Question 1(0.2 points)

Saved

The ways that a foreign government can adversely affect the risk of a foreign project include all EXCEPT

Question 1 options:

impose laws related to labor, wages, and prices that are more restrictive than those applicable for domestic firms.

disallow any remittance of funds from the subsidiary to the parent firm for either a limited period of time or the duration of the project.

change tax laws in a way that adversely impacts the firm.

remove tariffs and quotas on any imports.

Question 2(0.2 points)

Saved

Eurodollar and other Eurocurrency bonds have all characteristics identical to similar U.S corporate bonds.

Question 2 options:

TrueFalse

Question 3(0.2 points)

Saved

Royal Dutch Shell is a transnational corporation.

Question 3 options:

TrueFalse

Question 4(0.2 points)

Country risk has no effect on a firm's cash flows.

Question 4 options:

TrueFalse

Question 5(0.2 points)

Saved

Cultural views shape business practices and people's attitudes toward business.

Question 5 options:

TrueFalse

Question 6(0.2 points)

The ways that a foreign government can affect the risk of a foreign project include

Question 6 options:

change tax laws in a way that adversely impacts the firm.

disallow any remittance of funds from the subsidiary to the parent firm for either a limited period of time or the duration of the project.

All of these

impose laws related to labor, wages, and prices that are more restrictive than those applicable for domestic firms.

Question 7(0.2 points)

Saved

Long-term debt sold by a foreign firm to investors in a foreign country and denominated in that country's currency is called a _____ .

Question 7 options:

municipal bond

foreign bond

currency bond

Eurobond

Question 8(0.2 points)

Xecor Pharma just received revenues of A$2,372,300 in Australian dollars (A$). The only quotes management received are A$2.0651/ and $1.8538/. What is the U.S. dollar value of the company's revenues? (Do not round your intermediate calculation. Round your final answer to the nearest dollar.)

Question 8 options:

$2,129,567

$9,081,834

$4,899,037

$4,397,770

Question 9(0.2 points)

Saved

The foreign exchange market is a group of international markets connected electronically where currencies are bought and sold in wholesale amounts.

Question 9 options:

TrueFalse

Question 10(0.2 points)

Long-term debt instruments sold by firms to investors in countries other than the country in whose currency the bonds are denominated are called _____.

Question 10 options:

foreign bonds

Samurai bonds

currency bonds

Eurobonds

Question 11(0.2 points)

The decision to accept international projects with a positive NPV increases the value of a firm, and it should be consistent with maximizing stockholder wealth.

Question 11 options:

TrueFalse

Question 12(0.2 points)

English is the language for international business, but not the world's social language.

Question 12 options:

TrueFalse

Question 13(0.2 points)

A Eurodollar is defined as a U.S. dollar deposited in a bank outside the United States.

Question 13 options:

TrueFalse

Question 14(0.2 points)

Carrington Industries sold equipment to a Mexican firm. Payment of 41,275,000 pesos will be due in 30 days. Carrington has the option of selling the pesos at a 30-day forward rate of $0.09739/peso. If it waits 30 days to sell the pesos, the expected spot rate is $0.09596/peso. How much additional dollar revenue will Carrington get by selling forward the pesos? (Round your final answer to the nearest dollar.)

Question 14 options:

$83,838

$31,278

$59,023

$24,687

Question 15(0.2 points)

Which of the following is an indirect quote from an American perspective?

Question 15 options:

$0.006900/

0.5125/$

115.23/

$1.5637/

Question 16(0.2 points)

A foreign exchange dealer is willing to buy the New Zealand dollar (NZ$) at $0.7621/NZ$ and will sell it at a rate of $0.7714/NZ$. What is the bid-ask spread on the Danish krone? (Round your final percentage answer to two decimal place places.)

Question 16 options:

0.26%

1.21%

2.13%

0.96%

Question 17(0.2 points)

Integration of the financial system globally is a result of deregulation of foreign exchange markets, money and capital markets, and banking systems.

Question 17 options:

TrueFalse

Question 18(0.2 points)

English is the world's social language.

Question 18 options:

TrueFalse

Question 19(0.2 points)

The European manager's goal is to earn as much wealth as possible for a firm while considering the overall welfare of both the stockholders and stakeholders.

Question 19 options:

TrueFalse

Question 20(0.2 points)

Suppose a Tata Nano car is priced at Rs.100,000 in New Delhi and $3,129 in New York. In which place is the car more expensive if the spot rate is $0.0242/Rs.?

