ADVANCED FINANCIAL MANAGEMENT - II M.COM - QUIZ II

What is foreign exchange exposure?

• The risk of loss due to changes in interest rates
  
  

• The risk of loss due to changes in foreign exchange rates
  
  

• The risk of loss due to changes in commodity prices
  
  

• The risk of loss due to changes in stock prices

Which of the following is a characteristic of a multinational corporation (MNC)?

• Operations in only two countries
  

• Domestic sales only

• Operations and value-creation activities in multiple countries

• Single currency transactions only

What is a eurobond?

• A bond issued by European countries only

• A bond denominated in euros
  
  

• A bond issued in a currency different from the country where it's issued
  
  

• A bond traded exclusively in European markets

In international finance, what does political risk primarily refer to?

• Risk of war between trading nations
  
  

• Risk of government actions affecting business operations

• Risk of currency devaluation
  
  

• Risk of trade sanctions

Which of the following best describes a forward contract?

• An agreement to exchange currencies at a future date at a predetermined rate
  
  

• An immediate exchange of currencies at the current market rate

• A contract that gives the right but not obligation to exchange currencies

• A long-term loan denominated in foreign currency

What is dividend policy?

• A policy that only deals with cash payments to shareholders
  
  

• The decision about retaining earnings for reinvestment
  
  

• The framework for determining how much and when to pay dividends to shareholders

• A regulatory requirement for public companies

Which of the following is a characteristic of a stable dividend policy?

• Paying a fixed percentage of earnings each period

• Regular dividend payments with minimal fluctuations

• No regular pattern of dividend payments

• Paying all excess cash as dividends

Which of the following is a disadvantage of stock dividends?

• They require cash outflow

• They increase the number of shares outstanding

• They reduce earnings per share

• They are taxed immediately

Which factor is NOT typically considered in setting dividend policy?

• Legal restrictions

• Company's growth opportunities

• Competitors' stock prices

• Available cash flow

What is a stock repurchasing?

• When investors buy more shares from the market

• When a company buys back its own shares from the market

• When employees exercise stock options

• When new shares are issued to the public