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Submitted by Aplustutor on Mon, 2013-11-18 13:05
due on Sun, 2013-12-08 00:00
answered 1 time(s)
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Fin 535

Question 1

 







  1.  



    The least risky method by which firms conduct

    international business is:
    Answer







    Franchising.







    The acquisitions of existing

    operations.







    International

    Trade.







    The establishment of new

    subsidiaries.







    Licensing

 

5 points  

 

Question 2

 







  1.  



    Assume that an American firm wants to engage in

    international business without major investment in the foreign country. Which

    method is least appropriate in this situation?
    Answer







    International

    Trade







    Licensing







    Franchising







    Direct foreign

    investment

 

5 points  

 

Question 3

 







  1.  



    Which of the following does not constitute a

    form of direct foreign investment?
    Answer







    Franchising







    International

    trade







    Joint

    ventures







    Acquisitions of existing

    operations







    Establishment of new foreign

    subsidiaries

 

5 points  

 

Question 4

 







  1.  



    An MNC may be more exposed to agency problems

    if most of its shares are held by:
    Answer







    a few mutual

    funds







    a widely dispersed set of

    individual investors







    a few pension

    funds







    individual

    stockholders

 

5 points  

 

Question 5

 







  1.  



    With regard to corporate goals, an MNC is

    mostly concerned with maximizing ____, and a purely domestic firm is mostly

    concerned with maximizing ____.
    Answer







    shareholder wealth; short-term

    earnings







    shareholder wealth; shareholder

    wealth







    short-term earnings; sales

    volume







    short-term earnings; shareholder

    wealth

 

5 points  

 

Question 6

 







  1.  



    ____ purchases more U.S. exports than the

    other countries listed here.
    Answer







    Italy







    Spain







    Mexico







    Canada

 

5 points  

 

Question 7

 







  1.  



    ____ represent aid, grants, and gifts from one

    country to another.
    Answer







    Transfer

    payments







    Factor

    income







    The balance of

    trade







    The balance of

    payments







    The capital

    account

 

5 points  

 

Question 8

 







  1.  



    The World Bank was established

    to:
    Answer







    enhance development solely in Asia

    through grants.







    enhance economic development

    through non-subsidized loans (at market interest rates).







    enhance economic development

    through low-interest rate loans (below-market rates).







    enhance economic development of the

    private sector through investment in stock of

    corporations.

 

5 points  

 

Question 9

 







  1.  



    A General Agreement on Tariffs and Trade

    (GATT) accord in 1993 called for:
    Answer







    increased trade restrictions

    outside of North America.







    lower trade restrictions around the

    world.







    uniform environmental standards

    around the world.







    uniform worker health

    laws.

 

5 points  

 

Question 10

 







  1.  



    The ____, an accord among 117 nations, called

    for lower tariffs around the world.
    Answer







    General Agreement on Tariffs and

    Trade (GATT)







    North American Free Trade Agreement

    (NAFTA)







    Single European Act of

    1987







    European Union

    Accord

 

5 points  

 

Question 11

 







  1.  



    If a U.S. firm desires to avoid the risk from

    exchange rate fluctuations, and it will need C$200,000 in 90 days to make

    payment on imports from Canada, it could:
    Answer







    obtain a 90-day forward purchase

    contract on Canadian dollars.







    obtain a 90-day forward sale

    contract on Canadian dollars.







    purchase Canadian dollars 90 days

    from now at the spot rate.







    sell Canadian dollars 90 days from

    now at the spot rate.

 

5 points  

 

Question 12

 







  1.  



    If companies can rely on stock markets to

    obtain funds, they will have to rely more heavily on the ____ market to raise

    long-term funds.
    Answer







    derivative







    long-term

    credit







    money







    foreign

    exchange

 

5 points  

 

Question 13

 







  1.  



    Futures contracts are typically ____; forward

    contracts are typically ____.
    Answer







    sold on an exchange; sold on an

    exchange







    offered by commercial banks; sold

    on an exchange







    sold on an exchange; offered by

    commercial banks







    offered by commercial banks;

    offered by commercial banks

 

5 points  

 

Question 14

 







  1.  



