21-

If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater than the demand for it, what will happen?

Multiple Choice

The dollar will depreciate against the yen.

The exchange rates will remain the same.

The yen will appreciate against the dollar.

The dollar will appreciate against the yen.

22-

London Luggage is a British multinational company with operations in 120 countries around the world. It is the companys policy to staff all the key positions in foreign operations with managers from Great Britain. What type of staffing policy does the company use?

Multiple Choice

geocentric

eurocentric

ethnocentric

polycentric

23-

Assume that a European nation operates under a fixed exchange rate regime. What would occur if this nation rapidly increased its money supply by printing more currency?

Multiple Choice

It would lead to price deflation in the country.

It would lead to an increase in the worth of the currency.

The prices of imports would become more attractive in the country.

The country's goods would be highly competitive in world markets.

24-

With which statement would a follower of the inefficient market school of thought agree?

Multiple Choice

Forward exchange rates do the best possible job of forecasting future spot exchange rates.

Forward rates reflect all available information about likely future changes in exchange rates.

Companies can optimize their foreign exchange transactions by using forward markets.

Companies would be better off investing in foreign exchange forecasting services.

25-

Prestige Consulting is a large software service provider. The company has the largest market share in the industry. In order to restrain the smaller competitors in the market, the company sells some of its products at very low prices. This is an example of __________ pricing.

Multiple Choice

experience curve

predatory

penetration

multipoint

26-

A U.S.-based company today invests some of its spare cash in a German money market account that will earn 8 percent for two months. Which of the following, if it happens during the next two months, would imply that the company will earn less than 8 percent on its investment?

Multiple Choice

The German euro rises in value against the dollar.

The dollar appreciates against the German euro.

Short-term interest rates in German money markets shoot up.

Interest rates in the United States move down.

27-

Presser Auto Works, a German auto parts manufacturer, has a policy of appointing the best person for the job in its various locations regardless of the candidate's nationality. Which staffing policy best describes Presser Auto Works approach?

Multiple Choice

ethnocentric

geocentric

eurocentric

polycentric

28-

Lead Technologies, based in the United States, decides it wants to collect all of its foreign currency receivables from Singapore early because the currency in Singapore is expected to depreciate. This is an example of

Multiple Choice

a lag strategy.

the efficient market school.

arbitrage.

a lead strategy.

29-

The currency of Lebanon is fixed relative to the U.S. dollar. This means that the exchange rate between the Lebanese pound and other currencies is determined by the dollar exchange rate. This reflects a

Multiple Choice

managed float system.

pegged exchange rate.

floating exchange rate.

fixed exchange rate.

30-

Smith Brothers is exporting for the first time to France and has contracted with Miller Products in Brazil for an initial order valued at $55,000. Smith Brothers wants Miller Products to secure a document from a Brazilian bank that indicates the bank will pay Smith Brothers $50,000 upon presentation of specified documents by the exporter. What document is Smith Brothers asking for?

Multiple Choice

bill of exchange

bill of lading

time draft

letter of credit

31-

Novelty Goods, a United States-based company, is clear-cut in its human resources policy with regard to international expansion. While U.S. nationals staff key positions at its Chicago, Illinois, headquarters, it recruits locals to manage subsidiaries in each country into which Novelty expands. Novelty Goods staffing policy is

Multiple Choice

ethnocentric

polycentric

eurocentric

geocentric

32-

Traders at a stock exchange notice that five traders on the floor seem to be selling more yen and purchasing more euros because of an expected decline in the yen. As a result, all other traders started to do the same. This is an example of the ________ that creates a self-fulfilling prophecy when the yen does decline in value.

Multiple Choice

arbitrage

bandwagon effect

Fisher Effect

decoupling of markets

33-

If Mexico suffered from fundamental disequilibrium, and its government chose not to devalue its currency, a likely consequence would be

Multiple Choice

a persistent trade surplus.

high unemployment.

an increase in exports.

an immediate balance-of-payments equilibrium.

34-

Assume that the yen/dollar exchange rate quoted in Tokyo at 3:00 p.m. is 120 = $1, and the yen/dollar exchange rate quoted in New York at the same time is 123 = $1. A dealer in New York uses dollars to purchase yen and then immediately sells the yen to buy dollars in Tokyo, thereby making a profit. The dealer has engaged in

Multiple Choice

an arbitrage.

a currency swap.

a trade.

a straddle.

35-

A Romanian firm raising capital by selling stock through the Luxembourg Stock Exchange is an example of

Multiple Choice

service exporting.

transnational investment.

transnational financing.

indirect financing.

36-

Edwin accepted a position his firm offered him to move and work in China. The firm provided Edwin and his family information on how to enroll their children in school, where to shop for groceries, and referrals for medical and dental care. What kind of training did they receive?

Multiple Choice

cultural

cognitive

practical

language

37-

A pair of earrings costs 40 in Britain. An identical pair costs $50 in the United States when the exchange rate is 1 = $1.50. Which statement is correct?

Multiple Choice

The United States offers a better deal.

Britain offers a better deal.

A trader can make money by buying the earrings in Britain and selling in the United States at $50.

The deal is the same in both countries.

38-

Pure Water manufactures portable water filtration systems. It wants to market these products in underdeveloped nations where water quality is poor and people lack easy access to these systems. The company knows that to successfully enter a foreign market, the retailers will have to be educated on how these products work. What distribution factor does this represent?

Multiple Choice

channel concentration

channel quality

channel exclusivity

channel length

39-

Namrata is gathering evidence to determine if the firms financial accounts conform to required accounting standards. In what activity is Namrata engaged?

Multiple Choice

auditing

reporting

banking

finance

40-

How is the International Fisher effect best characterized?

Multiple Choice

It has proven to have substantial power at predicting short-run changes in spot exchange rates.

It has not proven to be a good predictor of long-run changes in forward exchange rates.

It has not proven to be a good predictor of short-run changes in spot exchange rates.

It has proven to have substantial power at predicting long-run changes in forward exchange rates.