This quiz works best with JavaScript enabled. Home > International Finance > International Finance – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books International Finance Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Covered interest arbitrage (CIA) activities will result in A) Restoring equilibrium quite quickly. B) An unstable international financial market. C) A disintermediation. D) No effect on the market. Show Answer Correct Answer: A) Restoring equilibrium quite quickly. 2. What does the listed price indicate? A) How many currencies do you have to get 1 USD. B) How much is 1 unit of foreign currency worth in USD. C) How many units of foreign currency are needed to get 1 unit of local currency. D) How many units of local currency do you need to exchange for 1 unit of foreign currency. Show Answer Correct Answer: C) How many units of foreign currency are needed to get 1 unit of local currency. 3. THE CONFERENCE WHICH GIVE SHAPE TO IMF IS NAMES AS A) Bretton Woods Conference. B) Vretton Woods Conference. C) Bretton Hoods Conference. D) Vretton Hoods Conference. Show Answer Correct Answer: A) Bretton Woods Conference. 4. The least risky method by which firms conduct international business is: A) Franchising. B) The acquisitions of existing operations. C) International Trade. D) The establishment of new subsidiaries. E) Licensing. Show Answer Correct Answer: C) International Trade. 5. Tax placed on imported goods that will generate revenue without prohibiting imports A) The trade fails. B) Quota. C) Balance of payments. D) Revenue tariff. Show Answer Correct Answer: D) Revenue tariff. 6. International Finance discusses the issues related with ..... interactions of at least two or more countries. A) MONETARY. B) LEGAL. Show Answer Correct Answer: A) MONETARY. 7. Transaction banks using USD, listing US prices (indirect listing) means: A) Using USD as listing currency. B) Using the British pound as the quote currency. C) Using the USD as a quote currency. D) Get a foreign currency quote. Show Answer Correct Answer: A) Using USD as listing currency. 8. Forward contracts: A) A) contain a commitment to the owner, and are standardised. B) B contain a commitment to the owner, and can be tailored to the desire of the owner. C) C) contain a right but not a commitment to the owner, can be tailored to the desire of the owner. D) D) contain a right but not a commitment to the owner, and are standardised. Show Answer Correct Answer: B) B contain a commitment to the owner, and can be tailored to the desire of the owner. 9. If a firm is due to be paid in deutsche marks in two months, to hedge against exchange rate risk the firm should A) Sell foreign exchange futures short. B) Buy foreign exchange futures long. C) Stay out of the exchange futures market. D) None of the above. Show Answer Correct Answer: A) Sell foreign exchange futures short. 10. Fixed exchange rate regime A) There are no forex reserve changes. B) Can change as a result of changes in the domestic credit. C) Can change as a result of changes in the forex reserves. D) Can change as a result of changes in the forex reserves or domestic credit or both. Show Answer Correct Answer: D) Can change as a result of changes in the forex reserves or domestic credit or both. 11. International organization that settles trade disputes and organizes trade negotiations A) United Nations (UN). B) European Union (EU). C) World Trade Organization (WTO). D) North America Free Trade Agreement (NAFTA). Show Answer Correct Answer: C) World Trade Organization (WTO). 12. Such stocks are issued for a single company. A) Treasury. B) Common. C) Preferred. D) Dual class. Show Answer Correct Answer: D) Dual class. 13. Goods and services that a country produces and then sells to other countries A) Exports. B) Imports. C) Comparative advantage. D) Absolute advantage. Show Answer Correct Answer: A) Exports. 14. According to the international Fisher effect (IFE): A) The nominal rate of return on a foreign investment should be equal to the nominal rate of return on the domestic investment. B) The exchange rate-adjusted rate of return on a foreign investment should be equal to the interest rate on a local money market investment. C) The percentage change in the foreign spot exchange rate will be positive if the foreign interest rate is higher than the local interest rate. D) The percentage change in the foreign spot exchange rate will be negative if the foreign interest rate is lower than the local interest rate. Show Answer Correct Answer: B) The exchange rate-adjusted rate of return on a foreign investment should be equal to the interest rate on a local money market investment. 15. SKLJCJDKSHFDS A) DKFJSDK. B) DKFJKDJF. C) KDJFJKD. D) KJFKJDHF. Show Answer Correct Answer: C) KDJFJKD. 16. If the interest rate in the United Kingdom is 9% and the interest rate in the U.S is 5% approximate premium on the British pound forward rate should 3%? A) True. B) False. Show Answer Correct Answer: B) False. 17. The current interest rate on a Euro Yen loan is 6%/year (annual compound interest) and the interest rate on a Euro USD loan is 8.5%/year. What is the premium or discount of a 5-year European yen forward contract? A) Compensation 4.17%. B) 18.46% discount. C) 11.00% discount. D) Compensation 12.36%. Show Answer Correct Answer: C) 11.00% discount. 18. Uncovered 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: A) $\left(1+r\right)=\left(1+r^{\cdot}\right)\left(\frac{S^e}{S}\right)$. 19. Assume you are holding Treasury securities and have sold futures to hedge against interest rate risk. If interest rates fall A) The increase in the value of the securities equals the decrease in the value of the futures contracts. B) The decrease in the value of the securities equals the increase in the value of the futures contracts. C) Both the securities and the futures contracts increase in value. D) Both the securities and the futures contracts decrease in value. Show Answer Correct Answer: A) The increase in the value of the securities equals the decrease in the value of the futures contracts. 20. How many types of international arbitrage are there? A) 1. B) 2. C) 3. D) 4. Show Answer Correct Answer: C) 3. ← PreviousNext →Related QuizzesInternational Finance Quiz 1International Finance Quiz 2International Finance Quiz 3International Finance Quiz 4International Finance Quiz 5International Finance Quiz 7International Finance Quiz 8International Finance Quiz 9International Finance Quiz 10International Finance Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books