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2. Answer the following multiple choice question. (Choose the correct answer only ). 1 mark each question. Assume a UK-based subsidiary wants to raise 1,000,000
2. Answer the following multiple choice question. (Choose the correct answer only ). 1 mark each question.
- Assume a UK-based subsidiary wants to raise 1,000,000 by issuing a bond denominated in Pakistani rupees (PKR). The current exchange rate of the rupee is 0.01. Thus, the MNC needs ___________ rupees to obtain the 1,000,000 needed.
1 point
- 10,000,000
- 1,000,000,000
- 100,000
- 100,000,000
- Assume the U.S. dollar is worth 0.55, and the Canadian dollar is worth 0.47. What is the value of the Canadian dollar in U.S. dollars to the nearest cent?
1 point
- $0.85
- $1.71
- $1.17
- $1.54
- $0.89
- Which of the following is the most likely strategy for a UK firm that will be receiving Australian dollars (AUD) in the future and desires to avoid exchange rate risk (assume the firm has no offsetting position in AUD)?
1 point
- purchase a put option on AUD.
- purchase a call option on AUD.
- obtain a forward contract to purchase AUD forward.
- all of the above are appropriate strategies for the scenario described.
- A UK-based MNC has a contract to export products in which it agreed to accept yens. The UK-based MNCs pound cash flows are adversely affected if the
1 point
(a) Yen appreciates
(b) Yen depreciates
(c) Pound depreciates
(d) both a & c
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