Questions:
Question1. Monetary policy for the countries using the euro as a currency is now conducted by: the Federal Reserve.
the Bundesbank.
European Central Bank.
none of the above.
Question 2. The capital account may be divided into three categories:
Cross-border mergers and acquisitions, portfolio investment, and other investment
Direct investment, portfolio investment, and Cross-border mergers and acquisitions
Direct investment, mergers and acquisitions, and other investment
Direct investment, portfolio investment, and other investment
Question 3. The official reserve account includes:
the export and import of goods and services.
all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.
all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs).
none of the above.
Question 4. Privatization:
has spurred a tremendous increase in cross-border investment.
has allowed many governments to have the funds to nationalize important industries.
has guaranteed that new ownership will be limited to the local citizens.
has generally decreased the efficiency of the enterprise.
Question 5. Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to:
carefully manage their exchange risk exposure.
carefully measure their exchange risk exposure.
both a) and b)
Question 6. If the United States imports more than it exports, this means that:
the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.
the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus.
the U.S. dollar would be under pressure to appreciate against other currencies.
both b) and c) are correct.
Question 7. What major dimension sets apart international finance from domestic finance?
foreign exchange and political risks
Market imperfections
Expanded opportunity set
all of the above
Question 8. The international monetary system can be defined as the institutional framework within which:
international payments are made.
movement of capital is accommodated.
exchange rates among currencies are determined.
all of the above.
Question 9. Prior to the 1870s, both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. Suppose that the dollar was pegged to gold at $30 per ounce, the French franc is pegged to gold at 90 francs per ounce and to silver at 6 francs per ounce of silver, and the German mark pegged to silver at one mark per ounce of silver. What would the exchange rate between the U.S. dollar and German mark be under this system?
one German mark = $2
one German mark = $0.50
one German mark = $3
one German mark = $1
Question 10.Multinational corporations (MNCs) can use their global presence to:
take advantage of under-priced labor services available in certain developing countries.
gain access to special R&D capabilities residing in advanced foreign counties.
boost profit margins and create shareholder value.
all of the above.