This quiz works best with JavaScript enabled. Home > Finance > International Finance > International Finance – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 8 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following is not mentioned in the text as a theory of international business? A) Theory of Comparative Advantage. B) Imperfect Markets Theory. C) Product Cycle Theory. D) Globalization of Business Theory. E) All of these are mentioned in the text as theories of international business. Show Answer Correct Answer: E) All of these are mentioned in the text as theories of international business. 2. To measure the importance of global trade to an economy, economists usually divide ..... by the total volume of its domestic output. A) Exports minus imports. B) Capital flows. C) Exports plus imports. D) Exports. Show Answer Correct Answer: C) Exports plus imports. 3. The imposition of a tax causes A) A decrease in demand. B) A increase in demand. C) A decrease in supply. D) An increase in supply. Show Answer Correct Answer: C) A decrease in supply. 4. Increase in the exchange rate (S) A) Increase price of foreign exchange and depreciation of domestic currency. B) Decrease in the number of units of domestic currency required to buy a unit of foreign exchange and appreciation of domestic currency. C) Decrease price of foreign exchange and appreciation of domestic currency. D) Increase in the number of units of domestic currency required to sell a unit of foreign exchange and depreication of domestic currency. Show Answer Correct Answer: A) Increase price of foreign exchange and depreciation of domestic currency. 5. If you buy a call option on treasury futures at 115, and at expiration the market price is 110, A) The call will be exercised. B) The put will be exercised. C) The call will not be exercised. D) The put will not be exercised. Show Answer Correct Answer: C) The call will not be exercised. 6. For businesses that operate across nations, capital is raised by the issue and distribution of these. A) Checks. B) Assets. C) Shares. D) None of the above. Show Answer Correct Answer: C) Shares. 7. Which of the following is not mentioned in the text as an additional risk resulting from international business? A) Political risk. B) Exposure to foreign economies. C) Exchange rate fluctuations. D) Interest rate risk. Show Answer Correct Answer: D) Interest rate risk. 8. Bretton Woods System states that Each country fixed the value of its currency in terms of gold or dollar and kept its price within a range of 1% of its parity value A) False. B) True. Show Answer Correct Answer: B) True. 9. WTO WAS CREATED ON A) 1ST JAN 1995. B) 1ST JAN 1994. C) 1st June 1995. D) 1ST JAN 1996. Show Answer Correct Answer: A) 1ST JAN 1995. 10. Change in NIIP = A) CA-valuation changes. B) CA + valuation changes. C) TB + valuation changes. D) TB-valuation changes. Show Answer Correct Answer: B) CA + valuation changes. 11. Advantages of a fixed exchange rates include A) Reduction in exchange rate risk for businesses. B) Reduction in transactions costs. C) Reduction in trading frictions. D) All of the above. Show Answer Correct Answer: D) All of the above. 12. If you purchase a $ 100, 000 interest-rate futures contract for 110, and the price of the Treasury securities on the expiration date is 106 A) Your loss is $ 4000. B) Your loss is $ 6000. C) Your profit is $ 4000. D) Your profit is $ 6000. Show Answer Correct Answer: A) Your loss is $ 4000. 13. A formal agreement between 2 or more regionalcountries that removes tari"s between those countries butkeeps them for other countries A) Regional block. B) Free trade. C) Trade block. D) Exchange block. Show Answer Correct Answer: C) Trade block. 14. Which of the following is not one of the more common methods used by MNCs to improve their internal control process? A) Establishing a centralized database of information. B) Ensuring that all data are reported consistently among subsidiaries. C) Speeding the process by which all departments and all subsidiaries have access to the data that they need. D) Making executives more accountable for financial statements by personally verifying their accuracy. E) All of these are common methods used by MNCs to improve their internal control process. Show Answer Correct Answer: C) Speeding the process by which all departments and all subsidiaries have access to the data that they need. 15. A document that states a promise to pay a set amount by a certain date is a/an A) Letter of credit. B) Bill of exchange. C) Promissory note. D) Bond. Show Answer Correct Answer: C) Promissory note. 16. The MNC's value depends on all of the following, except: A) MNC's required rate of return. B) Amount of MNC's cash flows in particular currency. C) The exchange rate at which cash flows are converted to dollars. D) The value of MNC depends on all of the above factors. Show Answer Correct Answer: D) The value of MNC depends on all of the above factors. 