Seminar 1 MCQs Flashcards
(40 cards)
Financial globalisation has NOT resulted in:
A) an increase in quantity and speed in the flow of capital across the world.
B) uniform ways of ownership, control, and governance across the world.
C) capital markets less open and a decrease in the availability of capital for many
organizations.
D) continuing imbalances of balance of payments.
Uniform ways of ownership, control, and governance across the world.
Financial globalisation has NOT resulted in:
A) Capital markets more open and an increase in the availability of capital for many
organizations.
B) Continuing imbalances of balance of payments.
C) An increase in quantity and speed in the flow of capital across the world.
D) An increase in the flow of capital into and out of industrialised markets.
Capital markets more open and an increase in the availability of capital for many organisations.
The institutions of global finance are:
A) central banks.
B) investment banks.
C) commercial banks.
D) All of the above are institutions of global finance.
All of the above.
A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:
A) International Monetary Fund - IMF.
B) Office of the Comptroller of the Currency - OCC.
C) Federal Deposit Insurance Corporation - FDIC.
D) World Bank - WB.
Federal Deposit Insurance Corporation - FDIC.
The reference rate of interest in the eurocurrency market is the:
A) Treasury rate.
B) Prima rate.
C) Federal funds rate.
D) London Interbank Offered Rate.
London Interbank Offered Rate.
Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
A) The eurocurrency is a wholesale market.
B) Eurocurrency loans are secured loans.
C) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an
unsecured basis.
D) Borrowers are usually large corporations or government entities.
Eurocurrency loans are secured loans.
The theory that suggests specialisation by country can increase worldwide production is:
A) the theory of working capital management.
B) the international Fisher effect.
C) the theory of comparative advantage.
D) the theory of foreign direct investment.
The theory of comparative advantage.
Which of the following is NOT a reason governments interfere with comparative advantage?
A) national self-sufficiency in defence-related industries
B) Governments attempt to achieve full employment.
C) Governments promote economic development.
D) All are reasons governments interfere with comparative advantage.
All are reasons.
Which of the following factors of production DO NOT flow freely between countries?
A) financial capital
B) (non-military) technology
C) raw materials
D) All of the above factors of production flow freely among countries.
Raw materials.
Of the following, which would NOT be considered a way that government interferes with comparative advantage?
A) quotas
B) managerial skills
C) tariffs
D) other non-tariff restrictions
Managerial skills.
Which of the following domestic financial instruments have NOT been modified for use in international financial management?
A) letters of credit
B) interest rate and currency swaps
C) currency options and futures
D) All of the above are domestic financial instruments that have also been modified for use in
international financial markets.
All of the above.
Which of the following is NOT always understood by MNE management?
A) political risk
B) foreign exchange risk
C) culture, history, and institutions
D) financial instruments
Culture, history and institutions.
In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms
produce in foreign countries?
A) to export to foreign markets
B) satisfaction of local demand in the foreign country
C) political safety and small likelihood of government expropriation of assets
D) All of the above are market-seeking activities.
Political safety and small likelihood of government expropriation of assets.
A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
B) access to capital
C) high-quality strategic management
D) access to qualified labor pool
Access to capital.
A well-established, large, China-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
C) access to qualified labor pool
B) high-quality strategic management
D) access to capital
An open marketplace.
The phase of the globalisation process characterised by imports from foreign suppliers and exports to foreign buyers is called the:
A) domestic phase.
B) import-export banking phase.
C) international trade phase.
D) multinational phase.
International trade phase.
The authors describe the multinational phase of globalisation for a firm as one characterised by the:
A) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
B) ownership of assets and enterprises in foreign countries.
C) requirement that all employees be multilingual.
D) imports from foreign suppliers and exports to foreign buyers.
Ownership of assets and enterprises in foreign countries.
Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalisation by the firm?
A) foreign consumer method of payment preferences
B) evaluation of the credit quality of foreign buyers and sellers
C) credit risk management
D) evaluation of foreign exchange risk
Foreign consumer method of payment preferences.
The twin agency problems limiting financial globalisation are caused by these two groups acting in their own self-interests rather than the interests of the firm.
A) rulers of sovereign states and unsavoury customs officials
B) corporate insiders and rulers of sovereign states
C) corporate insiders and attorneys
D) attorneys and unsavory customs officials
Corporate insiders and rulers of sovereign states.
World War I caused the suspension of the gold standard for fixed international exchange rates because the war:
A) used gold as the main ingredient in armament plating.
B) cost too much money.
C) interrupted the free movement of gold.
D) lasted too long.
Interrupted to the free movement of gold.
Another name for the International Bank for Reconstruction and Development is:
A) the European Monetary System.
B) The Marshall Plan.
C) the World Bank.
D) the Recon Bank.
the World Bank.
The International Monetary Fund (IMF):
A) in recent years has provided large loans to Russia, South Korea, and Brazil.
B) aids countries with balance of payment and exchange rate problems.
C) was created as a result of the Bretton Woods Agreement.
D) is all of the above.
All of the above.
Based on the premise that, other things equal, countries would prefer a fixed exchange rate, which of the following statements is NOT true?
A) Fixed exchange rate regimes necessitate that central banks maintain large quantities of international reserves for use in the occasional defense of the fixed rate.
B) Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies.
C) Stable prices aid in the growth of international trade and lessen exchange rate risks for businesses.
D) Fixed rates provide stability in international prices for the conduct of trade.
Fixed rates are inherently inflationary in that they require the country to follow loose monetary and fiscal policies.
According to the terminology associated with changes in currency values, which of the following choices is the case when a currency’s value relative to other currencies is changed by a government?
A) depreciation and revaluation
B) devaluation and appreciation
C) depreciation and appreciation
D) devaluation and revaluation
Devaluation and revaluation.