    Which currency is used the most to denominate

    Eurobonds?
    Answer







    the British

    pound.







    the Japanese

    yen.







    the U.S.

    dollar.







    the Swiss

    franc.

 

5 points  

 

Question 15

 







  1.  



    A syndicated loan:
    Answer







    represents a loan by a single bank

    to a syndicate of corporations.







    represents a loan by a single bank

    to a syndicate of country governments.







    represents a direct loan by a

    syndicate of oil-producing exporters to a less developed

    country.







    represents a loan by a group of

    banks to a borrower.

 

5 points  

 

Question 16

 







  1.  



    Assume that Swiss investors have francs

    available to invest in securities, and they initially view U.S. and British

    interest rates as equally attractive. Now assume that U.S. interest rates

    increase while British interest rates stay the same. This would likely

    cause:
    Answer







    the Swiss demand for dollars to

    decrease and the dollar will depreciate against the

    pound.







    the Swiss demand for dollars to

    increase and the dollar will depreciate against the Swiss

    franc.







    the Swiss demand for dollars to

    increase and the dollar will appreciate against the Swiss

    franc.







    the Swiss demand for dollars to

    decrease and the dollar will appreciate against the

    pound.

 

5 points  

 

Question 17

 







  1.  



    Which of the following events would most

    likely result in an appreciation of the U.S. dollar?
    Answer







    U.S. inflation is very

    high.







    The Fed indicates that it will

    raise U.S. interest rates.







    Future U.S. interest rates are

    expected to decline.







    Japan is expected to increase

    interest rates in the near

    future.

 

5 points  

 

Question 18

 







  1.  



    When the "real" interest rate is relatively

    low in a given country, then the currency of that country is typically expected

    to be:
    Answer







    weak, since the country's quoted

    interest rate would be high relative to the inflation

    rate.







    strong, since the country's quoted

    interest rate would be low relative to the inflation

    rate.







    strong, since the country's quoted

    interest rate would be high relative to the inflation

    rate.







    weak, since the country's quoted

    interest rate would be low relative to the inflation

    rate.

 

5 points  

 

Question 19

 







  1.  



    Any event that reduces the U.S. demand for

    Japanese yen should result in a(n) ____ in the value of the Japanese yen with

    respect to ____, other things being equal.
    Answer







    increase; U.S.

    dollar







    increase; nondollar

    currencies







    decrease; nondollar

    currencies







    decrease; U.S.

    dollar

 

5 points  

 

Question 20

 







  1.  



    The equilibrium exchange rate of pounds is

    $1.70. At an exchange rate of $1.72 per pound:
    Answer







    U.S. demand for pounds would exceed

    the supply of pounds for sale and there would be a shortage of pounds in the

    foreign exchange market.







    U.S. demand for pounds would be

    less than the supply of pounds for sale and there would be a shortage of pounds

    in the foreign exchange market.







    U.S. demand for pounds would exceed

    the supply of pounds for sale and there would be a surplus of pounds in the

    foreign exchange market.







    U.S. demand for pounds would be

    less than the supply of pounds for sale and there would be a surplus of pounds

    in the foreign exchange market.







    U.S. demand for pounds would be

    equal to the supply of pounds for sale and there would be a shortage of pounds

    in the foreign exchange

    market.

 

5 points  



 

Question 21

 







  1.  



    Currency options are commonly traded through

    the ____ system.
    Answer







    robot







    Euro







    GLOBEX







    Scope

 

5 points  



 

Question 22

 







  1.  



    European currency options can be exercised

    ____; American currency options can be exercised

    ____.
    Answer







    any time up to the expiration

    date; any time up to the expiration date







    any time up to the expiration

    date; only on the expiration date







    only on the expiration date; only

    on the expiration date







    only on the expiration date; any

    time up to the expiration

    date

 

5 points  



 

Question 23

 







  1.  



    If you have a position where you might be

    obligated to buy Euros, you are:
    Answer







    a call

    writer.







    a put

    writer.







    a put

    buyer.







    a futures

    seller.

