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术语-小组作业
after-class exercises
1、【单选题】For the MNC, agency costs are typically:
A、non-existent.
B、 larger than agency costs of a small purely domestic firm.
C、smaller than agency costs of a small purely domestic firm.
D、the same as agency costs of a small purely domestic firm.
2、【单选题】The agency costs of an MNC are likely to be lower if it:
A、scatters its subsidiaries across many foreign countries.
B、increases its volume of international business.
C、uses a centralized management style.
D、both:scatters its subsidiaries across many foreign countries.and increases its volume of international business.
3、【单选题】____ are most commonly classified as a direct foreign investment.
A、Foreign acquisitions
B、Purchases of international stocks
C、Licensing agreements
D、Exporting transactions
4、【单选题】If a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time.
A、True
B、False
C、True
D、False
5、【单选题】Saller Co. has a subsidiary in Mexico. The expected cash flows in pesos to be received in the future from this subsidiary have not changed since last month, but the valuation of Saller Co. has declined since last month. What could've caused this decline in value?
A、A weaker Mexican economy
B、Lower Mexican interest rates
C、Depreciation of the Mexican peso
D、Appreciation of the Mexican peso.
6、【单选题】Which of the following is not mentioned in the text as a theory of international business?
A、Theory of Comparative Advantage
B、Imperfect Markets Theory
C、Globalization of Business Theory
D、All of the above are mentioned in the text as theories of international business
7、【单选题】The least risky method by which firms conduct international business is:
A、Franchising.
B、The acquisitions of existing operations.
C、International Trade.
D、The establishment of new subsidiaries.
E、Licensing
8、【单选题】 A decentralized management style, where subsidiary managers make the relevant decisions regarding their subsidiary, may result in better decision making, as subsidiary managers are generally better informed about their subsidiary's operations.
A、 True
B、False
C、 True
D、False
9、【单选题】Livingston Co. has a subsidiary in Korea. The subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Livingston's expected cash flows from domestic business are $100,000 and the Korean subsidiary is expected to generate 100 million Korean won at the end of the year. The expected value of won is $.0012. What are the expected dollar cash flows of Livingston Co.?
A、$100,000
B、$200,000
C、$160,000
D、$60,000
10、【单选题】International trade:
A、is a relatively conservative approach to foreign market penetration.
B、entails minimal risk.
C、does not require large amount of investment.
D、all of the above.
After-chapter Test
1、【单选题】 A high home inflation rate relative to other countries would ____ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would ____ the home country's current account balance, other things equal.
A、increase; increase
B、increase; decrease
C、decrease; decrease
D、decrease; increase
2、【单选题】An increase in the current account deficit will place ____ pressure on the home currency value, other things equal.
A、upward
B、downward
C、no
D、upward or downward (depending on the size of the deficit
3、【单选题】The J curve effect describes:
A、the continuous long-term inverse relationship between a country's current account balance and the country's growth in gross national product.
B、the short-run tendency for a country's balance of trade to deteriorate even while its currency is depreciating.
C、the tendency for exporters to initially reduce the price of goods when their own currency appreciates.
D、the reaction of a country's currency to initially depreciate after the country's inflation rate declines.
4、【单选题】. ____ is (are) income received by investors on foreign investments in financial assets (securities).
A、Portfolio income
B、Direct foreign income
C、Unilateral transfers
D、Factor income
5、【单选题】A weak home currency may not be a perfect solution to correct a balance of trade deficit because:
A、it reduces the prices of imports paid by local companies.
B、it increases the prices of exports by local companies.
C、it prevents international trade transactions from being prearranged.
D、foreign companies may reduce the prices of their products to stay competitive.
6、【单选题】Which of the following will probably not result in an increase in a country's current account balance (assuming everything else constant)?
A、A decrease in the country's rate of inflation
B、A decrease in the country's national income level
C、An increase in government restrictions in the form of tariffs or quotas
D、An appreciation of the country's currency
E、All of the above will result in an increased current account balance.
7、【单选题】Which of the following factors probably does not directly affect a country's capital account and its components?
A、Inflation
B、Interest rates
C、Withholding taxes on foreign income
D、Exchange rate movements
E、All of the above will directly affect a country's capital account.
8、【单选题】Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.
A、Inflation increases in countries X and Y by comparable amounts.
B、Country X's and Country Y's currencies depreciate by the same amount.
C、Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports.
D、The central banks of Country X and Country Y reduce the money supply to increase interest rates.
E、Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports.
9、【单选题】A country's net outflow of funds ____ affect its interest rates, and ____ affect its economic conditions.
