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Global Business > Quiz 9 > Flashcards

Quiz 9 Flashcards

0
Q

The monetary authority in each nation is called the

A

Central bank

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1
Q

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

A

Exchange rate

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2
Q

Want to countries exports exceeds imports this is called day

A

Trade surplus

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3
Q

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

A

Currency crisis, country risk crisis, and foreign debt crisis

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4
Q

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

A

Special drawing right

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5
Q

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

A

International monetary system

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6
Q

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

A

Devaluation

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7
Q

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

A

Brazil

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8
Q

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

A

Supply and demand

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9
Q

Foreign currencies are traded on the

A

Foreign-exchange market

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10
Q

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

A

Convertible currency; hard currency

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11
Q

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

A

All of the above

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12
Q

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

A

Currency risk

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13
Q

_____ 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

A

Monetary intervention

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14
Q

Which of the following is considered foreign exchange

A

All of the above

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15
Q

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

A

True

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16
Q

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

A

False

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17
Q

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

A

True

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18
Q

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

A

Falls

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19
Q

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

A

False

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20
Q

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

A

False

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21
Q

The exchange rate does not vary over time and remains fixed

A

False

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22
Q

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

A

False

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23
Q

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

A

True

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24
Q

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

A

True

25
Q

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

A

False

26
Q

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

A

True

27
Q

And undervalued national currency can result in a trade deficit

A

False

28
Q

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

A

False

29
Q

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

A

True

30
Q

Name the three major financial centers in the world

A

Tokyo, New York, and London

31
Q

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

A

Equity financing

32
Q

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

A

Global money market

33
Q

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

A

Global equity market

34
Q

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

A

Multilateral netting

35
Q

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

A

Spot rate

36
Q

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

A

Tax haven

37
Q

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

A

Fronting loan

38
Q

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

A

Intracorporate financing

39
Q

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

A

Debt financing

40
Q

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

A

Eurobond

41
Q

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

A

New York Stock Exchange

42
Q

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

A

None of the above

43
Q

Borrowing internationally is complicated by several reasons including

A

Cross national banking regulations

44
Q

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

A

Euro dollars

45
Q

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

A

True

46
Q

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

A

False

47
Q

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

A

False

48
Q

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

A

True

49
Q

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

A

True

50
Q

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

A

False

51
Q

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

A

False

52
Q

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

A

False

53
Q

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

A

True

54
Q

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

A

False

55
Q

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

A

False

56
Q

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

A

True

57
Q

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

A

False

58
Q

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

A

True

59
Q

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

A

False

Global Business (4 decks)

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