Question 1

Which of the following statements is NOT CORRECT?

Accepted Answer

A)   Any bond sold outside the country of the borrower is called an international bond.
B)   Foreign bonds and Eurobonds are two important types of international bonds.
C)   Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold.
D)   The term Eurobond applies only to foreign bonds denominated in U.S.currency.
E)   A Eurodollar is a U.S.dollar deposited in a bank outside the U.S.F) A) and C)
G) B) and E)

Question 2

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 3

Multinational financial management requires that financial analysts consider the effects of changing currency values.

Accepted Answer

A) True 
 B)False

Question 4

Legal and economic differences among countries,although important,do NOT pose significant problems for most multinational corporations when they coordinate and control worldwide operations and subsidiaries.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Accepted Answer

A)   2.1285
B)   2.3760
C)   1.9058
D)   2.5988
E)   2.4750F) B) and D)
G) C) and D)

Question 6

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Accepted Answer

A)   2.1285
B)   2.3760
C)   1.9058
D)   2.5988
E)   2.4750F) C) and E)
G) A) and B)

Question 7

If one Swiss franc can purchase 0.85 U.S.dollar,how many Swiss francs can one U.S.dollar buy?

Accepted Answer

A)   1.0471
B)   1.1765
C)   1.0706
D)   1.3294
E)   1.2706F) A) and C)
G) A) and D)

Question 8

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Accepted Answer

A)   143.1936
B)   138.3120
C)   175.7376
D)   162.7200
E)   183.8736F) A) and B)
G) A) and C)

Question 9

If one British pound can purchase $2.00 U.S.dollars,how many British pounds can one U.S.dollar buy?

Accepted Answer

A)   0.5600
B)   0.5550
C)   0.4000
D)   0.5000
E)   0.4850F) A) and D)
G) A) and B)

Question 10

Suppose one year ago,Hein Company had inventory in Britain valued at 240,000 pounds.The exchange rate for dollars to pounds was 1£ = 2.00 U.S.dollars.This year the exchange rate is 1£ = 1.82 U.S.dollars.The inventory in Britain is still valued at 240,000 pounds.What is the U.S.dollar gain or loss in inventory value as a result of the change in exchange rates?

Accepted Answer

A)   -$43,200.00
B)   -$48,816.00
C)   -$36,288.00
D)   -$50,544.00
E)   -$32,400.00F) None of the above
G) C) and D)

Question 11

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Accepted Answer

A)   143.1936
B)   138.3120
C)   175.7376
D)   162.7200
E)   183.8736F) None of the above
G) All of the above

Question 12

A currency trader observes the following quotes in the spot market:  1 U.S. dollar =10.875 Mexican pesos 1 British pound =7.500 Danish krone 1 British pound =1.65 U.S. dollars \begin{array} { l l l } 1 	ext { U.S. dollar } = & 10.875 & 	ext { Mexican pesos } \1 	ext { British pound } = & 7.500 & 	ext { Danish krone } \1 	ext { British pound } = & 1.65 & 	ext { U.S. dollars }\end{array}1 U.S. dollar =1 British pound =1 British pound =​10.8757.5001.65​ Mexican pesos  Danish krone  U.S. dollars ​ 
Given this information,how many Mexican pesos can be purchased for 1 Danish krone?

Accepted Answer

A)   2.3446
B)   2.0097
C)   2.9188
D)   2.0815
E)   2.3925 F) C) and D)
G) B) and E)

Question 13

Suppose in the spot market 1 U.S.dollar equals 1.3750 Canadian dollars.6-month Canadian securities have an annualized return of 6.00% (and thus a 6-month periodic return of 3.00%) .6-month U.S.securities have an annualized return of 6.50% and a periodic return of 3.25%.If interest rate parity holds,what is the U.S.dollar-Canadian dollar exchange rate in the 180-day forward market? In other words,how many Canadian dollars are required to purchase one U.S.dollar in the 180-day forward market? Do not round the intermediate calculations and round the final answer to four decimal places.

Accepted Answer

A)   1.1660
B)   1.1385
C)   1.4540
D)   1.3717
E)   1.2345F) A) and B)
G) A) and C)

Question 14

A Eurodollar is a U.S.dollar deposited in a bank outside the United States.

Accepted Answer

A) True 
 B)False

Question 15

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 16

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.76 shekels per dollar,then the forward rate for the Israeli shekel is selling at a(n) ______________ to the spot rate.

Accepted Answer

A)   3.68% premium
B)   3.72% premium
C)   4.99% discount
D)   4.54% discount
E)   5.58% discountF) A) and B)
G) A) and C)

Question 17

A product sells for $750 in the United States.The spot exchange rate is $1 to 1.56 Swiss francs.If purchasing power parity (PPP) holds,what is the price of the product in Switzerland?

Accepted Answer

A)   1,462.50
B)   1,392.30
C)   1,228.50
D)   1,170.00
E)   947.70F) A) and C)
G) B) and C)

Question 18

Today in the spot market $1 = 1.82 Swiss francs and $1 = 130 Japanese yen.In the 90-day forward market,$1 = 1.84 Swiss francs and $1 = 127 Japanese yen.Assume that interest rate parity holds worldwide.Which of the following statements is most CORRECT?

