This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 21 (18 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following methods of entering international markets is the most complex and requires the most risk? A) Joint venture. B) Licensing. C) Exporting. D) Strategic alliance. Show Answer Correct Answer: A) Joint venture. 2. Assume that an American firm wants to engage in international business without major investment in the foreign country. Which method is least appropriate in this situation? A) International Trade. B) Licensing. C) Franchising. D) Direct foreign investment. Show Answer Correct Answer: D) Direct foreign investment. 3. The one-year forward rate of the British pound is quoted at $ 1.60, and the spot rate of the British pound is quoted at $ 1.63. The forward ..... is ..... percent. A) Discount; 1.9. B) Discount; 1.8. C) Premium; 1.9. D) Premium; 1.8. Show Answer Correct Answer: B) Discount; 1.8. 4. What would be the cost in U.S. dollars for a hotel room in Canada that costs 109 Canadian dollars if each Canadian dollar is worth.73 U.S. dollars? A) $ 66.97. B) $ 79.57. C) $ 109.73. D) $ 149.31. Show Answer Correct Answer: B) $ 79.57. 5. By hedging a portfolio, a bank manager A) Reduces interest rate risk. B) Increases reinvestment risk. C) Increases exchange rate risk. D) Increases the probability of gains. Show Answer Correct Answer: A) Reduces interest rate risk. 6. Assume an investor has USD 2, 000, 000 to invest. Spot rate GBP/USD = 1.2230. 90-day forward rate GBP/USD = 1.2228. The interest rate on 3-month deposit in USD is 1.5% and GBP is 3.4%. If the investor implements CIA for 90 days, the rate of return on CIA activity is? A) 3, 883%. B) 3, 383%. C) 3, 338%. D) -3, 338%. Show Answer Correct Answer: B) 3, 383%. 7. In which theory it is mentioned that, Country's wealth was calculated through "gold and silver holdings of that country" . A) Mercantilism. B) Absolute Advantage. C) Classical. D) Comparative Advantage. Show Answer Correct Answer: A) Mercantilism. 8. Of the following situations, the one that does NOT usually cause an increased interest rate is: A) Political Uncertainty. B) When people are saving more and borrowing less. C) When inflation is increasing. D) When people are saving less and borrowing more. Show Answer Correct Answer: D) When people are saving less and borrowing more. 9. What is the summary of flow of funds due to purchases of goods or services or the provision of income on financial assets? A) Primary Income Payments. B) Financial Account. C) Current Account. D) Capital Account. Show Answer Correct Answer: C) Current Account. 10. Forward 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: B) Specified predetermined price for a specific date in the future. 11. If interest rates on the euro are consistently below U.S. interest rates, then for the international Fisher effect (IFE) to hold: A) The value of the euro would often appreciate against the dollar. B) The value of the euro would often depreciate against the dollar. C) The value of the euro would remain constant most of the time. D) The value of the euro would appreciate in some periods and depreciate in other periods, but on average have a zero rate of appreciation. Show Answer Correct Answer: A) The value of the euro would often appreciate against the dollar. 12. Exchange Rate If one pound sterling is equivalent to 1.37 dollars, how many dollars is 100 pounds sterling? A) 125 dollars. B) 152 dollars. C) 137 dollars. D) 142 dollars. Show Answer Correct Answer: C) 137 dollars. 13. Which are the sides of the crisis? A) Banking Crisis. B) Capital and Trade Imbalance. C) Fiscal Crisis. D) All of the above. Show Answer Correct Answer: D) All of the above. 14. The seller of an option has the A) Right to buy or sell the underlying asset. B) The obligation to buy or sell the underlying asset. C) Ability to reduce transaction risk. D) Right to exchange one payment stream for another. Show Answer Correct Answer: B) The obligation to buy or sell the underlying asset. 15. Currency futures contracts sold on an exchange: A) Contain a commitment to the owner, and are standardised. B) Contain a commitment to the owner, and can be tailored to the desire of the owner. C) Contain a right but not a commitment to the owner and can be tailored to the owner's desire. D) Contain a right but not a commitment to the owner, and are standardised. Show Answer Correct Answer: A) Contain a commitment to the owner, and are standardised. 16. The World Bank was established in 1922. A) True. B) False. C) Do not choose. D) Do not choose. Show Answer Correct Answer: B) False. 17. The commonly accepted goal of the MNC is to: A) Maximize short-term earnings. B) Maximize shareholder wealth. C) Minimize risk. D) A and C. E) Maximize international sales. Show Answer Correct Answer: B) Maximize shareholder wealth. 18. The international monetary system can be defined as the institutional framework within which: A) International payments are made. B) Movement of capital is accommodated. C) Exchange rates among currencies are determined. D) All of the above. Show Answer Correct Answer: D) All of the above. ← PreviousRelated 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