1: Suppose that an MNC wishes to purchase a foreign exchange derivative contract to hedge against future payments but also desires the flexibility to not use the contract if it so chooses.

Which of the following contracts will the MNC most likely choose?

Currency Futures Contracts

Forward Contracts

Currency Options Contracts

2: True or False: Short-term loans of six months or less, extended by banks to MNCs in Europe, are called eurocredit loans.

False

True

3:

An MNC has an incentive to invest short-term funds in a foreign currency if investments denominated in the foreign currency have a lower / higher interest rate than investments denominated in the home currency of the MNC.

True or False: If a currencys LIBOR rate rises, the money market interest rates denominated in that currency fall.

True

False