International Financial Management

Because of globalization in the world’s markets, a multinational financial manager is more likely than a domestic financial manager to specialize in finance to the exclusion of other fields of business. 

• True
• False

Risk exists whenever actual outcomes can differ from expected outcomes.

• True
• False

Assets and liabilities are exposed to currency risk when their values can change with unexpected changes in currency values. 

• True
• False

The Basel Accord established the International Monetary Fund and the World Bank.

• True
• False

The “financial account” of the IMF’s Balance-of-Payments Statistics measures the total financial wealth of citizens in each reporting country. 

• True
• False

In a fixed exchange rate system, governments/CBs stand ready to buy and sell currency at official exchange rates.

• True
• False

Decreases in currency values within a floating rate system are called devaluations.

• True
• False

The ____ of the IMF’s Balance-of-Payments Statistics measures whether a particular country is a net importer or exporter of goods and services.

• current account
• financial account
• overall balance
• trade balance

Which of the following currencies is currently linked to the price of gold?   

• British Pound
• US Dollar
• Japanese yen
• None of the above

Common elements in many currency crises include each of the following except: 

• A fixed exchange rate system that overvalued the local currency
• A large amount of foreign currency debt
• A precipitous drop in the value of the local currency
• All of the above are common during currency crises