Int Fin

warning Midterm 1 Questions 1. Which of the come throughing does non constitute a course of instruction of leave world-wide enthronisation? a. Franchising b. planetary make do c. Joint ventures d. Acquisitions of lively trading operations e. psychiatric hospital of new strange subsidiaries 2. Which of the undermentioned theories identifies specialty as a effort for outside(a) business? a. theory of comparative degree advantage. b. decrepit markets theory. c. product cycle theory. d. none of the preceding(prenominal) 3. Agency be go nearly by multinational corporations (MNCs) whitethorn be large than those faced by stringently municipal rigids because a.Monitoring of managers located in foreign countries is much difficult. b. Foreign subsidiary managers elevated in different cultures may not follow uniform goals. c. MNCs argon comparatively large. d. all in all of the to a higher place e. A and B entirely 4. Which of the sideline industries would most apparent add advantage of lower costs in some less essential foreign countries? a. assembly line production. b. specialise victor services. c. nuclear missile provision. d. planning for more(prenominal) sophisticated computer technology. 5. The uniting Ameri deal Free Trade pact (NAFTA) change magnitude restrictions on a. rade betwixt Canada and Mexico. b. craftiness between Canada and the U. S. c. civilise foreign investment in Mexico by U. S. firms. d. none of the preceding(prenominal). 6. Which of the undermentioned is mentioned in the text as a realistic means by which the g everyplacenment may cartel to improve its offset of backup position (increase its exports or discredit its imports). a. It could attempt to reduce its home species look on. b. The organization could lead firms to engage in outsourcing. c. The regime could collect that its local firms pursue outsourcing. d. every last(predicate) of the higher up are mentioned. . If a countrys p residency imposes a tariff on merchandise goods, that countrys catamenia account balance leave behind probably ____ (assuming no retaliation by other(a) presidential terms). a. decrease b. increase c. watch unswayed d. each A or C are feasible 8. wear upon that a banks bid compute on Swiss francs is $. 45 and its ask reckon is $. 47. Its bid-ask destiny spread is a. near 4. 44%. b. about 4. 26%. c. about 4. 03%. d. about 4. 17%. 9. If a U. S. firm desires to fend off the seek from supersede invest fluctuations, and it is receiving 100,000 in 90 geezerhood, it could a. btain a 90-day send bribe contract on euros. b. obtain a 90-day send sale contract on euros. c. barter for euros 90 years from this instant at the stake gait. d. sell euros 90 days from now at the position array. 10. LIBOR is a. the raise sum up comm merely charged for imparts between banks. b. the average ostentatiousness regulate in European countries. c. the maximum loan rate ceil ing on loans in the pla makeary money market. d. the maximum accommo season rate ceiling on deposits in the international money market. e. the maximum stake rate offered on bonds that are issued in London. 11. Eurobonds a. an be issued only by European firms. b. can be sold only to European investors. c. A and B d. none of the above 12. A Japanese ache is expenditure $. 0080, and a Fijian horse mark (F$) is expenditure $. 5900. What is the jimmy of the yen in Fijian sawbuck bills (i. e. , how mevery Fijian long horses do you accept to buy a yen)? a. 73. 75. b. 125. c. 1. 69. d. 0. 014. e. none of the above 13. A acknowledgment representing the value of a foreign property in dollar bills is referred to as a(n) ____ quotation a quotation representing the event of units of a foreign currency per dollar is referred to as a(n) ____ quotation. . direct substantiative b. confirmative direct c. direct direct d. mediate indirect e. cannot be answered without more teachin g 14. The value of the Australian dollar (A$) right away is $0. 73. Yesterday, the value of the Australian dollar was $0. 69. The Australian dollar ____ by ____%. a. depreciated 5. 80 b. depreciated 4. 00 c. send wordd 5. 80 d. appreciated 4. 00 15. Baylor slang believes the bleak Zealand dollar ordain appreciate all over the next five days from $. 48 to $. 50. The pursual annual pursuance order apply Currency Dollars virgin Zealand dollar (NZ$) Lending Rate 7. 10% . 80% Borrowing Rate 7. 50% 7. 25% Baylor Bank has the capacity to follow every NZ$10 million or $5 million. If Baylor Banks forecast is correct, what will its dollar dough be from speculation over the five-day stop (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? a. $521,325. b. $500,520. c. $104,262. d. $413,419. e. $208,044. 