 

5 points  



 

Question 24

 







  1.  



    Currency futures contracts sold on an

    exchange:
    Answer







    contain a commitment to the owner,

    and are standardized.







    contain a commitment to the owner,

    and can be tailored to the desire of the owner.







    contain a right but not a

    commitment to the owner, and can be tailored to the desire of the

    owner.







    contain a right but not a

    commitment to the owner, and are

    standardized.

 

5 points  



 

Question 25

 







  1.  



    If the spot rate of the euro increased

    substantially over a one-month period, the futures price on euros would likely

    ____ over that same period.
    Answer







    increase

    slightly







    decrease

    substantially







    increase

    substantially







    stay the

    same

 

5 points  



 

Question 26

 







  1.  



    Which of the following countries have not

    adopted the euro?
    Answer







    Germany







    Italy







    Switzerland







    France

 

5 points  



 

Question 27

 







  1.  



    Countries that have adopted the euro must

    agree on a single ____ policy.
    Answer







    monetary







    fiscal







    worker

    compensation







    foreign

    relations

 

5 points  



 

Question 28

 







  1.  



    During the period 1944-1971, the U.S. used a

    ____ system.
    Answer







    euro exchange

    rate







    fixed







    dirty

    float







    flexible

 

5 points  



 

Question 29

 







  1.  



    A weak dollar is normally expected to

    cause:
    Answer







    high unemployment and high

    inflation in the U.S.







    high unemployment and low

    inflation in the U.S.







    low unemployment and low inflation

    in the U.S.







    low unemployment and high

    inflation in the U.S.

 

5 points  



 

Question 30

 







  1.  



    Which of the following is the most likely

    reason for revaluation of a currency?
    Answer







    To reduce

    inflation.







    To stimulate the local

    economy.







    To increase the amount of

    exports.







    To increase balance-of-trade

    surplus.

 

5 points  



 

Question 31

 







  1.  



    Assume that interest rate parity holds. U.S.

    interest rate is 13% and British interest rate is 10%. The forward rate on

    British pounds exhibits a ____ of ____ percent.
    Answer







    discount;

    2.73







    premium;

    2.73







    discount;

    3.65







    premium;

    3.65

 

5 points  



 

Question 32

 







  1.  



    Based on interest rate parity, the larger the

    degree by which the foreign interest rate exceeds the U.S. interest rate,

    the:
    Answer







    larger will be the forward

    discount of the foreign currency.







    larger will be the forward premium

    of the foreign currency.







    smaller will be the forward

    premium of the foreign currency.







    smaller will be the forward

    discount of the foreign

    currency.

 

5 points  



 

Question 33

 







  1.  



    If interest rate parity exists, then ____ is

    not feasible.
    Answer







    forward realignment

    arbitrage







    triangular

    arbitrage







    covered interest

    arbitrage







    locational

    arbitrage

 

5 points  



 

Question 34

 







  1.  



    Points above the IRP line represent

    situations where:
    Answer







    covered interest arbitrage is

    feasible from the perspective of domestic investors and results in the same

    yield as investing domestically.







    covered interest arbitrage is

    feasible from the perspective of domestic investors and results in a yield above

    what is possible domestically.







    covered interest arbitrage is

    feasible from the perspective of foreign investors and results in a yield above

    what is possible in their local markets.







    covered interest arbitrage is not

    feasible for neither domestic nor foreign

    investors.

 

5 points  



 

Question 35

 







  1.  



    Which of the following is an example of

    triangular arbitrage initiation?
    Answer







    buying a currency at one bank's

    ask and selling at another bank's bid, which is higher than the former bank's

    ask.







    buying Singapore dollars from a

    bank (quoted at $.55) that has quoted the South African rand (SAR)/Singapore

    dollar (S$) exchange rate at SAR2.50 when the spot rate for the rand is

    $.20.







    buying Singapore dollars from a

    bank (quoted at $.55) that has quoted the South African rand/Singapore dollar

    exchange rate at SAR3.00 when the spot rate for the rand is

    $.20.







    converting funds to a foreign

    currency and investing the funds

    overseas.

