This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If, for a $ 1000 premium, you buy a $ 100, 000 call option on bond futures with a strike price of 110, and at the expiration date the price is 114 A) Your profit is $ 4000. B) Your loss is $ 4000. C) Your profit is $ 3000. D) Your loss is $ 3000. Show Answer Correct Answer: C) Your profit is $ 3000. 2. Livingston Co. has a subsidiary in Korea. The subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Livingston's expected cash flows from domestic business are $ 100, 000 and the Korean subsidiary is expected to generate 100 million Korean won at the end of the year. The expected value of won is $ .0012. What are the expected dollar cash flows of Livingston Co.? A) $ 100, 000. B) $ 200, 000. C) $ 160, 000. D) $ 60, 000. Show Answer Correct Answer: C) $ 160, 000. 3. The SSE Composite 50 Index: A) Measures the stock market performance of Chinese blue chip companies (large cap). B) Is traded only on the Shanghai Stock Exchange. C) None of the above answers is correct. D) None of above. Show Answer Correct Answer: A) Measures the stock market performance of Chinese blue chip companies (large cap). 4. Zest Co. has a subsidiary in Mexico. The expected cash flows in pesos to be received in the future from this subsidiary have not changed since last month, but the valuation of Zest Co. has increased since last month. What could have caused this increase in value? A) Appreciation of the Mexican peso. B) (None). C) (None). D) (None). Show Answer Correct Answer: A) Appreciation of the Mexican peso. 5. Covered Interest Rate Parity A) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{S^e}{S}\right)$. B) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{F}{S}\right)$. C) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{S}{S^e}\right)$. D) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{S}{F}\right)$. Show Answer Correct Answer: B) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{F}{S}\right)$. 6. Hedging is mechanism to gain a profit A) True. B) False. Show Answer Correct Answer: B) False. 7. This is the most common form of stocks. The holders have the power to vote in important corporate decisions. A) Treasury. B) Common. C) Preferred. D) Dual class. Show Answer Correct Answer: B) Common. 8. The secondary market: A) Promotes business financing. B) Connects investors with each other. C) Is reserved for stocks only. D) None of above. Show Answer Correct Answer: B) Connects investors with each other. 9. ..... means importing goods from one country and exporting the same to foreign countries. A) Entrepot trade. B) Export Trade. C) Import Trade. D) None of the above. Show Answer Correct Answer: A) Entrepot trade. 10. At Vietcombank, the buying rate is listed as follows:1 USD = 7, 7852 HKD and 1 HKD = 2003.8 VND. So for the bank, the buying rate of 1 USD is? A) 15.599. B) 15.547. C) 16.453. D) 15.762. Show Answer Correct Answer: A) 15.599. 11. The primary purpose of the World Bank is to maintain an orderly system of world trade and exchange rates A) True. B) False. Show Answer Correct Answer: B) False. 12. Bank for International Settlements logo A) . B) . C) . D) . Show Answer Correct Answer: A) . 13. The current spot rate of the British pound is:1.45 USD/GBP. Suppose the spot rate of the pound one year later is:1.52 USD/GBP? A) The USD rose:4.14%. B) The British pound fell:4.14%. C) British pound rose:4.14%. D) British pound increased:3.97%. Show Answer Correct Answer: C) British pound rose:4.14%. 14. What is the primary function of the European Bank for Reconstruction and Development? A) Facilitate cooperation among countries with regard to international transactions. B) Provide loans at low interest rates to poor nations. C) Promote private enterprise within countries. D) Focus on the needs of Europe. Show Answer Correct Answer: D) Focus on the needs of Europe. 15. The most active/important Chinese organized market is A) The Shanghai Stock Exchange. B) The Shenzhen Stock Exchange. C) The Hong Kong Stock Exchange. D) None of above. Show Answer Correct Answer: A) The Shanghai Stock Exchange. 16. U9V-5) When a nation imports more than they export, that nation has a A) Free trade agreement. B) Trade surplus. C) Trade fails. D) Trade free economic system. Show Answer Correct Answer: C) Trade fails. 17. Kalons, Inc. is a U.S.-based MNC (Multinational company) that frequently imports raw materials from Canada. Kalons is typically invoiced for these goods in Canadian dollars and is concerned that the Canadian dollar will appreciate in the near future. Which of the following is not an appropriate hedging technique under these circumstances? A) Purchase Canadian dollars forward. B) Purchase Canadian dollar futures contracts. C) Purchase Canadian dollar put options. D) Purchase Canadian dollar call options. Show Answer Correct Answer: C) Purchase Canadian dollar put options. 18. This records the sale and purchase of goods and services, investment income earned abroad, and other transfers like donations and foreign aid. A) Financial account. B) Current account. C) Money market account. D) Business account. Show Answer Correct Answer: B) Current account. 19. The report that reflects the total value of transactions in terms of trade in goods, services and financial flows is known as: A) Balance of trade. B) Current account. C) Capital account. D) International trade balance. Show Answer Correct Answer: D) International trade balance. 20. At ACB bank, the exchange rate is listed at USD/VND = 1.5247/5362; for the bank means? A) Buy at exchange rate 1 USD = 1, 5247 VND. B) Buy at exchange rate 1 USD = 1, 5362 VND. C) Sold at the exchange rate of 1 USD = 1.5362. D) A &C. Show Answer Correct Answer: D) A &C. ← PreviousNext →Related QuizzesInternational Finance Quiz 1International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 6International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9International Finance Quiz 10International Finance Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books