Quiz 9

Question 0

The monetary authority in each nation is called the

Answer 0

Central bank

Question 1

The price of one currency expressed in terms of another is called the

Answer 1

Exchange rate

Question 2

Want to countries exports exceeds imports this is called day

Answer 2

Trade surplus

Question 3

The IMF plays an important role in addressing financial and monetary crisis worldwide. Name the three common crisis the IMF deals with

Answer 3

Currency crisis, country risk crisis, and foreign debt crisis

Question 4

To help manage current evaluation worldwide, the IMF established a special type of international reserve known as the

Answer 4

Special drawing right

Question 5

The institutional framework, rules, and procedures by which national currencies or exchange for one another is called the

Answer 5

International monetary system

Question 6

When a government reduces the official value of its currency relative to other currencies, this is called a

Answer 6

Devaluation

Question 7

In the mid-1990s, which country experienced over 400% per year inflation rate

Answer 7

Brazil

Question 8

In a free market, the price of any currency is determined by

Answer 8

Supply and demand

Question 9

Foreign currencies are traded on the

Answer 9

Foreign-exchange market

Question 10

A ________ can be readily exchange for other currencies in the most convertible currencies are called ____

Answer 10

Convertible currency; hard currency

Question 11

When the dollar is more expensive to European businesses, what effect does it have on them

Answer 11

All of the above

Question 12

_______ is the risk that arises from the changes in the price of one currency relative to another

Answer 12

Currency risk

Question 13

_____ is the buying and selling of government securities by central bank to maintain the exchange rate of a country’s currency at some acceptable level

Answer 13

Monetary intervention

Question 14

Which of the following is considered foreign exchange

Answer 14

All of the above

Question 15

Because currency convertibility is so strict and some developing countries, companies prefer to avoid using parentheses altogether instead receive payments in forms of products rather than cash

Answer 15

True

Question 16

Chinese recession could not possibly trigger economic problems in the US because of the size of the US economy realtor to the Chinese economy

Answer 16

False

Question 17

Nations prefer to hold hard currencies like the dollar and euro as reserves because of their strength and stability in comparison to other currencies, such as the Russian Rubel

Answer 17

True

Question 18

The foreign-exchange market can easily be controlled by major governments like the US and Japan

Answer 18

Falls

Question 19

The annual accounting of all economic transactions of the nation with all of their nations is calledtheir balance of trade

Answer 19

False

Question 20

Because inflation is controlled by a government, it does not affect the demand and supply the country’s currency

Answer 20

False

Question 21

The exchange rate does not vary over time and remains fixed

Answer 21

False

Question 22

The major world banking centers are London, Paris, Berlin, and Hong Kong

Answer 22

False

Question 23

The BISs role is to foster cooperation among central banks and other governmental agencies

Answer 23

True

Question 24

Fluctuations in exchange rates motivate countries worldwide to coordinate their monetary policies at regular meetings of the G8

Answer 24

True

Question 25

Inflation results in an increase in the price of goods and services, so that money actually buys more than an preceding years

Answer 25

False

Question 26

China purchased nearly half of the US treasury securities making China the world largest investor in US government

Answer 26

True

Question 27

And undervalued national currency can result in a trade deficit

Answer 27

False

Question 28

A good example of a contagion is the sars crisis and East Asia in the late 1990s

Answer 28

False

Question 29

The World Bank is a key player in the global financial system

Answer 29

True

Question 30

Name the three major financial centers in the world

Answer 30

Tokyo, New York, and London

Question 31

The issuance of shares of stock to raise capital for the investors and the use of retained earnings is called

Answer 31

Equity financing

Question 32

The collective financial markets were firms in government to raise short-term financing is called

Answer 32

Global money market

Question 33

The stock exchanges throughout the world were investors and for me to buy and sell shares of stock is called the

Answer 33

Global equity market

Question 34

Strategic reduction of cash transfers within the MNE family through the illumination of offsetting cash flows is called

Answer 34

Multilateral netting

Question 35

The exchange rate applicable to the trading of foreign currencies in which the current rate of exchange is used in delivery is considered immediate is called the

Answer 35

Spot rate

Question 36

A country hospitable to business and inward investment because of its low corporate income taxes is called

Answer 36

Tax haven

Question 37

Alone between the parent and it's subsidiary, channeled through a large bank or other financial intermediary is called a

Answer 37

Fronting loan

Question 38

Funds provided from sources inside the firm such as equity, loans, and trade credits are called

Answer 38

Intracorporate financing

Question 39

______ comes from either loans from banks and other financial intermediaries or money raised from the sale of corporate bonds to individuals or institutions

Answer 39

Debt financing

Question 40

A bond sold in a foreign country and denominated in the currency of the sellers on country is called

Answer 40

Eurobond

Question 41

The international marketplace in which bonds are bought and sold, primarily through banks in stockbrokers is called the

Answer 41

New York Stock Exchange

Question 42

Any currency deposited in the bank outside it's country of origin is called

Answer 42

None of the above

Question 43

Borrowing internationally is complicated by several reasons including

Answer 43

Cross national banking regulations

Question 44

US dollars held in banks outside United States including foreign branches of us Banks is called

Answer 44

Euro dollars

Question 45

Translation exposure is the currency risk that results when an MNE translates foreign-currency financial results into the functional currency of the parent from

Answer 45

True

Question 46

Speculators or crunchy traders who seek to minimize the risk of exchange rate fluctuations, often by buying forwards or similar financial instruments

Answer 46

False

Question 47

A currency option is an agreement to exchange one currency for another, according to a specified schedule

Answer 47

False

Question 48

Because banks are often reluctant to extend credit to SMEs, firms may turn to government agencies like the export import Bank for the direct loans

Answer 48

True

Question 49

The key advantage of participating in the global capital market is the ability to access funds for a larger pool of sources at competitive interest rates

Answer 49

True

Question 50

The global capital market is the collective financial markets were firms and governments raise short-term financing

Answer 50

False

Question 51

There are four primary sources of funds for international operations: equity financing, debt financing, intercorporate financing, and securitization

Answer 51

False

Question 52

In terms of the value of shares traded, the largest stock exchanges in the world is the London Stock exchange

Answer 52

False

Question 53

According to global trend, leading international investment destination today is the emerging markets like Brazil, China, and South Korea

Answer 53

True

Question 54

One reason why the euro currency market is really used my firms is because these funds are subject to more stringent government regulations them in their own country banking systems

Answer 54

False

Question 55

When Toyota sells yen denominated Vons in the US it is issuing foreign bonds

Answer 55

False

Question 56

Transparency is the degree to which companies regularly and comprehensively reveal substantial information about their financial condition and accounting practices

Answer 56

True

Question 57

Transaction exposure is the currency risk that firms face when I was standing accounts receivable are payable are denominated in euro currency

Answer 57

False

Question 58

I'll forward contract is a financial instrument used to buy or sell a currency at an agreed-upon exchange rate at the initiation of the contract for future delivery and settlement

Answer 58

True

Question 59

Currency traders who seek profits by investing in parentheses with the expectation that they will rise in value in the future are called arbitragers

Answer 59

False