This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 20 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of these activities is not carried out by the Middle Office in a trading room: A) Operational activity (management of financial transactions after their negotiation). B) Activity of monitoring the execution of transactions against rules and standards. C) Administrative, accounting, settlement-delivery, auditing activities, reporting. D) None of above. Show Answer Correct Answer: C) Administrative, accounting, settlement-delivery, auditing activities, reporting. 2. Financial derivatives include A) Stocks. B) Bonds. C) Forward contracts. D) None of the above. Show Answer Correct Answer: C) Forward contracts. 3. A country's ability to produce a given product withgreater output per unit of input than another country A) Export. B) Import. C) Comparative advantage. D) Absolute advantage. Show Answer Correct Answer: D) Absolute advantage. 4. Risk lover 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: B) Willing to pay a premium for the privilege of bearing risk. 5. If you sold a short contract on financial futures you hope interest rates A) Rise. B) Fall. C) Are stable. D) Fluctuate. Show Answer Correct Answer: A) Rise. 6. International Finance Analyzes the following areas of study: A) Optimum currency area theory. B) Model-Flemish Model. C) Interest Rate Parity. D) All of the Above. Show Answer Correct Answer: D) All of the Above. 7. U9V-2) When a country has the ability to produce a product at a lower opportunity cost than another country. A) Comparative Advantage. B) Favorable Advantage. C) Absolute Advantage. D) Positive Net Export. Show Answer Correct Answer: A) Comparative Advantage. 8. David Ricardo introduced this theory in the year 1817. A) Mercantilism. B) Absolute Advantage. C) Classical. D) Comparative Advantage. Show Answer Correct Answer: B) Absolute Advantage. 9. What is the major objective of the World Trade Organization (WTO)? A) Provide a forum for multilateral trade negotiations and to settle trade disputes. B) Facilitate governance in governments and corporations of countries with market economics. C) Promote cooperation among countries on international monetary issues. D) Provide loans to enhance economic development. Show Answer Correct Answer: A) Provide a forum for multilateral trade negotiations and to settle trade disputes. 10. Angel investors prefer to hold off on providing advice until after they have invested so they can focus on maximizing their returns. A) True. B) False. Show Answer Correct Answer: B) False. 11. Assume that the U.S. inflation rate is higher than the New Zealand inflation rate. This will cause U.S. consumers to ..... their imports from New Zealand and New Zealand consumers to ..... their imports from the United States. According to purchasing power parity (PPP), this will result in a(n) ..... of the New Zealand dollar (NZ$ ). A) Reduce; increase; appreciation. B) Increase; reduce; appreciation. C) Reduce; increase; depreciation. D) Reduce; increase; appreciation. Show Answer Correct Answer: B) Increase; reduce; appreciation. 12. The point below (to the right) of the IRP line describes: A) Possible CIA for foreign investors. B) Possible CIA for domestic investors. C) CIA is not viable for either domestic or foreign investors. D) Interest rate parity exists. Show Answer Correct Answer: B) Possible CIA for domestic investors. 13. Salt was used as money once but would not work well today because: A) It would be difficult to persuade someone to accept salt as money. B) Salt is not durable. C) Salt is not scarce. D) All of these. Show Answer Correct Answer: D) All of these. 14. Which of the following forms of arbitrage takes advantage of cross-rates? A) Local Arbitrage. B) Hedged interest rate arbitrage. C) Triangle Arbitrage. D) Arbitrage interest rate. Show Answer Correct Answer: C) Triangle Arbitrage. 15. With regard to corporate goals, an MNC is mostly concerned with maximizing ....., and a purely domestic firm is mostly concerned with maximizing ..... A) Shareholder wealth; short-term earnings. B) Shareholder wealth; shareholder wealth. C) Short-term earnings; sales volume. D) Short-term earnings; shareholder wealth. Show Answer Correct Answer: B) Shareholder wealth; shareholder wealth. 16. Covered interest rate parity applies whether risk averse or risk neutral A) True. B) False. Show Answer Correct Answer: A) True. 17. If purchasing power parity were to hold even in the short run, then: A) Real exchange rates should tend to decrease over time. B) Quoted nominal exchange rates should be stable over time. C) Real exchange rates should tend to increase over time. D) Real exchange rates should be stable over time. Show Answer Correct Answer: D) Real exchange rates should be stable over time. 18. Risk is calculated through ..... A) Mean. B) Median. C) Standard Deviation. D) Mode. Show Answer Correct Answer: C) Standard Deviation. 19. World Bank logo A) . B) . C) . D) . Show Answer Correct Answer: A) . 20. When a country has favorable trade balances, its currency is usually stable or rising A) True. B) False. Show Answer Correct Answer: A) True. ← 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