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International Finance Quiz 9 (30 MCQs)

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1. U9V-8) Limit on the amount of a foreign good or service that may be legally imported.
2. Jensen Co. wants to establish a new subsidiary in Mexico that will sell computers to Mexican customers and remit earnings back to the U.S. parent. The value of this project will be favorably affected if the value of the peso ..... while it establishes the new subsidiary and ..... when the subsidiary starts operations.
3. Futures markets have grown rapidly because futures
4. Tata Steel financed acquisitions of Corus steel thorough
5. 3 Suppose at time t, the market rate:1 EUR = 1 USD, 1 GBP= 1.5 USD of the bank:2 EUR = 1 GBP, 1.5EUR = 1 GBP. So transaction cost = 0 investor has USD, he will exploit the opportunity = how?
6. Bank A quotes a bid price of $ 1.52 and an ask price of $ 1.54 for the British pound. Bank B quotes a bid price of $ 1.51 and an ask price of $ 1.53 for the British pound. If a trader has $ 100, 000 to invest, what should the trader do to take advantage of locational arbitrage and how much profit would the trader make?
7. The rate a lender charges to a borrower for a loan, presented as a fixed percentage of the total amount borrowed
8. What type of exchange rate system does the United States have?
9. In order to protect itself effectively against a very significant rise in the euro, an American importer with a debt in this currency must:
10. The covered interest rate differential should be zero
11. The transaction method used for making payments between countries; the simultaneous act of buying one currency and selling the other
12. Latin American countries have historically experienced relatively high inflation, and their currencies have weakened. This information is somewhat consistent with the concept of:
13. . Bank A quotes GBP/USD = 1.52/54; Bank B quotes GBP/USD = 1.51/52. assuming transaction fee = 0, an American investor will?
14. Exchange of goods and services among the nations of theworld
15. Due to ....., market forces should realign the relationship between the interest rate differential of two currencies and the forward premium (or discount) on the forward exchange rate between the two currencies
16. According to the international Fisher effect, if U.S. investors expect a 5 percent rate of domestic inflation over one year and a 2 percent rate of inflation in European countries that use the euro, and if they require a 3 percent real return on investments over one year, the nominal interest rate on one-year U.S. Treasury securities would be:
17. What is the limitation of a weak home currency solution on international trade?
18. Bank A quotes GBP/USD as 1.55/1.57. Bank B lists the exchange rate of British pound and USD as 1.53/1.55. If an investor has $ 100, 000, how much profit can be obtained by buying GBP from bank B and selling it to bank A?
19. This is raised for the international businesses by the stock market and derivative market.
20. Which of these is not a reason of going global?
21. People who favor trade barriers to protect domestic industries from imported products
22. Which of the following is not need of International Finance
23. Exchange Rate If one dollar is equivalent to 0.82 euros, how many euros is 120 dollars?
24. The most risky method(s) by which firms conduct international business is (are):
25. Net International Investment Position (NIIP)
26. A country's ability to produce a given product with greater output per unit of input than another country
27. A high home inflation rate relative to other countries would ..... the home country's current account balance, other things being equal. High growth in the home income level relative to other countries would ..... the home country's current account balance, other things being equal
28. Assuming the current interest rate of USD is 2.5%/year, the current interest rate of CHF is 5.3%/year. The premium or discount of a forward contract with a US investor after 1 year will be (assuming an IRP exists):
29. What is the main purpose of the Inter-American Development Bank?
30. Currency futures contracts traded on exchanges:
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