Accepted Answer

A)   Interest rates on 90-day risk-free U.S.securities are higher than the interest rates on 90-day risk-free Swiss securities.
B)   Interest rates on 90-day risk-free U.S.securities are higher than the interest rates on 90-day risk-free Japanese securities.
C)   Interest rates on 90-day risk-free U.S.securities equal the interest rates on 90-day risk-free Japanese securities.
D)   Since interest rate parity holds interest rates should be the same in all three countries.
E)   Interest rates on 90-day risk-free U.S.securities equal the interest rates on 90-day risk-free Swiss securities.F) A) and E)
G) B) and D)

Question 19

Individuals and corporations can buy or sell forward currencies to hedge their exchange rate exposure.Essentially,the process involves simultaneously selling the currency expected to appreciate in value and buying the currency expected to depreciate.

Accepted Answer

A) True 
 B)False

Question 20

If one U.S.dollar buys 0.61 euro,how many dollars can you purchase for one euro?

Accepted Answer

A)   1.5574
B)   1.4262
C)   1.6393
D)   1.2623
E)   1.4590F) A) and B)
G) C) and D)

Exam 19: Multinational Financial Management

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Correct Answer
verified

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Correct Answer
verified

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Correct Answer
verified

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Correct Answer
verified

Individuals and corporations can buy or sell forward currencies to hedge their exchange rate exposure.Essentially,the process involves simultaneously selling the currency expected to appreciate in value and buying the currency expected to depreciate.

Correct Answer
verified

Correct Answer
verified

If one U.S.dollar buys 0.61 euro,how many dollars can you purchase for one euro?

Correct Answer
verified

If one British pound can purchase $2.00 U.S.dollars,how many British pounds can one U.S.dollar buy?

Correct Answer
verified

Which of the following statements is NOT CORRECT?

Correct Answer
verified

Legal and economic differences among countries,although important,do NOT pose significant problems for most multinational corporations when they coordinate and control worldwide operations and subsidiaries.

Correct Answer
verified

Correct Answer
verified

Multinational financial management requires that financial analysts consider the effects of changing currency values.

Correct Answer
verified

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Correct Answer
verified

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Correct Answer
verified

Today in the spot market $1 = 1.82 Swiss francs and $1 = 130 Japanese yen.In the 90-day forward market,$1 = 1.84 Swiss francs and $1 = 127 Japanese yen.Assume that interest rate parity holds worldwide.Which of the following statements is most CORRECT?

Correct Answer
verified

If one Swiss franc can purchase 0.85 U.S.dollar,how many Swiss francs can one U.S.dollar buy?

Correct Answer
verified

A Eurodollar is a U.S.dollar deposited in a bank outside the United States.

Correct Answer
verified

A product sells for $750 in the United States.The spot exchange rate is $1 to 1.56 Swiss francs.If purchasing power parity (PPP) holds,what is the price of the product in Switzerland?

Correct Answer
verified

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.76 shekels per dollar,then the forward rate for the Israeli shekel is selling at a(n) ______________ to the spot rate.

Correct Answer
verified

Correct Answer
verified

Exam 19: Multinational Financial Management

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Correct AnswerverifiedShow Answer

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Correct AnswerverifiedShow Answer

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Correct AnswerverifiedShow Answer

Suppose 144 yen could be purchased in the foreign exchange market for one U.S.dollar today.If the yen depreciates by 13.0% tomorrow,how many yen could one U.S.dollar buy tomorrow?

Correct AnswerverifiedShow Answer

Individuals and corporations can buy or sell forward currencies to hedge their exchange rate exposure.Essentially,the process involves simultaneously selling the currency expected to appreciate in value and buying the currency expected to depreciate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If one U.S.dollar buys 0.61 euro,how many dollars can you purchase for one euro?

Correct AnswerverifiedShow Answer

If one British pound can purchase $2.00 U.S.dollars,how many British pounds can one U.S.dollar buy?

Correct AnswerverifiedShow Answer

Which of the following statements is NOT CORRECT?

Correct AnswerverifiedShow Answer

Legal and economic differences among countries,although important,do NOT pose significant problems for most multinational corporations when they coordinate and control worldwide operations and subsidiaries.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Multinational financial management requires that financial analysts consider the effects of changing currency values.

Correct AnswerverifiedShow Answer

Suppose that currently,1 British pound equals 1.98 U.S.dollars and 1 U.S.dollar equals 1.25 Swiss francs.How many Swiss francs are needed to purchase 1 pound?

Correct AnswerverifiedShow Answer

When the value of the U.S.dollar appreciates against another country's currency,we may purchase more of the foreign currency with the U.S.dollar.

Correct AnswerverifiedShow Answer

Today in the spot market $1 = 1.82 Swiss francs and $1 = 130 Japanese yen.In the 90-day forward market,$1 = 1.84 Swiss francs and $1 = 127 Japanese yen.Assume that interest rate parity holds worldwide.Which of the following statements is most CORRECT?

Correct AnswerverifiedShow Answer

If one Swiss franc can purchase 0.85 U.S.dollar,how many Swiss francs can one U.S.dollar buy?

Correct AnswerverifiedShow Answer

A Eurodollar is a U.S.dollar deposited in a bank outside the United States.

Correct AnswerverifiedShow Answer

A product sells for $750 in the United States.The spot exchange rate is $1 to 1.56 Swiss francs.If purchasing power parity (PPP) holds,what is the price of the product in Switzerland?

Correct AnswerverifiedShow Answer

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.76 shekels per dollar,then the forward rate for the Israeli shekel is selling at a(n) ______________ to the spot rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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