17. Which factor can affect international trade flows by influencing the cost of labor? A) National income. B) Inflation. C) Credit conditions. D) Government policies. Show Answer Correct Answer: B) Inflation. 18. Merchandise means goods that areintangible. A) True. B) False. Show Answer Correct Answer: B) False. 19. Current spot rate EUR/USD = 1.3272. 3-month forward rate:EUR /USD= 1.2728. If the next 3 months' spot rate EUR/USD = 1.15. If you had 100, 000 EUR in the next 3 months would you? A) Set up a USD forward contract. B) Set up a USD forward contract. C) Set up a EUR. forward sell contract. D) Establishment of a forward contract to buy EUR. Show Answer Correct Answer: D) Establishment of a forward contract to buy EUR. 20. The discounted cash flow method of business valuation is a methodology that places a value on a business by determining, at a specified discount rate, the sum of the ..... values of all of the business's expected future cash flows. A) Future. B) Present. C) Average. D) Weighted-average. Show Answer Correct Answer: B) Present. 21. Which of the following occurs when the forward exchange rate does NOT equal the spot exchange rate? A) Trade fails. B) Interest rate parity. C) World bank deficit. D) Increased inflation. Show Answer Correct Answer: B) Interest rate parity. 22. A soft currency is a currency that is easy to exchange for another currency A) False. B) True. Show Answer Correct Answer: A) False. 23. Which of the following industries would most likely take advantage of lower costs in some less developed foreign countries? A) Specialized professional services. B) Nuclear missile planning. C) Planning for more sophisticated computer technology. D) Assembly line production. Show Answer Correct Answer: D) Assembly line production. 24. Licensing is the transfer of rights and permission to produce and sell a product to a foreign firm. A) Do not choose. B) True. C) Do not choose. D) False. Show Answer Correct Answer: B) True. 25. Which of the following statements about business valuation is false? A) The discounted cash flow method of business valuation determines a value for a business based upon the expected future cash flows of the business. B) The discount rates used for business valuation are usually higher than the discount rates used for capital budgeting. C) A business valuation may become necessary because of insurance requirements, because one of the owners wants to exit the business, or because of the tax planning or tax reporting needs of either the business or one of its owners. D) An entrepreneur should place a value on his business based on how much time and money the entrepreneur has invested in the business. Show Answer Correct Answer: D) An entrepreneur should place a value on his business based on how much time and money the entrepreneur has invested in the business. 26. The valuation of an MNC should rise when an event causes the expected cash flows from foreign to ..... and when foreign currencies denominating these cash flows are expected to ..... A) Decrease; depreciate. B) Increase; appreciate. C) Increase; depreciate. D) Decrease; appreciate. Show Answer Correct Answer: B) Increase; appreciate. 27. These are financial claims whose value is derived from the value of the underlying asset. A) Money market. B) Shares. C) Derivatives. D) None of the above. Show Answer Correct Answer: C) Derivatives. 28. The derivatives contracts which are standardized and traded on a futures exchange are called ..... A) Capital. B) Futures. C) Options. D) Derivatives. Show Answer Correct Answer: B) Futures. 29. An aging of accounts receivable is a schedule that: A) Lists customers with unpaid balances in alphabetical order. B) Categorizes unpaid customer invoices based on the number of days they have been outstanding. C) Categorizes unpaid customer invoices based on how quickly they have been paid. D) Lists customers with unpaid balances in the order of least likely to most likely to pay. Show Answer Correct Answer: B) Categorizes unpaid customer invoices based on the number of days they have been outstanding. 30. The advantage of forward contracts over future contracts is that they A) Are standardized. B) Have lower default risk. C) Are more liquid. D) None of the above. Show Answer Correct Answer: D) None of the above. ← 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 9International Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books