This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 11 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. 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; lower. B) Higher; higher. C) Lower; higher. D) Lower; lower. Show Answer Correct Answer: D) Lower; lower. 3. 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. 4. If the exchange rate USD/CHF = 2.2128/30. USD / SGD= 2.7227/72, the CHF /SGD rate is? A) 1.2303/25. B) 1.2303/24. C) 0.8114/23. D) 0.8127/15. Show Answer Correct Answer: A) 1.2303/25. 5. 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. 6. In the rate of the rate of exchange equilibrium 1 price is reset because: A) Government intervention in the foreign exchange market. B) Price changes of goods. C) Not a kernel on. D) The change of the rate price. Show Answer Correct Answer: D) The change of the rate price. 7. Which of the following is not a way in which agency problems can be reduced through corporate control? A) Executive compensation. B) Threat of hostile takeover. C) Acquisition of a foreign subsidiary. D) Monitoring by large shareholders. Show Answer Correct Answer: C) Acquisition of a foreign subsidiary. 8. 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 5, 000, 000. B) USD 10, 000, 000. C) USD 1, 500, 000. D) USD 2, 875, 000. Show Answer Correct Answer: D) USD 2, 875, 000. 9. 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) 1.9 percent discount. B) 1.9 percent premium. C) 7.6 percent premium. D) 7.6 percent discount. Show Answer Correct Answer: C) 7.6 percent premium. 10. 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) 5, 875, 000. B) 5, 750, 000. C) 7, 000, 000. D) 6, 500, 000. Show Answer Correct Answer: B) 5, 750, 000. 11. 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. 12. Occurs when the value of exports exceeds the value ofimports A) Dumping. B) Trade surplus. C) Protective tariff. D) Fixed exchange rate. Show Answer Correct Answer: B) Trade surplus. 13. 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. 14. The rate for currencies exchanged today for delivery in the future, usually up to 180 days A) Forward Rate. B) Spot Rate. C) Fixed Exchange Rate. D) Floating Exchange Rate. Show Answer Correct Answer: A) Forward Rate. 15. 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. 16. 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. 17. The Sarbanes-Oxley Act improves corporate governance of MNCs because it: A) Makes executives more accountable for verifying financial statements. B) Eliminates stock options as a form of compensation. C) Ties executive compensation to firm performance. D) Places a limit on the amount of funds that managers can spend. Show Answer Correct Answer: A) Makes executives more accountable for verifying financial statements. 18. 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. 19. To measure the importance of global trade to an economy, economists usually divide ..... by the total volume of its domestic output. A) Exports. B) Capital flows. C) Exports minus imports. D) Exports plus imports. Show Answer Correct Answer: D) Exports plus imports. 20. 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. ← 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 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books