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Commerce and BusinessbackBusinessbackCorporate Finance/Financial ManagementbackFundamentals of Corporate FinancebackPractice Set 2491back

International Corporate Finance

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Question 1
Free
Multiple Choice

Which one of the following securities is used as a means of investing in a foreign stock that otherwise could not be traded in the United States?

Choose correct answer/s
A

American Depository Receipt

B

Yankee bond

C

Yankee stock

D

LIBOR

E

gilt

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Question 2
Free
Multiple Choice

Assume that $1 is equal to ¥98 and also equal to C$1.21.Based on this,you could say that C$1 is equal to: C$1(¥98/C$1.21)= ¥80.99.The exchange rate of C$1 = ¥80.99 is referred to as the:

Choose correct answer/s
A

open exchange rate.

B

cross-rate.

C

backward rate.

D

forward rate.

E

interest rate.

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Question 3
Free
Multiple Choice

International bonds issued in multiple countries but denominated solely in the issuer's currency are called:

Choose correct answer/s
A

Treasury bonds.

B

Bulldog bonds.

C

Eurobonds.

D

Yankee bonds.

E

Samurai bonds.

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Question 4
Free
Multiple Choice

U.S.dollars deposited in a bank in Switzerland are called:

Choose correct answer/s
A

foreign depository receipts.

B

international exchange certificates.

C

francs.

D

Eurocurrency.

E

Eurodollars.

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Question 5
Free
Multiple Choice

International bonds issued in a single country and denominated in that country's currency are called:

Choose correct answer/s
A

Treasury bonds.

B

Eurobonds.

C

gilts.

D

Brady bonds.

E

foreign bonds.

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Question 6
Multiple Choice

You would like to purchase a security that is issued by the British government.Which one of the following should you purchase?

Choose correct answer/s
A
Samurai bond
B
kronor
C
Euro
D
LIBOR
E
gilt
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Question 7
Multiple Choice

On Friday evening,Bank A loans Bank B Eurodollars that must be repaid the following Monday morning.Which one of the following is most likely the interest rate that will be charged on this loan?

Choose correct answer/s
A
Eurodollar yield to maturity
B
London Interbank Offer Rate
C
Paris Opening Interest Rate
D
United States Treasury bill rate
E
international prime rate
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Question 8
Multiple Choice

Party A has agreed to exchange $1 million U.S.dollars for $1.21 million Canadian dollars.What is this agreement called?

Choose correct answer/s
A
gilt
B
LIBOR
C
SWIFT
D
Yankee agreements
E
swap
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Question 9
Multiple Choice

A large U.S.company has £500,000 in excess cash from its foreign operations.The company would like to exchange these funds for U.S.dollars.In which of the following markets can this exchange be arranged?

Choose correct answer/s
A
ADR
B
national registry
C
national discount window
D
foreign exchange market
E
Eurobond market
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Question 10
Multiple Choice

The price of one Euro expressed in U.S.dollars is referred to as a(n):

Choose correct answer/s
A
ADR rate.
B
cross inflation rate.
C
depository rate.
D
exchange rate.
E
foreign interest rate.
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Question 11
Multiple Choice

Trader A has agreed to give 100,000 U.S.dollars to Trader B in exchange for British pounds based on today's exchange rate of $1 = £0.62.The traders agree to settle this trade within two business day.What is this exchange called?

Choose correct answer/s
A
swap
B
option trade
C
futures trade
D
forward trade
E
spot trade
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Question 12
Multiple Choice

George and Pat just made an agreement to exchange currencies based on today's exchange rate.Settlement will occur tomorrow.Which one of the following is the exchange rate that applies to this agreement?

Choose correct answer/s
A
spot exchange rate
B
forward exchange rate
C
triangle rate
D
cross rate
E
current rate
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Question 13
Multiple Choice

A trader has just agreed to exchange $2 million U.S.dollars for $1.55 million Euros six months from today.This exchange is an example of a:

Choose correct answer/s
A
spot trade.
B
forward trade.
C
currency swap.
D
floating swap.
E
triangle arbitrage.
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Question 14
Multiple Choice

Mr.Black has agreed to a currency exchange with Mr.White.The parties have agreed to exchange C$12,500 for $10,000 with the exchange occurring 4 months from now.This agreed-upon exchange rate is called the:

Choose correct answer/s
A
spot rate.
B
swap rate.
C
forward rate.
D
parity rate.
E
triangle rate.
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Question 15
Multiple Choice

Assume that an item costs $100 in the U.S.and the exchange rate between the U.S.and Canada is: $1 = C$1.27.Which one of the following concepts supports the idea that the item that sells for $100 in the U.S.is currently selling in Canada for $127?

Choose correct answer/s
A
unbiased forward rates condition
B
uncovered interest rate parity
C
international Fisher effect
D
purchasing power parity
E
interest rate parity
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Question 16
Multiple Choice

The condition stating that the interest rate differential between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate is called:

Choose correct answer/s
A
the unbiased forward rates condition.
B
uncovered interest rate parity.
C
the international Fisher effect.
D
purchasing power parity.
E
interest rate parity.
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Question 17
Multiple Choice

Which one of the following states that the current forward rate is an unbiased predictor of the future spot exchange rate?

Choose correct answer/s
A
unbiased forward rates
B
uncovered interest rate parity
C
international Fisher effect
D
purchasing power parity
E
interest rate parity
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Question 18
Multiple Choice

Which one of the following states that the expected percentage change in the exchange rate between two countries is equal to the difference in the countries' interest rates?

Choose correct answer/s
A
unbiased forward rates condition
B
uncovered interest parity
C
international Fisher effect
D
purchasing power parity
E
interest rate parity
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Question 19
Multiple Choice

Which one of the following supports the idea that real interest rates are equal across countries?

Choose correct answer/s
A
unbiased forward rates condition
B
uncovered interest rate parity
C
international Fisher effect
D
purchasing power parity
E
interest rate parity
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Question 20
Multiple Choice

Which one of the following is the risk that a firm faces when it opens a facility in a foreign country,given that the exchange rate between the firm's home country and this foreign country fluctuates over time?

Choose correct answer/s
A
international risk
B
diversifiable risk
C
purchasing power risk
D
exchange rate risk
E
political risk
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