[removed]find it more difficult to estimate the incremental cash flows for foreign projects [removed] have to deal with foreign exchange rate risk on international capital investments. [removed]must incorporate a country risk premium when evaluating foreign business activities. [removed] All of the above. |
[removed]an American quote. [removed]an indirect quote. [removed]a direct quote. [removed]a cross quote. |
[removed] Multinational firms can use Eurobonds to finance international or domestic projects. [removed] Eurobonds are bearer bonds and do not have to be registered. [removed] Eurobonds are bonds that have to be registered. [removed] Eurobonds also pay interest annually. |
[removed] Eurobond. [removed]municipal bond. [removed]foreign bond. [removed]currency bond. |
[removed]multinational commercial banks, large investment banking firms, and domestic firms. [removed]multinational commercial banks, local banks and domestic firms. [removed]multinational commercial banks, large investment banking firms, and small currency boutiques that specialize in foreign exchange transactions. [removed] None of the above |
[removed] Change tax laws in a way that adversely impacts the firm. [removed] Impose laws related to labor, wages, and prices that are more restrictive than those applicable for domestic firms. [removed] Remove tariffs and quotas on any imports. [removed] 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. |
[removed] $24,687 [removed] $803,838 [removed] $779,152 [removed] $31,278 |
[removed]the U.S. dollar is at a forward premium against the yen. [removed]the yen is at a forward premium against the U.S. dollar. [removed]the yen is at a forward discount against the U.S. dollar. [removed]the dollar is at neither a premium nor a discount against the yen. |
[removed] $124,687 [removed] $118,418 [removed] $159,023 [removed] $131,278 |
Which of the following economic benefits do the foreign exchange markets provide?
| [removed] | A mechanism to transfer purchasing power via exports and imports. |
| [removed] | A mechanism for hedging the risk associated with currency fluctuations. |
| [removed] | A channel for businesses to acquire credit for international transactions. |
| [removed] | All of these. |
If the foreign exchange rate is the price in dollars for a foreign currency, then the exchange rate quote is called:
| [removed] | a European quote |
| [removed] | an indirect quote |
| [removed] | a direct quote |
| [removed] | a cross quote |
Bartman Corporation observes that the Swiss franc (SF) is being quoted at $0.6164/SF, while the Swedish krona (SK) is quoted at $0.1981/SK. What is the SK/SF cross rate?
| [removed] | SK3.1116/SF |
| [removed] | SK0.3214/SF |
| [removed] | SK2.1467/SF |
| [removed] | SK0.4183/SF |
Given that the spot rate is $1.5276/€ and the 90-day forward quote is $1.5174/€, we can say that:
| [removed] | the dollar is at neither a premium nor a discount against the euro |
| [removed] | the U.S. dollar is at a forward discount against the euro |
| [removed] | the euro is at a forward premium against the U.S. dollar |
| [removed] | the U.S. dollar is at a forward premium against the euro |
All of the following represent differences between Eurobonds and domestic US bonds except that
| [removed] | many Eurobonds are sold without credit ratings. |
| [removed] | Eurobonds pay coupon interest annually. |
| [removed] | Eurobonds are issued as bearer bonds and do not have to be registered. |
| [removed] | investors in Eurobonds regularly pay taxes on the interest they receive. |
All other things remaining constant, if the US$/£ exchange rate changes from $1.65/£ to $1.45/£ , which of the following will occur?
| [removed] | Demand for British goods will decrease. |
| [removed] | None of these. |
| [removed] | Demand for British goods will increase. |
| [removed] | British demand for US goods will decrease. |
Which of the following statements regarding the forward rate is false?
| [removed] | The forward rate is what one party agrees to pay for money in the future. |
| [removed] | The forward rate is established on the day that the agreement is made and defines the exchange rate that will be used in the future. |
| [removed] | Forward rates are important because business transactions may extend over long periods. |
| [removed] | The forward rate quoted on a particular date is very often equal to the spot rate on the same day. |
All of the following represent differences between Eurobonds and domestic US bonds except that
| [removed] | Eurobonds pay coupon interest annually. |
| [removed] | investors in Eurobonds regularly pay taxes on the interest they receive. |
| [removed] | Eurobonds are issued as bearer bonds and do not have to be registered. |
| [removed] | many Eurobonds are sold without credit ratings. |