16. If puffiness increases well in Australia while U. S. inflation ashes unchanged, this is expected to place ____ tweet on the val ue of the Australian dollar with treasure to the U. S. ollar. a. upwards b. downward c. either upward or downward (depending on the floor of the increase in Australian inflation) d. none of the above there will be no impact 17. The annual send on rate of the British perplex is quoted at $1. 60, and the speck rate of the British ticktack is quoted at $1. 63. The forward ____ is ____ percent. a. usher out 1. 9 b. discount 1. 8 c. aid 1. 9 d. agiotage 1. 8 18. If your firm expects the euro to considerably depreciate, it could speculate by ____ euro recollect elections or ____ euros forward in the forward exchange market. a. change exchange . selling buying c. purchasing purchasing d. purchasing selling 19. pay that a piston purchases a put option on British puntings (with a strike equipment casualty of $1. 50) for $. 05 per unit. A pound sign option represents 31,250 units. Assume that at the epoch of the purchase, the spot rate of the pound is $1. 51 and continua lly rises to $1. 62 by the expiration date. The highest net avail possible for the speculator ground on the teaching above is a. $1,562. 50. b. ?$1,562. 50. c. ?$1,250. 00. d. ?$625. 00. 20. You purchase a cry out option on pounds for a support of $. 3 per unit, with an exercise price of $1. 64 the option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is $1. 65, your net profit per unit is a. ?$. 03. b. ?$. 02. c. ?$. 01. d. $. 02. e. none of the above 21. A U. S. corporation has purchased currency roar options to hedge a 70,000 pound payable. The premium is $. 02 and the exercise price of the option is $. 50. If the spot rate at the time of maturity date is $. 65, what is the total amount of money remunerative by the corporation if it acts rationally? a. $33,600. b. $46,900. c. $44,100. d. $36,400. 22.Which of the following is not true regarding the Mexican peso crisis? a. Mexico promote firms and consumers to buy an ex cessive amount of imports because the peso was stronger than it should have been. b. Many speculators based in the U. S. speculated on the potential twilight in the peso by drop their specie in Mexico. c. In declination of 1994, the of import bank of Mexico allowed the peso to ice-cream soda freely. d. The central bank of Mexico increased engage rank after the peso declined in value in order to disallow investors from withdrawing their investments in Mexicos debt securities. e. All of the above are true.Int caudal finSample Midterm 1 Questions 1. 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 2. Which of the following theories identifies specialization as a reason for international business? a. theory of comparative advantage. b. imperfect markets theory. c. product cycle theory. d. none of the above 3 . Agency costs faced by multinational corporations (MNCs) may be larger than those faced by purely domestic firms because a.Monitoring of managers located in foreign countries is more difficult. b. Foreign subsidiary managers raised in different cultures may not follow uniform goals. c. MNCs are relatively large. d. All of the above e. A and B only 4. Which of the following industries would most likely take advantage of lower costs in some less developed foreign countries? a. assembly line production. b. specialized professional services. c. nuclear missile planning. d. planning for more sophisticated computer technology. 5. The North American Free Trade Agreement (NAFTA) increased restrictions on a. rade between Canada and Mexico. b. trade between Canada and the U. S. c. direct foreign investment in Mexico by U. S. firms. d. none of the above. 6. Which of the following is mentioned in the text as a possible means by which the government may attempt to improve its balance of trade p osition (increase its exports or reduce its imports). a. It could attempt to reduce its home currencys value. b. The government could require firms to engage in outsourcing. c. The government could require that its local firms pursue outsourcing. d. All of the above are mentioned. . If a countrys government imposes a tariff on imported goods, that countrys current account balance will likely ____ (assuming no retaliation by other governments). a. decrease b. increase c. remain unaffected d. either A or C are possible 8. Assume that a banks bid rate on Swiss francs is $. 45 and its ask rate is $. 