This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. International Finance is the study of A) Business. B) International Business. C) Trade. D) Commerce. Show Answer Correct Answer: B) International Business. 2. All of the following direct international law EXCEPT which one of these? A) International Court of Justice. B) Permanent Court of Arbitration. C) Committee of International Trade. D) International Criminal Court. Show Answer Correct Answer: C) Committee of International Trade. 3. To hedge the interest rate risk on $ 4 million of Treasury bonds with $ 100, 000 futures contracts, you would need to purchase A) 4 contracts. B) 20 contracts. C) 40 contracts. D) 400 contracts. Show Answer Correct Answer: C) 40 contracts. 4. Canada has 5, 000 labor units and 2, 500 capital units, while Mexico has 500 labor units and 200 capital units. The production of a car requires 200 labor units and 300 capital units. The production of a guitar requires 10 labor units and 12 capital units. According to the Heckscher-Ohlin Theorem: A) Canada will export both cars and guitars to Mexico. B) Canada will import both cars and guitars from Mexico. C) Canada will export cars to Mexico and import guitars from Mexico. D) Canada will export guitars to Mexico and import cars from Mexico. Show Answer Correct Answer: C) Canada will export cars to Mexico and import guitars from Mexico. 5. Assume that Swiss investors are benefiting from covered interest arbitrage due to a high U.S. interest rate. Which of the following forces results from this covered interest arbitrage activity? A) Upward pressure on the Swiss franc's spot rate. B) Upward pressure on the U.S. interest rate. C) Downward pressure on the Swiss interest rate. D) Upward pressure on the Swiss franc's forward rate. Show Answer Correct Answer: D) Upward pressure on the Swiss franc's forward rate. 6. Tax placed on imports to increase their price in thedomestic market A) Dumping. B) Balance of payment. C) Protectionists. D) Tariff. Show Answer Correct Answer: D) Tariff. 7. Goods and services that a country produces and thensells to other countries A) Import. B) Export. C) Comparative advantage. D) Absolute advantage. Show Answer Correct Answer: B) Export. 8. Due to the risks involved in international business, firms should: A) Only consider international business in major countries. B) Maintain international business to no more than 20% of total business. C) Maintain international business to no more than 35% of total business. D) None of these. Show Answer Correct Answer: D) None of these. 9. Selling product abroad cheaper them at home A) Dumping. B) Balance of payments. C) Protectionists. D) Tariff. Show Answer Correct Answer: A) Dumping. 10. Decrease in the exchange rate (S) A) Increase price of foreign exchange and depreciation of domestic currency. B) Decrease in the number of units of domestic currency required to buy a unit of foreign exchange and appreciation of domestic currency. C) Decrease price of foreign exchange and appreciation of domestic currency. D) Increase in the number of units of domestic currency required to sell a unit of foreign exchange and depreication of domestic currency. Show Answer Correct Answer: B) Decrease in the number of units of domestic currency required to buy a unit of foreign exchange and appreciation of domestic currency. 11. What international finance is? A) The proces leads to the growing interpenetration and consolidation of markets and internalization of production, distribution, marketing and acquistion by company global operating strategies. B) Institutions are not active in the sphere of eco-develoopment. C) Is a scientific discipline focused on conducting research and disseminating knowledge regarding various types of connections between the national economy and finances with those of other counties. D) Is a broad term for the use of force or violence against persons or property for the purpose of intimidation, coercion or ransom. Show Answer Correct Answer: C) Is a scientific discipline focused on conducting research and disseminating knowledge regarding various types of connections between the national economy and finances with those of other counties. 12. Start-up businesses usually go through a period of zero revenue:the start-up phase of the business. A) True. B) False. Show Answer Correct Answer: A) True. 13. The valuation of an MNC should decline when an event causes the expected cash flows from foreign subsidiaries to ..... and when the foreign currencies denominating these cash flows are expected to ..... A) Decrease; depreciate. B) (None). C) (None). D) (None). Show Answer Correct Answer: A) Decrease; depreciate. 14. What is the primary objective of the International Finance Corporation (IFC)? 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) Extend loans at low interest rates to poor nations. Show Answer Correct Answer: C) Promote private enterprise within countries. 15. ..... maintains the foreign exchange reserves in India. A) State Bank of India. B) Reserve Bank of India. C) Finance Ministry of India. D) EXIM India. Show Answer Correct Answer: B) Reserve Bank of India. 16. The dfference between the money a country pays to, andreceives from, other nations when it engages ininternational trade A) Free traders. B) Balance of payment. C) Protectionists. D) Office". Show Answer Correct Answer: B) Balance of payment. 17. Interest Rate Parity (IRP) is best defined as A) An arbitrage condition that must hold when international financial markets are in equilibrium. B) When a government brings its domestic interest rate in line with other major financial markets. C) When the central bank of a country brings its domestic interest rate in line with its major trading partners. D) None of the above. Show Answer Correct Answer: A) An arbitrage condition that must hold when international financial markets are in equilibrium. 18. A formal agreement between 2 or more regional countries that removes tariffs between those countries but keeps them for other countries A) Free trade. B) Trade block. C) Exchange block. D) Regional block. Show Answer Correct Answer: B) Trade block. 19. When a currency is determined by supply and demand for a currency relative to other currencies A) Floating Exchange Rate. B) Exchange Rate. C) Foreign Exchange. D) Currency. Show Answer Correct Answer: A) Floating Exchange Rate. 20. Which of the following does not constitute a form of direct foreign investment? A) Franchising. B) International trade. C) Joint ventures. D) Acquisitions of existing operations. E) Establishment of new foreign subsidiaries. Show Answer Correct Answer: B) International trade. ← PreviousNext →Related QuizzesInternational Finance Quiz 1International Finance Quiz 2International 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