16) ________ is associated with cash flows that are already contracted for, compared to ________ which is associated with uncertainty of future cash flows due to changes in currency exchange.

a.

economic exposure; accounting exposure

b.

transaction exposure; operating exposure

c.

operating exposure; accounting exposure

d.

operating exposure; transaction exposure

17) All of the below on forfeiting are true EXCEPT:

a.

The bank-guaranteed promissory notes is sold by the exporter at face value

b.

The quality of merchandises delivered is the responsibility of the exporter

c.

The guaranteeing bank assume the commercial and political risks

d.

At the juncture of transaction, the exporter would receive cash payment unconditionally

18) Given that the net exposed assets of a German subsidiary of a U.S. company is euro750,000 and the exchange rate of euro declined from USD1.30/euro to USD1.20euro, the U.S. company would have a translation:

a.

loss of USD75,000.

b.

gain of USD625,000.

c.

loss of euro576,923.

d.

gain of USD75,000.

19) The exchange rates translation in accounting which results in a gain or loss with the current rate approach is accounted separately in a consolidated:

a.

income statement

b.

cash flow statement

c.

budgeting pro forma

d.

balance sheet 20) Shiller Inc. is a U.S. trading company. It has a USD100,000 before tax earnings in Malaysia. The Malaysian corporate income tax rate is 25% while the U.S. is 35%. The U.S. accounts taxes paid in Malaysia as tax-credit for the company. Therefore, the U.S. corporate tax amount that Shiller Inc. has to pay is

a.

USD10,000.

b.

USD35,000.

c.

USD16,250.

d.

USD26,250.