FIN 403 Final Exam PLEASE DOWNLOAD THE ANSWERS HERE!!! 1. Which of the following is an international finance risk factor? a) Political b) Temperature c) Balance of payment 2. What is most likely the consequence of globalization? a) Prosperous world economy b) More trade opportunities c) Decrease in local job opportunities 3. What is World Bank’s objective? a) Promote stability in exchange rates b) Make loans to countries in order to enhance economic development c) Promote private enterprise within countries 4. 1 year go, 1 Hong Kong Dollar. Currently 1 Hong Kong Dollar. Therefore, US Dollar has a) Appreciated b) Depreciated c) No way to tell. 5. Which of the following BEST exemplifies the relationship among the international flow of goods, services, and capital, the balance of payments, and domestic economic behavior? a) Interest rate, depreciation rate, and cross rate b) Inflation rate, tax rate, and deflation rate c) Interest rate, inflation, and exchange rate 6. Appreciation of US Dollar will encourage a) Importation b) Exportation c) no change in America. 7. A weak dollar places a) downward b) upward pressure on U.S. inflation, which in turn places further downward pressure on the value of the dollar. 8. Forward currency contracts are created in organized exchanges like the NYSE or the Chicago Mercantile Exchange. a) True b) False 9. Which of the following is a function of the derivatives market? a) Selling b) Hedging c) Fisher effect d) Increased cost of capital 10. Which of the following derivatives could be used in speculation and hedging in the foreign market? a) Money market b) Capital market c) Option d) Internet 11. Which of the following is NOT an international risk consideration? A) Terrorism b) Poverty c) Historical exchange rate d) Cross-cultural risks 12. Select the characteristic of Monopoly a) Investment in Research & Development b) Buyers can shop around c) Pricing is determined through supply and demand. 13. Which would be the most favorable to foreign investment for a U.S. organization? a) Canada-interest rate 14%, inflation 10% b) Japan-interest rate 15%, inflation 16% c) Iraq-interest rate 25%, inflation 20% d) Australia-interest rate 13%, inflation 18% 14. a) High national income b) Strong local currency c) Political situation tends NOT to result in a strong demand for imports and a current account deficit. 15. The difference between Future Contracts and Call options is that future contracts require an obligation, which option does not. a) True b) False 16. What type of risk exposure measures consolidated financial statements to exchange rate movements? a) Transaction exposure b) Economic Exposure c) Translation Exposure 17. Currently, 1 US Dollar. Therefore, 1,000 ,490 US Dollar. 2 years ago, 1 US Dollar. How much Euro would 1,490 US Dollar convert to back 2 years ago? a) 1,000 Euro b) 1,173 Euro c) 1,500 Euro 18. Select the factors used by MNCs to measure a country’s financial risk. a) Interest rate b) Exchange rate c) Inflation rates d) all the above 19. What instrument issued by a bank on behalf of the importer (buyer) promising to pay the exporter (beneficiary) upon presentation of shipping documents in compliance with the terms stipulated. a) Draft b) Letter of Credit c) Open account 20. Decisions to invest in a foreign country must weight the potential benefits against costs and additional risk. Which one is least likely to be considered as benefit from Direct Foreign Investment? a) Use foreign technology b) Attract new sources of demand c) Use foreign raw materials d) None of above FIN 403 Final Exam PLEASE DOWNLOAD THE ANSWERS HERE!!!
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