Question 4

1. Griffith Ltd. has a subsidiary in France. The expected cash flows in euros to be received in the future from this subsidiary have not changed since last month, but the valuation of Griffith Ltd. has declined since last month. What could have caused this decline in value?

   		weakening of the Germany's economy
   		decline in French interest rates
   		drop in the value of euro
   		appreciation of the euro

Question 7

1. A Japanese yen is worth $.009, and a Fijian dollar (F$) is worth $.6000. What is the value of the Fijian dollars in yen (i.e., how many yen do you need to buy a Fijian dollars)?

   		73.75
   		71.2
   		0.015
   		66.67

Question 9

1. Assume that a bank's bid rate on Japanese yen is $0.0131 and its ask rate is $0.0134. Its bid/ask percentage spread is:

   		about 2.24%.
   		about 1.85%.
   		about 2.10%.
   		about 2.29%.

Question 12

1. The value of yen is most likely to strengthen against the dollar if the U.S. inflation rate relative to Japan declines. Assume everything else is held constant.

   		True
   		False

Question 13

1. Euro is worth JPY120 today. The value of euro was JPY115 yesterday. The euro ____ by ____ percent.

   		depreciated; 5.80
   		depreciated; 4.00
   		appreciated; 4.30
   		appreciated; 4.00

Question 14

1. A purely domestic firm would never be affected by exchange rate fluctuations.

   		True
   		False