Question 20 options:

In New Delhi

In New York

It cannot be determined.

It is same in both places.

Question 21(0.2 points)

A local bank has requested foreign exchange quotes for the Swedish krona from Citibank. Citibank quotes a bid rate of $0.1652/SK and an ask rate of $0.1667/SK. What is the bid-ask spread? (Round your final percentage answer to one decimal place.)

Question 21 options:

0.65%

1.2%

2.1%

0.9%

Question 22(0.2 points)

Evidence of globalization include

Question 22 options:

the financial system has also become highly integrated.

goods and services are produced around the world.

All of these

consumers in many countries buy goods that are purchased from a number of countries, other than just their own.

Question 23(0.2 points)

To convert a project's future cash flows into another currency, we need to use today's spot exchange rates.

Question 23 options:

TrueFalse

Question 24(0.2 points)

The bid quote represents the rate at which

Question 24 options:

the dealer will buy domestic currency from you.

the dealer will sell foreign currency to you.

the dealer will sell domestic currency to the exchange.

the dealer will buy foreign currency from you.

Question 25(0.2 points)

When a U.S. bank in Chicago gives a quote of 0.5089/$, it is a direct quote.

Question 25 options:

TrueFalse

Question 26(0.2 points)

Dresdner Bank has offered the following exchange rate quotes on Indian rupees (Rs) Rs.83.7612/ and $1.8654/. What is the cross rate between the Indian rupees and the U.S. dollar?(Round your final answer to four decimal places)

Question 26 options:

Rs.51.2134/$

Rs.49.9375/$

Rs.36,7122/$

Rs.44.9025/$

Question 27(0.2 points)

To convert a project's future cash flows into another currency, we need to come up with projected or forecast exchange rates.

Question 27 options:

TrueFalse

Question 28(0.2 points)

Differences in legal systems and tax codes have no impact on the way firms operate in foreign countries.

Question 28 options:

TrueFalse

Question 29(0.2 points)

Which of the following statements about Eurobonds is NOT true?

Question 29 options:

Eurobonds are bonds that have to be registered.

Eurobonds also pay interest annually.

Eurobonds are bearer bonds.

Multinational firms can use Eurobonds to finance international or domestic projects.

Question 30(0.2 points)

Kapona Industries has purchased equipment from a Korean firm for a total cost of 11,500,000 Korean won. The firm has to pay in 90 days. J. P. Morgan has given the firm a 90-day forward quote of $0.0009791/won. Assume that on the day the payment is due, the spot rate is at $0.001004/ won. How much would Kapona save by hedging with a forward contract? (Round your final answer to the nearest dollar.)

Question 30 options:

$687

$286

$152

$338

Question 31(0.2 points)

A European quote is the same as

Question 31 options:

a cross quote.

an American quote.

a bidding quote.

an indirect quote.

Question 32(0.2 points)

Celio, Inc. sold equipment to a French firm and will receive 1,249,425 in 30 days. If the company entered a forward contract to sell the euros at the 30-day forward rate of $1.5512/, what is the dollar revenue received? (Round your final answer to the nearest dollar.)

Question 32 options:

$1,938,108

$805,457

$1,312,224

$1,249,425

Question 33(0.2 points)

Banco Herrero wants to make a bid-ask spread of 0.55 percent on its foreign exchange transactions. If the ask rate on the Mexican peso (MP) is MP10.4192/$, what does the bid rate have to be? (Do not round your intermediate calculation. Round your final answer to four decimal places.)

Question 33 options:

MP10.4192/$

MP10.4249/$

MP10.3619/$

MP10.2165/$

Question 34(0.2 points)

Trident Corp. recently purchased machinery parts worth 23.5 million Mexican Pesos (MP). Management needs to find out the U.S. dollar cost of the payables. It has access to two quotes for Canadian dollars (C$): C$1.0774/$ and C$0.0981/MP. What will it cost Trident to purchase 23.5 million Mexican pesos? (Do not round your intermediate calculations. Round your final answer to the nearest dollar.)

Question 34 options:

$2,305,350

$1,987,325

$2,139,735

$2,531,890

Question 35(0.2 points)

Country risk should be incorporated into the international capital budgeting analysis by

Question 35 options:

including the country risk premium to sunk costs.

increasing cash flow estimates from the project.

None of these

adjusting the firm's discount rate for the additional risk.

