question 16

When evaluating capital budgeting projects, which of the following would NOT necessarily be an indicator of an acceptable project?

Select one:

a. All of the other answers are correct indicators.

b. an IRR > 0

c. an NPV > 0

d. an IRR > the project's required rate of return

Question 17

The primary motive of foreign exchange activities by most central banks is profit.

Select one:

True

False

Question 18

Which of the following statements is NOT true regarding MNEs when compared to purely domestic firms?

Select one:

a. MNEs have greater costs of asymmetric information.

b. MNEs have higher agency costs.

c. MNEs tend to rely more on short and intermediate term debt.

d. MNEs have greater foreign exchange risk.

Question 19

A ________ is any restriction that limits or alters the rate or direction of capital movement into or out of a country.

Select one:

a. balance of trade deficit

b. capital budget

c. balance of trade surplus

d. capital control

Question 20

Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true?

Select one:

a. Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies.

b. Fixed rates provide stability in international prices for the conduct of trade.

c. Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate.

d. Stable prices aid in the growth of international trade and lessen exchange rate risks for businesses.