This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 15 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 15 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Risk neutral A) Require risk premium in order to hold risky assets. B) Willing to pay a premium for the privilege of bearing risk. C) Willing to take risk for a zero risk premium. D) None of above. Show Answer Correct Answer: C) Willing to take risk for a zero risk premium. 2. What is Purchasing Power Parity? A) Is an economic theory that allows the comparison of the purchasing power of various world currencies. B) Difference between all money flowing into the country in a particular period of time. C) Societies and countries have differing levels of "development" on an international scale. D) None of them. Show Answer Correct Answer: A) Is an economic theory that allows the comparison of the purchasing power of various world currencies. 3. Once capital markets are integrated, it is difficult for a country to maintain a fixedexchange rate. Why? A) The market forces may be stronger than the exchange rate intervention that thegovernment can muster. B) Portfolio managers will not invest in countries with fixed exchange rates. C) Because of the Tobin Tax. D) None of the above. Show Answer Correct Answer: A) The market forces may be stronger than the exchange rate intervention that thegovernment can muster. 4. A "good" (or ideal) international monetary system should provide: A) Liquidity, elasticity, and flexibility. B) Elasticity, sensitivity, and reliability. C) Liquidity, adjustments, and confidence. D) None of the above. Show Answer Correct Answer: C) Liquidity, adjustments, and confidence. 5. International organization that settles trade disputes andorganizes trade negotiations A) United Nations (UN). B) World Trade Organization (WTO). C) European Union (EU). D) North America Free Trade Agreement (NAFTA). Show Answer Correct Answer: B) World Trade Organization (WTO). 6. According to the text, a disadvantage of licensing is that: A) It prevents a firm from importing. B) It is difficult to ensure quality control of the production process. C) It prevents a firm from exporting. D) None of these. Show Answer Correct Answer: B) It is difficult to ensure quality control of the production process. 7. Increase in a currency value is called. A) Ratio. B) Appreciation. C) Depreciation. D) Derivatives. Show Answer Correct Answer: B) Appreciation. 8. Foreign exchange rate is understood as: A) Comparative relationship in the value of the currencies involved. B) One country's currency represents the quantity of another country's currency. C) The price of 1 unit of one country's currency represents the number of units of another country's currency. D) All answers. Show Answer Correct Answer: C) The price of 1 unit of one country's currency represents the number of units of another country's currency. 9. Floating exchange rate regime A) There are no forex reserve changes. B) Can change as a result of changes in the domestic credit. C) Can change as a result of changes in the forex reserves. D) Can change as a result of changes in the forex reserves and domestic credit. Show Answer Correct Answer: A) There are no forex reserve changes. 10. If you bought a long contract on financial futures you hope that interest rates A) Rise. B) Fall. C) Are stable. D) Fluctuate. Show Answer Correct Answer: B) Fall. 11. This measures the value of goods and services. A) Unit of account. B) Medium of exchange. C) Store of value. D) Price. Show Answer Correct Answer: A) Unit of account. 12. Which agency focuses on the needs of Latin America? A) European Bank for Reconstruction and Development. B) Inter-American Development Bank. C) African Development Bank. D) Asian Development Bank. Show Answer Correct Answer: B) Inter-American Development Bank. 13. In domestic business currency of domesticcountry is used. A) True. B) False. Show Answer Correct Answer: A) True. 14. Relative PPP, if e decreases A) Appreciation, domestic country more expensive. B) Depreciation, domestic country more expensive. C) Depreciation, domestic country less expensive. D) Appreciation, domestic country less expensive. Show Answer Correct Answer: A) Appreciation, domestic country more expensive. 15. McDonalds is an example of franchising: A) True. B) False. Show Answer Correct Answer: A) True. 16. A document prepared by the exporter, providing a description of the merchandise and the terms of sale. A) Insurance Certificate. B) Letter of Credit. C) Promissory Note. D) Commercial Invoice. Show Answer Correct Answer: D) Commercial Invoice. 17. Which of the following theories identifies the non-transferability of resources as a reason for international business? A) Theory of comparative advantage. B) Imperfect markets theory. C) Product cycle theory. D) None of these. Show Answer Correct Answer: B) Imperfect markets theory. 18. The study of the effect of exchange rate changes on the current balance through the export and import value elasticities is called? A) Target approach. B) J curve effect. C) External trade condition effect. D) Coefficient of elasticity approach. Show Answer Correct Answer: D) Coefficient of elasticity approach. 19. The Shenzhen Stock Exchange and Shanghai Stock Exchange are: A) Regulated stock markets. B) Over-the-counter markets. C) None of the above answers is correct. D) None of above. Show Answer Correct Answer: A) Regulated stock markets. 20. In comparing exporting to direct foreign investment (DFI), an exporting operation will likely incur ..... fixed production costs and ..... transportation costs than DFI. A) Higher; higher. B) Higher; lower. C) Lower; lower. D) Lower; highe. Show Answer Correct Answer: D) Lower; highe. ← 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