I really need help on a few and to check my answers on most of them. Please only
ID: 2623166 • Letter: I
Question
I really need help on a few and to check my answers on most of them. Please only serious answers only. I will rate accordingly. Thanks!
1. Buying the stock of a French company is generally called making a(n):
a. direct investment in a foreign company.
b. foreign investment in France
c. portfolio investment in a French company
d. international investment
2. The value of a foreign currency, such as the British pound, stated in American dollars is the:
a. indirect rate
b. forward rate
c. direct quote
d. forward spot rate
3. If you can exchange one U.S. dollar for 100 Japanese yen, then 100 yen per dollar is the
a. direct spot rate
b. indirect quote
c. direct forward rate
d. direct quote
e. none of the above
4. Assume a recent quote showed a spot price for Canadian dollars of $.7376 and a six month forward rate of $.7373. The implication is that products made in Canada and sold in the U.S. will cost:
a. more in six months
b. less in six months
c. the same in six months
d. either b or c
5. The forward exchange rate between two currencies
a. depends on the date of delivery of one of the currencies.
b. can fluctuate over time.
c. is always stated in terms of US dollars.
d. a and b
e. all of the above
6. If the forward (direct quote) exchange rate is lower than the spot rate, the forward currency is said to be trading at a
a. premium.
b. gain.
c. discount.
d. loss.
7. An agreement between a commercial bank and a corporate customer to exchange a exact amount of one currency for another on a specific future date is called a
a. spot contract.
b. futures contract.
c. forward contract.
d. deferred contract.
8. Exchange rate risk in an international transaction represents uncertainty about
a. the level of foreign currency cash flows to be generated by the transaction.
b. the level of U.S. dollar cash flows to be realized from a transaction requiring immediate cash settlement.
c. the level of U.S. dollar cash flows to be realized from a transaction involving deferred payment.
d. a and c
e. all of the above
9. To reduce or eliminate exchange rate risk, international buyers usually hedge future payments with:
a. spot rates
b. forward rates
c. forward contracts
d. negotiations with the seller
10. If the U.S. dollar weakens against the Japanese Yen, which of the following will occur.
a. Japanese imports will be more expensive in the U.S.
b. Japanese imports will be less expensive in the U.S.
c. American imports will be less expensive in Japan.
d. Both a. and c. are correct.
e. None of the above is correct.
11. The currencies of ____ have traditionally not been convertible.
a. China
b. Great Britain
c. Russia
d. a and c
e. all of the above
12. An American dollar deposit in a London bank is a:
a. Europound deposit
b. Eurodollar deposit
c. US funds deposit
d. Liquid Assets deposit
13. A Eurobond is one denominated in a currency other than that of the country in which it is sold. Which of the following is not a distinguishing feature of Eurobonds?
a. They are issued in bearer form so the owner doesn't have to be identified.
b. Very strict adherence to the regulatory and disclosure requirements of the country in which the bond is issued is generally required.
c. Income taxes are not generally withheld on interest payments
d. a and b are not characteristic of Eurobonds
14. A recent direct quote for the British pound was $1.5547. The pound's indirect quote is:
a.
Explanation / Answer
1 c. portfolio investment in a French company 2 c. direct quote 3 b. indirect quote 4 a. more in six months 5 d. a and b 6 a. premium. 7 c. forward contract. 8 c. the level of U.S. dollar cash flows to be realized from a transaction involving deferred payment. 9 c. forward contracts 10 d. Both a. and c. are correct. 11 d. a and c 12 d. Liquid Assets deposit 13 b. Very strict adherence to the regulatory and disclosure requirements of the country in which the bond is issued is generally required. 14 d.