, foreign investors will have the ..... of American investors: A) Profit = capital profit. B) Interest rate = capital interest. C) Not the sentences above. D) Return rate = capital rate of return. Show Answer Correct Answer: D) Return rate = capital rate of return. 6. 15 At time t, bank A lists:GBP/USD=1.5; At time t, bank B lists:CHF/USD=0.75 and GBP/CHF=0.02. If you calculate at bank B, cross rate GBP/CHF=1.515. Assuming transaction cost =0, you will have 100, 000USD. You will: A) Use dollars to buy pounds at bank A, sell pounds for CHF and use CHF to buy dollars at bank B. B) Use dollars to buy CHF, sell CHF for GBP at bank B, sell GBP for USD at bank A. C) Buy dollars at bank A, convert dollars to CHF in bank B, then convert CHF to GBP. D) None of the sentences are correct. Show Answer Correct Answer: B) Use dollars to buy CHF, sell CHF for GBP at bank B, sell GBP for USD at bank A. 7. Comparative advantage exists when residents of one country can produce a good or service at lower opportunity cost than residents of another country. A) False. B) True. Show Answer Correct Answer: B) True. 8. The bond market is a market: A) Short-term and long-term debt financing. B) Reserved for sovereign debt only. C) Medium and long-term debt financing only. D) None of above. Show Answer Correct Answer: C) Medium and long-term debt financing only. 9. A country's ability to produce a product relatively more efficiently than another country A) Comparative advantage. B) Absolute advantage. C) International trade. D) Exports. Show Answer Correct Answer: A) Comparative advantage. 10. At time t, 1 EUR = 1.3 USD, 1 GBP = 1.7 USD. Then the price of EUR/GBP will be: A) 0, 765. B) 0.76. C) 0.7647. D) 01.7647. Show Answer Correct Answer: C) 0.7647. 11. Comparing "forward" and "future" exchange contracts, we can say that A) Their major difference is in the way the underlying asset is priced for the future purchase or sale:futures settle daily and forwards settle at maturity. B) A futures contract is nogotiated by open outcry between floor brokers or traders and is traded on organized exchanges, while forward contract is tailor-made by an international bank for its clients and is traded OTC. C) They are both "marked-to-market" daily. D) Both A and B. Show Answer Correct Answer: D) Both A and B. 12. Which of the following is not an example of political risk? A) Consumers' income levels will decrease, thus decreasing consumption. B) Government may impose barriers on subsidiary. C) Consumers may boycott the MNC. D) Government may impose taxes on subsidiary. Show Answer Correct Answer: A) Consumers' income levels will decrease, thus decreasing consumption. 13. Gross domestic product; total amount of goods/services produced in a country each year A) Forward Rate. B) Interest Rate. C) GDP. D) Inflation Rate. Show Answer Correct Answer: C) GDP. 14. Agency costs faced by multinational corporations (MNCs) may be larger than those faced by purely domestic firms because A) Monitoring of managers located in foreign countries is more difficult. B) Foreign subsidiary managers raised in different cultures may not follow uniform goals. C) MNCs are relatively large. D) All of these. E) A and B only. Show Answer Correct Answer: E) A and B only. 15. International trade generally results in ..... exposure to international political risk and ..... exposure to international economic conditions, when compared to other methods of international business. A) Higher; higher. B) Lower; higher. C) Lower; lower. D) Higher; lower. Show Answer Correct Answer: C) Lower; lower. 16. It is the currency of another country in our country, as long as it is freely convertible to other currencies in the exchange market. A) Bitcoin. B) Blockchain. C) Split. D) Virtual wallet. Show Answer Correct Answer: C) Split. 17. If the exchange rate USD/CHF = 2.2128/30. USD / SGD= 2.7227/72, the CHF /SGD rate is? A) 0.8127/15. B) 1.2303/24. C) 1.2303/25. D) 0.8114/23. Show Answer Correct Answer: C) 1.2303/25. 