Question 36(0.2 points)

Japanese managers focus on maximizing market share rather than stockholder wealth.

Question 36 options:

TrueFalse

Question 37(0.2 points)

The Euromarkets are

Question 37 options:

None of these

vast, regulated money and capital markets with major financial centers in the United Kingdom.

vast, largely unregulated money and capital markets existing in Tokyo, Hong Kong, and Singapore.

vast, regulated money and capital markets with major financial centers in the euro zone.

Question 38(0.2 points)

European firms focus on maximizing market share rather than stockholder wealth.

Question 38 options:

TrueFalse

Question 39(0.2 points)

The Eurocurrency market is the

Question 39 options:

long-term portion of the Euromarket.

medium-term portion of the Euromarket.

None of these

short-term portion of the Euromarket.

Question 40(0.2 points)

Venkat Ram purchased a pair of dress shoes in Italy for 131.25. If the spot exchange rate is $1.5621/, what is the dollar cost of the shoes? (Round your final answer to two decimal places.)

Question 40 options:

131.25

84.02

$205.03

$84.02

Question 41(0.2 points)

Long-term loans of a Eurocurrency made to multinational corporations and governments of poor credit quality are called Eurocredits.

Question 41 options:

TrueFalse

Question 42(0.2 points)

State Bank of India has offered a spot rate quote on Indian rupees (Rs.) of Rs. 42.47/$. The Indian rupee is quoted at a 30-day forward discount of 7.65 percent against the dollar. What is the 30-day forward quote?

Question 42 options:

Rs.42.7407/$

Rs.43.5622/$

Rs.41.5687/$

Rs.45.1226/$

Question 43(0.2 points)

The bid quote is the rate at which the dealer will sell foreign currency.

Question 43 options:

TrueFalse

Question 44(0.2 points)

John Travers is planning a holiday to Thailand but is concerned that the U.S. dollar will decline in value before he makes his trip. His travel agent has planned a trip for him for a total cost of 41,250 Thai baht. John plans to purchase the bahts forward and is given a dollar estimate of $1,247.17 based on the 30-day forward quote. What is the forward rate?

Question 44 options:

$1.2471/THB

THB41.2500/$

THB33.0749/$

$0.0242/THB

Question 45(0.2 points)

Which of the following statements about multinational firms is NOT true?

Question 45 options:

A multinational corporation is a business firm that operates in more than one country but is headquartered or based in its home country.

Multinational corporations may purchase raw materials from one country, obtain financing from a capital market in another country, and produce finished goods with labor and capital equipment from a third country.

Multinational corporations are owned by domestic stockholders only.

All of these

Question 46(0.2 points)

Bank of America quoted the 180-day forward rate on the Japanese yen at $0.009702/. The spot rate was quoted at $0.009466/. What is the forward premium or discount on the Japanese yen? (Round your final answer to the nearest percentage.)

Question 46 options:

7% discount

5% discount

5% premium

7% premium

Question 47(0.2 points)

Factors that can cause international business transactions to differ from domestic deals include all EXCEPT

Question 47 options:

exchange rate risk, legal systems, and country risk.

Time value of money, expected returns procedures, and size of market.

economic systems, cultural factors, and country risk

legal systems, cultural factors, and economic systems.

Question 48(0.2 points)

Which of the following statements about Eurocredits is true?

Question 48 options:

Eurocredits are denominated in all major Eurocurrencies, although the dollar is the overwhelming favorite.

All of these

Eurocredits are short- to medium-term loans made to multinational corporations and governments of medium to high credit quality.

The international banking system gathers funds from businesses and governments in the Eurocurrency market and then allocates funds to banks that have the most profitable lending opportunities.

Question 49(0.2 points)

Zylex Corporation's German unit is looking to borrow 4.5 million from Deutsche Bank. Deutsche Bank quotes a rate of three-month LIBOR plus 0.5 percent for the 90-day loan. Currently, the three-month LIBOR is 4.175 percent. If the exchange rate on the payoff date is 0.8334/$, what is the dollar cost of the loan? (Round your final answer to two decimal places.)

Question 49 options:

$39,143.76

$56,357.99

$63,107.45

$126,214.90

Question 50(0.2 points)

In 2010, the three largest foreign exchange markets based on daily volume are

Question 50 options:

London, New York, and Singapore.

New York, Tokyo, and Zurich.

London, Tokyo, and Zurich.

London, New York, and Tokyo.