This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 16 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A Currency Future is: A) An exchange rate. B) An exchange control. C) A contract. D) A floating currency. Show Answer Correct Answer: C) A contract. 2. How can government policies increase imports? A) Restrictions on imports. B) Subsidies for exporters. C) Restrictions on piracy. D) Environmental restrictions. Show Answer Correct Answer: B) Subsidies for exporters. 3. A contract that requires the investor to buy securities on a future date is called a A) Short contract. B) Long contract. C) Hedge. D) Cross. Show Answer Correct Answer: B) Long contract. 4. When the government (central bank) of a country decides what its currency will be worth relative to other currencies A) Fixed Exchange Rate. B) Floating Exchange Rate. C) Exchange Rate. D) Foreign Exchange. Show Answer Correct Answer: A) Fixed Exchange Rate. 5. Which of the following theories identifies specialization 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: A) Theory of comparative advantage. 6. According to the text, the valuation of an MNC with foreign subsidiaries is directly affected by all of the following except ..... A) A. exchange rate fluctuations. B) Foreign political conditions. C) Foreign economic conditions. D) It is affected by all of the above. Show Answer Correct Answer: D) It is affected by all of the above. 7. The stocks that are bought back from the public. A) Treasury. B) Common. C) Preferred. D) Dual class. Show Answer Correct Answer: A) Treasury. 8. The current USD/CAD spot rate is 0.82. The CAD call option premium is 0.04. The strike rate is 0.81. European style options. If the spot rate at expiration is 0.87, the percentage return on the initial investment (taking into account the option premium paid) is: A) 0%. B) 25%. C) 150%. D) 50%. Show Answer Correct Answer: D) 50%. 9. In order to protect itself against exchange rate risk, an American exporter holding a 3-month receivable in euro sells a EUR/USD call option at the exchange rate at a strike price of EUR 1 = USD 0.94. The present spot rate is EUR/USD = 1, 000. The option costs 4 cents (i.e., USD 0.04). 3 months later, the spot exchange rate is EUR 1 = USD =0.96. After the hedging operation ends the exporter will be left with: A) A cost of 6 cents per euro. B) A cost of 4 cents per euro. C) A cost of 2 cents per euro. D) A gain of 6 cents per euro. E) A gain of 4 cents per euro. Show Answer Correct Answer: A) A cost of 6 cents per euro. 10. An example of an exchange control is when the government limits the amount of money a tourist may take out of the country A) True. B) False. Show Answer Correct Answer: A) True. 11. What is two way fungibility in Global depository receipts A) The ability to convert GDRs into cryptocurrency. B) Two way fungibility in Global depository receipts refers to the ability to convert GDRs into underlying shares and vice versa. C) The ability to convert GDRs into real estate. D) The ability to convert GDRs into art pieces. Show Answer Correct Answer: B) Two way fungibility in Global depository receipts refers to the ability to convert GDRs into underlying shares and vice versa. 12. The value of currency is closely managed by government and central bank policy. A) Floating exchange rate. B) Managed exchange rate. C) Fixed exchange rate. D) Foreign exchange market. Show Answer Correct Answer: B) Managed exchange rate. 13. FX transactions are executed immediately, the rate ..... ? A) Forward rate. B) Spot Rate. C) Option contract strike price. D) The sentences above are correct. Show Answer Correct Answer: B) Spot Rate. 14. . Assuming the IRP holds, the USD interest rate is 5% and the GBP interest rate is 2%, the GBP/USD forward rate will? A) Decrease 2.94%. B) Increase 2.94%. C) Decrease 2.86%. D) Increase 2.86%. Show Answer Correct Answer: B) Increase 2.94%. 15. Spot rate A) Current price for the purchase/sale of currency. B) Specified predetermined price for a specific date in the future. Show Answer Correct Answer: A) Current price for the purchase/sale of currency. 16. Current account A) Trade balance + income balance + net unilateral transfers. B) Trade balance + income balance. C) Goods balance + services balance. D) Trade balance + net unilateral transfers. Show Answer Correct Answer: A) Trade balance + income balance + net unilateral transfers. 17. If interest rate parity exists, then ..... is not feasible A) Forward realignment arbitrage. B) Triangular arbitrage. C) Covered interest arbitrage. D) Locational arbitrage. Show Answer Correct Answer: C) Covered interest arbitrage. 18. People who favor trade barriers that protect domestic industries A) Dumping. B) Protectionists. C) Balance of payments. D) Tariff. Show Answer Correct Answer: B) Protectionists. 19. What are the similarities between currency futures and forwards: A) With Self-Adjustment. B) Are transformed according to the scale of activity. C) Are converted to the transaction date. D) None of the sentences are correct. Show Answer Correct Answer: B) Are transformed according to the scale of activity. 20. What is the summary of flow of funds resulting from the sale of assets between one specified country and all other countries over a specified period of time? A) Current Account. B) Capital Account. C) Financial Account. D) Secondary Income. Show Answer Correct Answer: B) Capital Account. ← 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