18. In the 1850s the French franc was valued by both gold and silver, under the official French ratio which equated a gold franc to a silver franc 151/2 times as heavy. At the same time, the gold from newly discovered mines in California poured into the market, depressing the value of gold. As a result, A) The franc effectively became a silver currency. B) The franc effectively became a gold currency. C) Silver became overvalued under the French official ratio. D) Answers a) and c) are correct. Show Answer Correct Answer: B) The franc effectively became a gold currency. 19. In the rate of the rate of exchange equilibrium 1 price is reset because: A) The change of the rate price. B) Price changes of goods. C) Not a kernel on. D) Government intervention in the foreign exchange market. Show Answer Correct Answer: A) The change of the rate price. 20. Which of the following is not a way in which agency problems can be reduced through corporate control? A) Acquisition of a foreign subsidiary. B) Monitoring by large shareholders. C) Threat of hostile takeover. D) Executive compensation. Show Answer Correct Answer: A) Acquisition of a foreign subsidiary. 21. The firm has a headroom of 23% and its authorized capital is USD 12.5 million with face value of USD 1. What is amount of ADR that can be raised A) USD 2, 875, 000. B) USD 10, 000, 000. C) USD 1, 500, 000. D) USD 5, 000, 000. Show Answer Correct Answer: A) USD 2, 875, 000. 22. The 90-day forward rate for the euro is $ 1.07, while the current spot rate of the euro is $ 1.05. What is the annualized forward premium or discount of the euro? Hint:It's only 90 days ..... A) 7.6 percent discount. B) 1.9 percent discount. C) 7.6 percent premium. D) 1.9 percent premium. Show Answer Correct Answer: C) 7.6 percent premium. 23. A company wants to use the option to hedge NZ$ 12.5 million in receivables from New Zealand companies. The option fee is 0.04 USD. The strike rate is 0.5. If the option is exercised, what is the total USD received (after accounting for the premium paid)? A) 7, 000, 000. B) 5, 875, 000. C) 5, 750, 000. D) 6, 500, 000. Show Answer Correct Answer: C) 5, 750, 000. 24. If the interest rate is higher in the United States than in the United Kingdom, and if the forward rate of the British pound (in U.S. dollars) is the same as the pound's spot rate, then: A) U.S. investors could possibly benefit from covered interest arbitrage. B) British investors could possibly benefit from covered interest arbitrage. C) Neither U.S. nor British investors could benefit from covered interest arbitrage. D) None of above. Show Answer Correct Answer: B) British investors could possibly benefit from covered interest arbitrage. 25. Occurs when the value of exports exceeds the value ofimports A) Protective tariff. B) Trade surplus. C) Fixed exchange rate. D) Dumping. Show Answer Correct Answer: B) Trade surplus. 26. What are International Finances? A) The trade of goods, services, technology, capital and/or knowledge across national borders. B) Societies and countries have differing levels of "development" on an international scale. C) The study of monetary interactions between two or more countries. D) None of above. Show Answer Correct Answer: C) The study of monetary interactions between two or more countries. 27. The rate for currencies exchanged today for delivery in the future, usually up to 180 days A) Fixed Exchange Rate. B) Spot Rate. C) Floating Exchange Rate. D) Forward Rate. Show Answer Correct Answer: D) Forward Rate. 28. Futures market is mainly used by speculators while futures market is mainly used for hedging. A) True. B) Decisions. Show Answer Correct Answer: A) True. 29. International Business may be in the mode of A) International Trade. B) Contractual Mode. C) Foreign Investments. D) All of the above. Show Answer Correct Answer: D) All of the above. 30. The Sarbanes-Oxley Act improves corporate governance of MNCs because it: A) Places a limit on the amount of funds that managers can spend. B) Makes executives more accountable for verifying financial statements. C) Ties executive compensation to firm performance. D) Eliminates stock options as a form of compensation. Show Answer Correct Answer: B) Makes executives more accountable for verifying financial statements. ← PreviousNext →Related QuizzesFinance QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 6International Finance Quiz 8International Finance Quiz 9International Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books