This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 10 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of these is not a type of exposure in international finance? A) Transaction. B) Transporting. C) Operating. D) Translation. Show Answer Correct Answer: B) Transporting. 2. Services is also known as visibletrade. A) True. B) False. Show Answer Correct Answer: B) False. 3. 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. 4. 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. 5. 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) 122.0028. B) 122.28. C) 117.7560. D) 117.76. Show Answer Correct Answer: B) 122.28. 6. 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. 7. 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. 8. Goods and services that one country buys from other countries A) Exports. B) Imports. C) Comparative advantage. D) Absolute advantage. Show Answer Correct Answer: B) Imports. 9. On the expiration date of a futures contract, the price of the contract A) Always equals the purchase price of the contract. B) Always equals the average price over the life of the contract. C) Always equals the price of the underlying asset. D) Cannot be determined. Show Answer Correct Answer: C) Always equals the price of the underlying asset. 10. 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. 11. 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. 12. 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. 13. 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. 14. Comparative advantage exists when residents of one country can produce a good or service at lower opportunity cost than residents of another country. A) True. B) False. Show Answer Correct Answer: A) True. 15. 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. 16. A country's ability to produce a product relatively more efficiently than another country A) Comparative advantage. B) Absolute advantage. C) Exports. D) International trade. Show Answer Correct Answer: A) Comparative advantage. 17. At time t, 1 EUR = 1.3 USD, 1 GBP = 1.7 USD. Then the price of EUR/GBP will be: A) 0.76. B) 0, 765. C) 01.7647. D) 0.7647. Show Answer Correct Answer: D) 0.7647. 18. 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. 19. Which of the following is not an example of political risk? A) Government may impose taxes on subsidiary. B) Government may impose barriers on subsidiary. C) Consumers may boycott the MNC. D) Consumers' income levels will decrease, thus decreasing consumption. Show Answer Correct Answer: D) Consumers' income levels will decrease, thus decreasing consumption. 20. Gross domestic product; total amount of goods/services produced in a country each year A) GDP. B) Inflation Rate. C) Interest Rate. D) Forward Rate. Show Answer Correct Answer: A) GDP. ← PreviousNext →Related QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 6International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9International Finance Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books