WorksheetsInternatinal fin midterm
Total questions: 26
Worksheet time: 13mins
Dumping is a foreign trade context represents the:
sales of junk bonds to foreign countries
exporting of goods at prices below cost
removal of foreign subsidiaries by the host government
exporting of goods that do not meet quality standards
Which of the following will probably result in an increase in a country's current account balance (assuming everything else constant)?
Increased demand for that country's currency.
The lowering of tariffs on imported goods
Higher imports of foreign goods
An depreciation of the country's currency
If a country removes tariffs on certain imported goods, in the short term, that country's current account balance will likely ____ .
remain unaffected
increase
decrease
either increase or remain unaffected are possible
Saller Co. has a subsidiary in Mexico. The expected cash flows in pesos to be received in the future from this subsidiary have not changed since last month, but the valuation of Saller Co. has declined since last month. What could've caused this decline in value?
Depreciation of the Mexican peso
Lower Mexican interest rates
Appreciation of the Mexican peso.
A weaker Mexican economy
Which currency is used the most to denominate Eurobonds?
the swiss franc
the british pound
the U.S dollar
the Japenese yen
Which of the following is not likely to represent a strategy by the government of Country X to reduce its balance of trade deficit with Country Y?
The government of Country X provides tax breaks to firms in specific industries.
The government of Country X removes a tariff on goods imported from Country Y.
The government of Country X subsidizes firms in its country to facilitate dumping.
The government of Country X eliminates environmental restrictions.
Which of the following is a correct statement relating to global currency reserves?
Unlike payment for goods, payment for services in another country is often made in the local currency even if its not a global currency reserve.
Most major countries like Turkey and Saudi Arabia can use their own currencies to pay for imports.
A country whose currency is not a currency reserve needs to use global currency reserves to pay for imports.
Many countries pay for imports by exporting different products of approximately the same worth in a barter arrangement.
The demand for U.S. exports tends to increase when:
none of these
U.S inflation rises
economic growth in foreign countries decreases
the currencies of foreign countries strengthen against the dollar
Big Shoe Co., a U.S. MNC, has a subsidiary in Canada that will sell shoes in Canada and repatriate the earnings back to the U.S. parent. The shoes are manufactured in Mexico (cost is in pesos) and sold in Canada (revenue in Canadian dollars). Which of the following would be detrimental to the profits of the U.S. MNC?
I. The U.S. dollar appreciates vs. the peso
II. The U.S. dollar appreciates vs. the Canadian dollar
III. The peso appreciates vs. the Canadian dollar
I only
II only
I and III only
III only
All are true
For the MNC, the costs of international business compared to domestic business is usually:
larger than domestic business
the same as domestic business
non-existent
smaller than domestic business
Which of the following products would most likely be impacted by the imperfect markets theory related to unskilled labor?
assembling electronic computers.
specialized professional services.
drone manufacturing.
auto manufacturing.
British investors frequently invest in the U.S. or the U.K., depending on the prevailing interest rates. If interest rates in the U.K. suddenly increase above U.S. rates (all else being equal), the investors will ____ the supply of pounds to be exchanged for dollars and thus put ____ pressure on the value of the pound against the U.S. dollar.
increase; downward
decrease; downward
increase; upward
decrease; upward
If $1.00 = 125 Japanese yen, and 1 Fijian dollar (F$1.00) = $.5900. What is the value of one Fijian dollar in yen to the nearest yen?
F$212
F$74
F$125
F$71
Assume that a bank's bid rate on Swiss francs is $0.45 and its ask rate is $0.47. Its bid-ask percentage spread is:
2.00%.
4.44%.
4.03%.
4.26%.
If the income of a country increases, then the currency of that country would typically be expected to:
appreciate since this would increase demand for domestic investments.
appreciate since this would lower the demand for imports.
depreciate since this would increase the demand for imports.
depreciate, since this would signal that the economy is overheating.
Compute the real / pound exchange rate if:
6.25 real = $1.00 and 1 pound = $1.37.
1 real = 4.56 pounds
1 real = .2192 pounds
1 real = .1168 pounds
1 real = 8.56 pounds
Which of the following is the best definition of the bid / ask spread?
A flat fee the bank charges when exchanging currency like a commission percentage.
The lower amount received when exchanging currency at a bank due to the tax the bank must pay to the government.
The difference in the price of the currency at two different banks.
The amount charged by the bank to pay for its expenses when trading currency and to make a profit.
Which of the following events would most likely result in an depreciation of the U.S. dollar?
Japan is expected to lower interest rates in the near future.
There is an increase in DFI in the United States.
U.S inflation is very high
the fed indicates that it will raise U.S interest rates
If 1 Euro = $1.1765 and $1.00 = 98 yen. The value of 1 yen in euros is
1.18 euros
.01 euros
118 euros
.0087 euros
What is the percentage bid / ask spread for British Pounds if:
Bid Rate: $1.45 = 1 pound
Ask Rate: $1.52 = 1 pound?
5.20%
4.61%
7.00%
4.83%
____ represent aid, grants, and gifts from one country to another.
The balance of payments
The capital account
The balance of trade
Transfer payments
The World Bank was established to:
Be a regulator of banks around the world stabilizing international finance
Help countries with issues around trade
Help countries with combating poverty though loans to complete infrastructure projects
To help foreign central banks with liquidity problems in a financial crisis
When a country's currency appreciates, the country's trade deficit may not increase because:
Group of answer choices
foreign companies may increase the prices of their products to gain more profit.
it increases the prices of exports by local companies.
it reduces the prices of imports paid by local companies.
it prevents international trade transactions from being prearranged.
Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $60. What is the share price of the firm in Singapore dollars?
39.84
30.12
13.28
10
The value of the Australian dollar (A$) today is $0.69. Yesterday, the value of the Australian dollar was $0.73. The Australian dollar ____ by ____%.
appreciated; 5.80
depreciated; 5.48
appreciated; 5.48
depreciated; 5.80
If $1.00 = C$1.136 and 1.00 Peruvian sol = $0.35. Then how much does C$1.00 equal in Peruvian sol?
Group of answer choices
2.52 sol
0.3621 sol
0.3976 sol
2.36 sol
