International Financial Management Quiz

What is the main goal of International Financial Management?

• Minimize taxes

• Maximize shareholder wealth across borders

• Avoid foreign markets

• Increase domestic market share

What is the foreign exchange (FX) market?

• Market for exchanging currencies

• Market for stocks

• Market for bonds

• Market for commodities

What is foreign direct investment (FDI)?

• Government loans to foreign companies

• A company investing in foreign assets like factories

• Investment in foreign stocks

• Buying foreign government bonds

Which of the following most affects exchange rates?

• Trade agreements

• Domestic inflation

• Interest rate differentials

• Changes in government policy

What is a floating exchange rate?

• A fixed currency value

• A currency value determined by supply and demand in the market

• A rate controlled by the government

• A rate determined by international agreements

What is the balance of payments?

• The total money a country borrows

• The record of all economic transactions between a country and the rest of the world

• The total value of a country’s exports

• The government’s budget

What is the role of the International Monetary Fund (IMF)?

• Regulate global stock markets

• Stabilize international exchange rates and provide financial assistance to countries

• Set international trade laws

• Control domestic interest rates

What is purchasing power parity (PPP)?

• Theory about interest rates

• Theory that suggests goods should cost the same in different countries when adjusted for exchange rates

• Method of calculating trade tariffs

• System for determining wages

What is currency risk?

• The risk of inflation

• The risk from fluctuating exchange rates

• The risk of stock market crashes

• The risk of bankruptcy

What is a forward contract?

• A loan agreement

• A contract to buy or sell currency at a future date at a specified rate

• A stock market trade

• A tax agreement