The central bank of each country does operate in the foreign exchange market, buying and selling currencies to smooth out exchange rate fluctuations, but only to a limited extent.

True

False

Which of the following are major sources of international risk?

a.

interest rate risk.

b.

foreign exchange risk.

c.

all of these answers.

d.

stock exchange indices.

An indirect quotation reports the number of units of the home currency per unit of foreign currency.

Select one:

True

False

Exchange rate fluctuations make it difficult to estimate the value in home currency units that overseas operations will produce.

True

False

Which of the following are the reasons for companies go global'?

a.

all of these answers.

b. to seek new technology.

c.

to obtain raw materials

d.

to lower production costs.

e.

to expand their markets.

Which of the following steps that companies can take to to reduce the potential loss from expropriation.

a.

structure operations so that the subsidiary has value only as a part of the integrated corporate system.

b.

all of these answers.

c.

finance the subsidiary with local capital.

d.

obtain insurance against economic losses from expropriation.