A、does; does
B、does; does not
C、does not; does not
D、does not; does
10、【判断题】A weakening of the U.S. dollar with respect to the British pound would likely reduce the U.S. exports to Britain and increase U.S. imports from Britain over time.
A、正确
B、错误
After-chapter Test
1、【单选题】Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid-ask percentage spread is:
A、about 4.44%
B、about 4.26%.
C、about 4.03%.
D、about 4.17%.
2、【单选题】If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000 in 90 days to make payment on imports from Canada, it could:
A、obtain a 90-day forward purchase contract on Canadian dollars.
B、obtain a 90-day forward sale contract on Canadian dollars.
C、purchase Canadian dollars 90 days from now at the spot rate.
D、sell Canadian dollars 90 days from now at the spot rate.
3、【单选题】Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value of the Peruvian Sol in Canadian dollars is:
A、about .3621 Canadian dollars.
B、about .3977 Canadian dollars.
C、about 2.36 Canadian dollars.
D、about 2.51 Canadian dollars.
4、【单选题】A forward contract can be used to lock in the ____ of a specified currency for a future point in time.
A、purchase price
B、sale price
C、A or B
D、none of the above
5、【单选题】LIBOR is:
A、the interest rate commonly charged for loans between banks.
B、the average inflation rate in European countries.
C、the maximum loan rate ceiling on loans in the international money market.
D、the maximum deposit rate ceiling on deposits in the international money market.
E、the maximum interest rate offered on bonds that are issued in London.
6、【单选题】 Eurobonds:
A、are usually issued in bearer form.
B、typically carry several protective covenants.
C、cannot contain call provisions.
D、A and B
7、【单选题】Futures contracts are sold on exchanges and are consequently ____ than forward contracts, which can be ____ to satisfy an MNC's needs.
A、more standardized; standardized
B、more standardized; custom-tailored
C、more custom-tailored; standardized
D、more custom-tailored; custom-tailored
E、less standardized; custom-tailored
8、【单选题】An MNC's short-term financing decisions are satisfied in the ____ market, while its medium debt financing decisions are satisfied in the ____ market.
A、international money; international credit
B、international money; international bond
C、international credit; international money
D、international bond; international credit
E、international money; international stock
9、【单选题】Which of the following is not a possible bid/ask quotation for the Barbados dollar?
A、$.50/$.51
B、$.49/$.50
C、$.52/$.51
D、$.51/$.52
E、All of the above are possible bid/ask quotations.
10、【判断题】The more intense the competition for the traded currency, the larger the bid/ask spread.
A、正确
B、错误
After-chapter Test
1、【单选题】____ is not a factor that causes currency supply and demand schedules to change.
A、Relative inflation rates
B、 Relative interest rates
C、Relative income levels
D、Expectations
E、All of the above are factors that cause currency supply and demand schedules to change.
2、【单选题】An increase in U.S. interest rates relative to German interest rates would likely ____ the U.S. demand for euros and ____ the supply of euros for sale.
A、reduce; increase
B、increase; reduce
C、reduce; reduce
D、increase; increase
3、【单选题】Assume that Swiss investors have francs available to invest in securities, and they initially view U.S. and British interest rates as equally attractive. Now assume that U.S. interest rates increase while British interest rates stay the same. This would likely cause:
A、the Swiss demand for dollars to decrease and the dollar will depreciate against the pound.
B、the Swiss demand for dollars to increase and the dollar will depreciate against the Swiss franc.
C、the Swiss demand for dollars to increase and the dollar will appreciate against the Swiss franc.
D、the Swiss demand for dollars to decrease and the dollar will appreciate against the pound.
4、【单选题】Assume that Swiss investors have francs available to invest in securities, and they initially view U.S. and British interest rates as equally attractive. Now assume that U.S. interest rates increase while British interest rates stay the same. This would likely cause:
A、the Swiss demand for dollars to decrease and the dollar will depreciate against the pound.
B、the Swiss demand for dollars to increase and the dollar will depreciate against the Swiss franc.
C、the Swiss demand for dollars to increase and the dollar will appreciate against the Swiss franc.
D、the Swiss demand for dollars to decrease and the dollar will appreciate against the pound.
5、【单选题】Assume that British corporations begin to purchase more supplies from the U.S. as a result of several labor strikes by British suppliers. This action reflects:
A、an increased demand for British pounds.
B、a decrease in the demand for British pounds.
C、an increase in the supply of British pounds for sale.
D、a decrease in the supply of British pounds for sale.
6、【单选题】Any event that reduces the supply of Swiss francs to be exchanged for U.S. dollars should result in a(n) ____ in the value of the Swiss franc with respect to ____, other things being equal.
