Question 1

Remitting cash flows is a term used to describe:

Accepted Answer

A)  cash flows earned in a foreign country.
B)  moving cash flows from the foreign subsidiary to the parent firm.
C)  forecasting the value of foreign currency one-year hence.
D)  forecasting the value of U.S.currency one-year hence.
E)  None of the above.F) B) and E)
G) A) and C)

Question 2

Gilts are government securities issued by:

Accepted Answer

A)  Britain and Ireland.
B)  Japan.
C)  Germany.
D)  Australia and New Zealand.
E)  Italy.F) D) and E)
G) A) and E)

Question 3

The law of one price is also known as:

Accepted Answer

A)  relative purchasing power parity.
B)  absolute purchasing power parity.
C)  complete purchasing power parity.
D)  interest rate parity.
E)  the international Fisher Effect.F) B) and D)
G) None of the above

Question 4

The forward rate market is dependent upon:

Accepted Answer

A)  current forward rates exceeding current spot rates.
B)  current spot rates exceeding current forward rates over time.
C)  current spot rates equaling current forward rates on average over time.
D)  forward rates equaling the actual future spot rates on average over time.
E)  current spot rates equaling the actual future spot rates on average over time.F) C) and E)
G) A) and B)

Question 5

The current spot rate for the Norwegian krone is $1 = NKr6.83.The expected inflation rate in Norway is 3 percent and in the U.S.2 percent.A risk-free asset in the U.S.is yielding 4.5 percent.What real rate of return should you expect on a risk-free Norwegian security?

Accepted Answer

A)  4.5%
B)  5.0%
C)  5.5%
D)  6.0%
E)  6.5%F) B) and C)
G) B) and D)

Question 6

International bonds issued in a single country and denominated in that country's currency are called:

Accepted Answer

A)  Treasury bonds.
B)  Eurobonds.
C)  gilts.
D)  Brady bonds.
E)  foreign bonds.F) B) and D)
G) B) and C)

Question 7

Financial Accounting Standard Board Statement Number 52 requires that most assets and liabilities be translated at the current exchange rate.Gains and losses are recorded:

Accepted Answer

A)  against shareholder's equity.
B)  as a normal part of income.
C)  as an extraordinary item against income.
D)  as a footnote to the statements.
E)  only on the income tax statements.F) C) and D)
G) A) and B)

Question 8

Absolute purchasing power parity is also known as:

Accepted Answer

A)  The law of one price.
B)  relative purchasing power parity.
C)  complete purchasing power parity.
D)  interest rate parity.
E)  the international Fisher Effect.F) C) and E)
G) None of the above

Question 9

In the spot market,$1 is currently equal to £.55.The expected inflation rate in the U.K.is 4 percent and in the U.S.3 percent.What is the expected exchange rate two years from now if relative purchasing power parity exists?

Accepted Answer

A)  £.5391
B)  £.5445
C)  £.5555
D)  £.5611
E)  £.5667F) A) and D)
G) A) and E)

Question 10

_____ holds because of the possibility of covered interest arbitrage.

Accepted Answer

A)  Uncovered interest parity
B)  Interest rate parity
C)  The international Fisher effect
D)  Unbiased forward rates
E)  Purchasing power parityF) B) and D)
G) B) and C)

Question 11

The idea that the exchange rate adjusts to keep buying power constant among currencies is called:

Accepted Answer

A)  the unbiased forward rates condition.
B)  uncovered interest rate parity.
C)  the international Fisher effect.
D)  purchasing power parity.
E)  interest rate parity.F) C) and E)
G) A) and C)

Question 12

Assume that ¥107.62 equal $1.Also assume that 7.5415Skr equal $1.How many Japanese yen can you acquire in exchange for 6,200 Swedish krona?

Accepted Answer

A)  ¥419
B)  ¥434
C)  ¥41,719
D)  ¥46,757
E)  ¥88,476F) C) and E)
G) B) and D)

Question 13

An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a _____ trade.

Accepted Answer

A)  spot
B)  forward
C)  swap
D)  floating
E)  triangleF) A) and C)
G) A) and E)

Exam 31: International Corporate Finance

The forward rate market is dependent upon:

Correct Answer
verified

An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a _____ trade.

Correct Answer
verified

_____ holds because of the possibility of covered interest arbitrage.

Correct Answer
verified

Remitting cash flows is a term used to describe:

Correct Answer
verified

International bonds issued in a single country and denominated in that country's currency are called:

Correct Answer
verified

In the spot market,$1 is currently equal to £.55.The expected inflation rate in the U.K.is 4 percent and in the U.S.3 percent.What is the expected exchange rate two years from now if relative purchasing power parity exists?

Correct Answer
verified

Assume that ¥107.62 equal $1.Also assume that 7.5415Skr equal $1.How many Japanese yen can you acquire in exchange for 6,200 Swedish krona?

Correct Answer
verified

Absolute purchasing power parity is also known as:

Correct Answer
verified

Financial Accounting Standard Board Statement Number 52 requires that most assets and liabilities be translated at the current exchange rate.Gains and losses are recorded:

Correct Answer
verified

Gilts are government securities issued by:

Correct Answer
verified

The current spot rate for the Norwegian krone is $1 = NKr6.83.The expected inflation rate in Norway is 3 percent and in the U.S.2 percent.A risk-free asset in the U.S.is yielding 4.5 percent.What real rate of return should you expect on a risk-free Norwegian security?

Correct Answer
verified

The law of one price is also known as:

Correct Answer
verified

The idea that the exchange rate adjusts to keep buying power constant among currencies is called:

Correct Answer
verified

Exam 31: International Corporate Finance

The forward rate market is dependent upon:

Correct AnswerverifiedShow Answer

An agreement to exchange currencies at some point in the future using an agreed-upon exchange rate is called a _____ trade.

Correct AnswerverifiedShow Answer

_____ holds because of the possibility of covered interest arbitrage.

Correct AnswerverifiedShow Answer

Remitting cash flows is a term used to describe:

Correct AnswerverifiedShow Answer

International bonds issued in a single country and denominated in that country's currency are called:

Correct AnswerverifiedShow Answer

In the spot market,$1 is currently equal to £.55.The expected inflation rate in the U.K.is 4 percent and in the U.S.3 percent.What is the expected exchange rate two years from now if relative purchasing power parity exists?

Correct AnswerverifiedShow Answer

Assume that ¥107.62 equal $1.Also assume that 7.5415Skr equal $1.How many Japanese yen can you acquire in exchange for 6,200 Swedish krona?

Correct AnswerverifiedShow Answer

Absolute purchasing power parity is also known as:

Correct AnswerverifiedShow Answer

Financial Accounting Standard Board Statement Number 52 requires that most assets and liabilities be translated at the current exchange rate.Gains and losses are recorded:

Correct AnswerverifiedShow Answer

Gilts are government securities issued by:

Correct AnswerverifiedShow Answer

The current spot rate for the Norwegian krone is $1 = NKr6.83.The expected inflation rate in Norway is 3 percent and in the U.S.2 percent.A risk-free asset in the U.S.is yielding 4.5 percent.What real rate of return should you expect on a risk-free Norwegian security?

Correct AnswerverifiedShow Answer

The law of one price is also known as:

Correct AnswerverifiedShow Answer

The idea that the exchange rate adjusts to keep buying power constant among currencies is called:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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