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Describe the global debt markets.

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The international debt markets can be cl...

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The bid quote is the rate at which the dealer will sell foreign currency.

A) True
B) False

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The three largest foreign exchange markets based on daily volume are


A) London, New York, and Tokyo.
B) New York, Tokyo, and Zurich.
C) London, Tokyo, and Zurich.
D) London, New York, and Singapore.

E) C) and D)
F) A) and C)

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Tokyo is the largest foreign exchange trading center.

A) True
B) False

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Hedging: Carrington Industries sold equipment to a Mexican firm. Payment of 41,275,000 pesos will be due in 30 days. Carrington has the option of selling the pesos at a 30-day forward rate of $0.09739/peso. If it waits 30 days to sell the pesos, the expected spot rate is $0.09596/peso. How much additional dollar revenue will Carrington get by selling forward the pesos? Round to the nearest dollar.


A) $24,687
B) $83,838
C) $59,023
D) $31,278

E) B) and C)
F) A) and D)

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While production of goods has been moved overseas, American consumers only purchase domestic goods.

A) True
B) False

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Factors that can cause international business transactions to differ from domestic deals include all EXCEPT:


A) Exchange rate risk, legal systems, and country risk.
B) Legal systems, cultural factors, and economic systems.
C) Exchange rate risk, country risk, and size of market.
D) Economic systems, cultural factors, and country risk

E) None of the above
F) A) and B)

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Which one of the following statements about multinational firms is NOT true?


A) A multinational corporation is a business firm that operates in more than one country but is headquartered or based in its home country.
B) Multinational corporations are owned by domestic stockholders only.
C) Multinational corporations may purchase raw materials from one country, obtain financing from a capital market in another country, and produce finished goods with labor and capital equipment from a third country.
D) All of the above

E) All of the above
F) A) and D)

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Which ONE of the following statements about the goal of the firm is true?


A) Corporate wealth maximization is the accepted goal for firms in India.
B) Firms in Australia focus on maximizing corporate wealth.
C) The goal of the Japanese business manager is to increase the wealth and growth of the keiretsu.
D) Private-sector firms in China focus on providing full employment in the economy.

E) B) and D)
F) C) and D)

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Cross rate: Xecor Pharma just received revenues of $2,372,300 in Australian dollars (A$) . The only quotes management received are A$2.0651/£ and $1.8538/£. What is the U.S. dollar value of the company's revenues? Round to the nearest dollar.


A) $4,397,770
B) $4,899,037
C) $2,129,533
D) $9,081,834

E) A) and D)
F) C) and D)

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Integration of the financial system globally is a result of deregulation of foreign exchange markets, money and capital markets, and banking systems.

A) True
B) False

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Legal systems can vary on simple matters, such as opening a business, selecting a site location, and hiring employees.

A) True
B) False

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Which ONE of the following statements about the goal of the firm is true?


A) Stockholder value maximization is the accepted goal for firms in India.
B) Firms in Germany focus on maximizing corporate wealth.
C) The goal of the Japanese business manager is to increase the wealth and growth of the keiretsu.
D) All of the above

E) A) and D)
F) B) and C)

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Forward rate: Baljit, Inc., purchased machinery from a Japanese firm and will have to pay ¥278.45 million in 90 days. The bank quotes a forward rate of ¥105.46/$ to buy the required yen. What is the cost to Baljit in U.S. dollars?


A) $2,640,338
B) $2,784,500
C) $2,936,534
D) $2,714,300

E) B) and D)
F) A) and D)

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Stockholder wealth maximization is the accepted goal for firms in all countries around the world.

A) True
B) False

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Loan pricing: Zylex Corporation's German unit is looking to borrow €4.5 million from Deutsche Bank. Deutsche Bank quotes a rate of three-month LIBOR plus 0.5 percent for the 90-day loan. Currently, the three-month LIBOR is 4.175 percent. If the exchange rate on the payoff date is €0.8334/$, what is the dollar cost of the loan?


A) $63,107.45
B) $126,214.90
C) $39,143.76
D) $56,357.99

E) A) and B)
F) A) and C)

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Spot rate: Given that the spot rate is $1.5136/€ and the 90-day forward quote is $1.4974/€, we can say that


A) the U.S. dollar is at a forward premium against the euro.
B) the U.S. dollar is at a forward discount against the euro.
C) the euro is at a forward premium against the U.S. dollar.
D) the dollar is at neither a premium nor a discount against the euro.

E) B) and C)
F) C) and D)

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The ways that a foreign government can affect the risk of a foreign project include:


A) Change tax laws in a way that adversely impacts the firm.
B) Impose laws related to labor, wages, and prices that are more restrictive than those applicable for domestic firms.
C) Disallow any remittance of funds from the subsidiary to the parent firm for either a limited period of time or the duration of the project.
D) All of the above.

E) All of the above
F) B) and C)

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Which ONE of the following statements about Eurocredits is true?


A) The international banking system gathers funds from businesses and governments in the Eurocurrency market and then allocates funds to banks that have the most profitable lending opportunities.
B) Eurocredits are denominated in all major Eurocurrencies, although the dollar is the overwhelming favorite.
C) Eurocredits are short- to medium-term loans made to multinational corporations and governments of medium to high credit quality.
D) All of the above.

E) C) and D)
F) A) and C)

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To convert the project's future cash flows into another currency, we need to come up with projected or forecast exchange rates.

A) True
B) False

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Showing 41 - 60 of 83

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