 

5 points  

Answer
Submitted by Aplustutor on Mon, 2013-11-18 13:24
teacher rated 107 times
4.457945
price: $80.00

Fin 535

body preview (193 words)

Answers

x              c              xxx establishment of new

xx

xxxxxxxxxxxxx

x xxxxxxxxxxxxxxxxxxxxxxxx d xxxxxxxxxxxxxxxxxxxxxx xxxxxx foreign

investment

x              x xxxxxxxxxxxxxxxxxxxxxx International trade

x              x xxxxxxxxxxxxxxxxxxxxxx x xxxxxx dispersed set of xxxxxxxxxx investors

5              x             shareholder wealth; shareholder

xxxxxx

6              xx xxxxxxxxxxxxxxxxxxxx canada

7 xxxxxxxxxxxxxxxxxxxxxxxx x xxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxx

payments

8 xxxxxxxxxxxxxxxxxxxxxxxx b xxxxxxxxxxxxxxxxxxxxxx enhance economic development

xxxxxxx non-subsidized loans (at xxxxxx xxxxxxxx rates).

9 xxxxxxxxxxxxxxxxxxxxxxxx x xxxxxxxxxxxxxxxxxxxxxx

lower xxxxx xxxxxxxxxxxx around the

xxxxxx

xx           x xxxxxxxxxxxxxxxxxxxxxxxx General xxxxxxxxx xx Tariffs and

xxxxx xxxxxx

xxx xx obtain x 90-day forward xxxxxxxx xxxxxxxx xx Canadian xxxxxxxx

xx

xxx xx xxxxxxxxx credit

xxx c. sold xx an xxxxxxxxx xxxxxxx xx commercial banks

14 xxxxxxxxxxxxxxxxxx x              xxxxx xxxxxxxx xx xxxx the most to denominate

xxxxxxxxxx

xx           x xxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxx a xxxx by a group xx xxxxx to a borrower

16. xx

xx

the Swiss xxxxxx xxx xxxxxxx xx xxxxxxxx xxx the xxxxxx xxxx appreciate against xxx Swiss franc.

17. B. xxx Fed indicates xxxx it xxxx xxxxx U.S. interest rates.

18. xx weak, xxxxx the country's xxxxxx interest xxxx would xx xxx xxxxxxxx to the inflation xxxxx

19           D

xx           D

xxx x

xxx A

25. c

27. x

xxx b

xx           C

xx           x

xx           B

34           x

xx           x

file1.docx preview (155 words)

1 xx xxxx xxxxxxxxxxxxx xx new

subsidiaries.

2 xx xxxxxxx xxxxxxx

investment

3 b xxxxxxxxxxxxxx trade

4 b xx xxxxxx dispersed set of individual xxxxxxxxx

x b shareholder xxxxxxx shareholder

wealth

x d. canada

7 xx

xxxxxxxx

payments

8 b enhance economic development

xxxxxxx xxxxxxxxxxxxxx xxxxx xxx xxxxxx interest xxxxxxx

x xx

lower xxxxx xxxxxxxxxxxx around the

world.

xx a General Agreement on Tariffs xxx

xxxxx xxxxxx

11. xx obtain a 90-day forward xxxxxxxx contract on xxxxxxxx dollars.

12. B. long-term credit

13. c. xxxx on xx xxxxxxxxx xxxxxxx xx xxxxxxxxxx xxxxx

xx c Which currency xx used xxx xxxx to xxxxxxxxxx

xxxxxxxxxx

xx xx represents x loan by a xxxxx xx banks to a xxxxxxxx

16. xx

xxx Swiss demand for xxxxxxx to increase xxx xxx dollar will appreciate xxxxxxx the xxxxx xxxxxx

17. xx The xxx xxxxxxxxx xxxx it xxxx raise U.S. xxxxxxxx rates.

18. xx weak, xxxxx xxx xxxxxxxxx quoted xxxxxxxx xxxx would xx low xxxxxxxx xx xxx inflation rate.

xx D

20 D


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