A、increase; U.S. dollar
B、increase; nondollar currencies
C、decrease; nondollar currencies
D、decrease; U.S. dollar
7、【单选题】The value of euro was $1.30 last week. During last week the euro depreciated by 5%. What is the value of euro today?
A、$1.365
B、$1.235
C、$1.330
D、$1.30
8、【单选题】Assume that the total value of investment transactions between U.S. and Mexico is minimal. Also assume that total dollar value of trade transactions between these two countries is very large. Now assume that Mexico's inflation has suddenly increased, and Mexican interest rates have suddenly increased. Overall, this would put ____ pressure on the value of Mexican peso. The inflation effect should be ____ pronounced than the interest rate effect.
A、downward; more
B、upward; more
C、downward; less
D、upward; less
9、【单选题】Which of the following interactions will likely have the least effect on the dollar's value? Assume everything else is held constant.
A、A reduction in U.S. inflation accompanied by an increase in real U.S. interest rates
B、A reduction in U.S. inflation accompanied by an increase in nominal U.S. interest rates
C、An increase in U.S. inflation accompanied by an increase in nominal, but not real, U.S. interest rates
D、An increase in Singapore's inflation accompanied by an increase in real U.S. interest rates
E、An increase in Singapore's interest rates accompanied by an increase in U.S. inflation.
10、【判断题】 The markets that have a smaller amount of foreign exchange trading for speculatory purposes than for trade purposes will likely experience more volatility than those where trade flows play a larger role.
A、正确
B、错误
After-chapter Test
1、【单选题】The one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. The forward ____ is ____ percent.
A、discount; 1.9
B、discount; 1.8
C、premium; 1.9
D、premium; 1.8
2、【单选题】The 90-day forward rate for the euro is $1.07, while the current spot rate of the euro is $1.05. What is the annualized forward premium or discount of the euro?
A、1.9 percent discount.
B、1.9 percent premium
C、7.6 percent premium.
D、7.6 percent discount.
3、【单选题】 Thornton, Inc. needs to invest five million Nepalese rupees in its Nepalese subsidiary to support local operations. Thornton would like its subsidiary to repay the rupees in one year. Thornton would like to engage in a swap transaction. Thus, Thornton would:
A、convert the rupees to dollars in the spot market today and convert rupees to dollars in one year at today's forward rate.
B、convert the dollars to rupees in the spot market today and convert dollars to rupees in one year at the prevailing spot rate.
C、convert the dollars to rupees in the spot market today and convert rupees to dollars in one year at today's forward rate.
D、convert the dollars to rupees in the spot market today and convert rupees to dollars in one year at the prevailing spot rate.
4、【单选题】Currency options sold through an options exchange:
A、contain a commitment to the owner, and are standardized.
B、contain a commitment to the owner, and can be tailored to the desire of the owner.
C、contain a right but not a commitment to the owner, and can be tailored to the desire of the owner.
D、contain a right but not a commitment to the owner, and are standardized.
5、【单选题】Forward contracts:
A、contain a commitment to the owner, and are standardized.
B、contain a commitment to the owner, and can be tailored to the desire of the owner.
C、contain a right but not a commitment to the owner, and can be tailored to the desire of the owner.
D、contain a right but not a commitment to the owner, and are standardized.
6、【单选题】If your firm expects the euro to substantially depreciate, it could speculate by ____ euro call options or ____ euros forward in the forward exchange market.
A、selling; selling
B、selling; purchasing
C、purchasing; purchasing
D、purchasing; selling
7、【单选题】When you own ____, there is no obligation on your part; however, when you own ____, there is an obligation on your part.
A、call options; put options
B、futures contracts; call options
C、forward contracts; futures contracts
D、put options; forward contracts
8、【单选题】When the futures price on euros is below the forward rate on euros for the same settlement date, astute investors may attempt to simultaneously ____ euros forward and ____ euro futures.
A、sell; sel
B、buy; sell
C、sell; buy
D、buy; buy
9、【单选题】Frank is an option speculator. He anticipates the Danish kroner to appreciate from its current level of $.19 to $.21. Currently, kroner call options are available with an exercise price of $.18 and a premium of $.02. Should Frank attempt to buy this option? If the future spot rate of the Danish kroner is indeed $.21, what is his profit or loss per unit?
A、no; $0.01.
B、yes; $0.01
C、yes; $0.01
D、yes; $0.03.
10、【单选题】 The purchase of a currency put option would be appropriate for which of the following?
A、Investors who expect to buy a foreign bond in one month.
B、Corporations who expect to buy foreign currency to finance foreign subsidiaries.
C、Corporations who expect to collect on a foreign account receivable in one month.
D、all of the above
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