Question 1(1 point)

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

Question 1 options:

True or False

Question 2(1 point)

Most companies find it easier to estimate the incremental cash flows for foreign projects than for domestic projects.

Question 2 options:

True or False

Question 3(1 point)

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

Question 3 options:

True or False

Question 4(1 point)

Tokyo is the largest foreign exchange trading center.

Question 4 options:

True or False

Question 5(1 point)

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 5 options:

True or False

Question 6(1 point)

Tamcon Industries has purchased equipment from a Brazilian firm for a total cost of 1,272,500 Brazilian reals (BR). The firm has to pay in 30 days. Citicorp has given the firm a 30-day forward quote of $0.6123/BR. Assume that on the day the payment is due, the spot rate is at $0.6317/BR. How much would Tamcon save by hedging with a forward contract? (Round your final answer to the nearest dollar.)

Question 6 options:

$24,687

$803,838

$31,278

$779,152

Question 7(1 point)

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 7 options:

$56,357.99

$126,214.90

$39,143.76

$63,107.45

Question 8(1 point)

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 8 options:

$1,987,325

$2,531,890

$2,139,735

$2,305,350

Question 9(1 point)

Which of the following statements about the goal of a firm is true?

Question 9 options:

All of these

Stockholder value maximization is the accepted goal for firms in India.

The goal of a Japanese business manager is to increase the wealth and growth of the keiretsu.

Firms in Germany focus on maximizing corporate wealth.

Question 10(1 point)

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

Question 10 options:

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

remove tariffs and quotas on any imports.

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.

Question 11(1 point)

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 11 options:

$84.02

131.25

$205.03

84.02

Question 12(1 point)

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

Question 12 options:

0.5125/$

$1.5637/

115.23/

$0.006900/

Question 13(1 point)

Baljit, Inc. purchased machinery from a Japanese firm and will have to pay 278.45 million in 90 days. The bank quotes a forward rate of 105.46/$ to buy the required yen. What is the cost to Baljit in U.S. dollars? (Round your final answer to the nearest dollar.)

Question 13 options:

$2,936,534

$2,784,500

$2,714,300

$2,640,338

Question 14(1 point)

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

Question 14 options:

London, New York, and Singapore.

London, New York, and Tokyo.

New York, Tokyo, and Zurich.

London, Tokyo, and Zurich.

Question 15(1 point)

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 15 options:

$152

$286

$338

$687

Question 16(1 point)

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 16 options:

Rs.36,7122/$

Rs.44.9025/$

Rs.51.2134/$

Rs.49.9375/$

Question 17(1 point)

The ask quote represents the rate at which

Question 17 options:

the dealer will buy foreign currency from you.

the dealer will buy domestic currency from the exchange.

the dealer will sell domestic currency to you.

the dealer will sell foreign currency to you.

Question 18(1 point)

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

Question 18 options:

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.

All of these

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

Question 19(1 point)

Starling, Corp. purchased some components from a Mexican manufacturer. They have to pay 110 million Mexican Pesos for the goods today. The spot rate today is MP10.3540/$. What is the dollar cost of this payable? (Round your final answer to the nearest dollar.)

Question 19 options:

$10,623,913

$110,000,000

$11,110,235

$1,138,940,000

Question 20(1 point)

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 20 options:

7% premium

5% discount

5% premium

7% discount