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International Corporate Finance Basics Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. The idea that the market will react to try to achieve uncovered interest rate parity is called which of the following?

Question 2 2. Which of the following is the term for the current exchange rate?

Question 3 3. The value of one currency against another is which of the following?

Question 4 4. Matilda's investments in Russia earn 7% less than in Nigeria. The spot exchange rate between the two countries is likewise 7%. This is an example of which of the following?

Question 5 5. Sam, from the United States, buys $10,000 USD of Indian rupees because he thinks that the rupee will become stronger compared to the dollar. This is an example of which of the following?

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Question 6 6. Nathaniel wants to avoid dealing with exchange rates, so he leaves his company's money in foreign currencies. Which form of exposure does he still have associated risk with?

Question 7 7. Falling stock prices can occur due to reporting issues associated with _____ exposure.

Question 8 8. Mirza is a CEO whose company does business overseas. He worries about large economic events that could happen in the future, and how they might cause his company to lose money. Which type of exposure is he worried about?

Question 9 9. Eva is worried that the exchange rates will cause her company to lose money if she exchanges it tomorrow or the next day. Which form of exposure is she worried about?

Question 10 10. Geordie's company will be doing business in a country for many years in the future. To help mitigate the day-to-day fluctuations in exchange rates, he wants to lock in a _____ exchange rate.

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Question 11 11. The most common political risk of doing business in another country is which of the following?

Question 12 12. David is doing business in a country whose elected officials have traditionally supported very low corporate taxes. In this latest election, though, new officials were put in office that might raise tax rates on corporations. To justify keeping his business in that country, David should receive which of the following?

Question 13 13. Henri owns a multinational company that does business in a country where a civil war just broke out. As a result, Henri is likely to see a drop in which of the following?

Question 14 14. Which type of country should offer the highest financial return for a company?

Question 15 15. Which of the following is a political risk to a company's bottom line?

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Question 16 16. What is the value of one currency against another called?

Question 17 17. According to the home currency approach, after estimating cash flow in foreign currency and the future exchange rate, why would the company perform the next part of the process?

Question 18 18. In the home currency approach, international business is based on the currency of the _____.

Question 19 19. Which approach to international capital management ignores or discounts short-term fluctuations in the exchange rate?

Question 20 20. What type of approach is the home currency approach to capital management?

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Question 21 21. What is the rate at which one currency is converted in another called?

Question 22 22. Which of the following statements is true?

Question 23 23. If the American dollar rose in value in relation to the Japanese Yen, what would likely be the effect?

Question 24 24. If more Americans want to suddenly purchase goods in Mexico, what likely happens?

Question 25 25. When are exchange rates determined by demand and supply forces?

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Question 26 26. Which of the following is true of purchasing power?

Question 27 27. The U.S. dollar is valued at 0.94 euros. If arbitrage occurs, what will happen to the value of the dollar?

Question 28 28. In the event that prices don't match, a consumer will look to the lesser price country to buy the product in order to save money. This is known as _____.

Question 29 29. The exchange rate between two countries will remain the same as the ratio of the price levels for the same two countries. This is an example of _____.

Question 30 30. Which of the following is an example of a law of price provision?

International Corporate Finance Basics Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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