47. Its bid-ask percentage spread is a. about 4. 44%. b. about 4. 26%. c. about 4. 03%. d. about 4. 17%. 9. If a U. S. firm desires to avoid the risk from exchange rate fluctuations, and it is receiving 100,000 in 90 days, it could a. btain a 90-day forward purchase contract on euros. b. obtain a 90-day forward sale contract on euros. c. purchase euros 90 days from now at the spot rate. d. s ell euros 90 days from now at the spot rate. 10. LIBOR is a. the interest rate commonly charged for loans between banks. b. the average inflation rate in European countries. c. the maximum loan rate ceiling on loans in the international money market. d. the maximum deposit rate ceiling on deposits in the international money market. e. the maximum interest rate offered on bonds that are issued in London. 11. Eurobonds a. an be issued only by European firms. b. can be sold only to European investors. c. A and B d. none of the above 12. A Japanese yen is worth $. 0080, and a Fijian dollar (F$) is worth $. 5900. What is the value of the yen in Fijian dollars (i. e. , how many Fijian dollars do you need to buy a yen)? a. 73. 75. b. 125. c. 1. 69. d. 0. 014. e. none of the above 13. A quotation representing the value of a foreign currency in dollars is referred to as a(n) ____ quotation a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) __ __ quotation. . direct indirect b. indirect direct c. direct direct d. indirect indirect e. cannot be answered without more information 14. The value of the Australian dollar (A$) today is $0. 73. Yesterday, the value of the Australian dollar was $0. 69. The Australian dollar ____ by ____%. a. depreciated 5. 80 b. depreciated 4. 00 c. appreciated 5. 80 d. appreciated 4. 00 15. Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $. 48 to $. 50. The following annual interest rates apply Currency Dollars New Zealand dollar (NZ$) Lending Rate 7. 10% . 80% Borrowing Rate 7. 50% 7. 25% Baylor Bank has the capacity to borrow either NZ$10 million or $5 million. If Baylor Banks forecast is correct, what will its dollar profit be from speculation over the five-day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? a. $521,325. b. $500,520. c. $104,262. d. $413,419. e. $208,044. 16. If inflation increa ses substantially in Australia while U. S. inflation remains unchanged, this is expected to place ____ pressure on the value of the Australian dollar with respect to the U. S. ollar. a. upward b. downward c. either upward or downward (depending on the degree of the increase in Australian inflation) d. none of the above there will be no impact 17. 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 18. If your firm expects the euro to substantially depreciate, it could speculate by ____ euro call options or ____ euros forward in the forward exchange market. a. selling selling . selling purchasing c. purchasing purchasing d. purchasing selling 19. Assume that a speculator purchases a put option on British pounds (with a strike price of $1. 50) for $. 05 per unit. A pound option represents 31,250 units. Assume th at at the time of the purchase, the spot rate of the pound is $1. 51 and continually rises to $1. 62 by the expiration date. The highest net profit possible for the speculator based on the information above is a. $1,562. 50. b. ?$1,562. 50. c. ?$1,250. 00. d. ?$625. 00. 20. You purchase a call option on pounds for a premium of $. 3 per unit, with an exercise price of $1. 64 the option will not be exercised until the expiration date, if at all. If the spot rate on the expiration date is $1. 65, your net profit per unit is a. ?$. 03. b. ?$. 02. c. ?$. 01. d. $. 02. e. none of the above 21. A U. S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $. 02 and the exercise price of the option is $. 50. If the spot rate at the time of maturity is $. 65, what is the total amount paid by the corporation if it acts rationally? a. $33,600. b. $46,900. c. $44,100. d. $36,400. 22.Which of the following is not true regarding the Mexican peso crisis? a . Mexico encouraged firms and consumers to buy an excessive amount of imports because the peso was stronger than it should have been. b. Many speculators based in the U. S. speculated on the potential decline in the peso by investing their funds in Mexico. c. In December of 1994, the central bank of Mexico allowed the peso to float freely. d. The central bank of Mexico increased interest rates after the peso declined in value in order to prevent investors from withdrawing their investments in Mexicos debt securities. e. All of the above are true.