I have 60 questions. Can you please provide answers to them within 36 hours.

Thanks

1. The commonly accepted goal of the MNC is to: A) maximize short-term earnings. B) maximize shareholder wealth. C) minimize risk. D) A and C. E) maximize international sales. ANSWER: 2. Which of the following theories suggests that firms seek to penetrate new markets over time? A) theory of comparative advantage. B) imperfect markets theory. C) product cycle theory. D) none of the above ANSWER: 3. Which of the following is an example of direct foreign investment? A) exporting to a country. B) establishing licensing arrangements in a country. C) purchasing existing companies in a country. D) investing directly (without brokers) in foreign stocks. ANSWER: 4. If a countrys government imposes a tariff on imported goods, that countrys current account balance will likely __________ (assuming no retaliation by other governments). A) decrease B) increase C) remain unaffected D) either A or C are possible ANSWER: 5. An increase in the current account deficit will place _______ pressure on the home currency value, other things equal. A) upward B) downward C) no D) upward or downward (depending on the size of the deficit) ANSWER: 6. The primary component of the current account is the: A) balance of trade. B) balance of money market flows.

C) balance of capital market flows. D) unilateral transfers. ANSWER: 7. The demand for U.S. exports tends to increase when: A) economic growth in foreign countries decreases. B) the currencies of foreign countries strengthen against the dollar. C) U.S. inflation rises. D) none of the above ANSWER: 8. Dumping is used in the text to represent the: A) exporting of goods that do not meet quality standards. B) sales of junk bonds to foreign countries. C) removal of foreign subsidiaries by the host government. D) exporting of goods at prices below cost. ANSWER: 9. Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid-ask percentage spread is: A) about 4.44%. B) about 4.26%. C) about 4.03%. D) about 4.17%. ANSWER: 10. According to the text, the forward rate is commonly used for: A) hedging. B) Eurocurrency transactions. C) Eurocredit transactions. D) Eurobond transactions. ANSWER: 11. Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value of the Peruvian Sol in Canadian dollars is: A) about .3621 Canadian dollars. B) about .3977 Canadian dollars. C) about 2.36 Canadian dollars. D) about 2.51 Canadian dollars. ANSWER: 12. A forward contract can be used to lock in the __________ of a specified currency for a future point in time. A) purchase price B) sale price C) A or B D) none of the above

ANSWER: 13. LIBOR is: A) the interest rate commonly charged for loans between banks. B) the average inflation rate in European countries. C) the maximum loan rate ceiling on loans in the international money market. D) the maximum deposit rate ceiling on deposits in the international money market. E) the maximum interest rate offered on bonds that are issued in London. ANSWER: 14. According to the text, the average foreign exchange trading around the world ________ per day. A) equals about $200 billion B) equals about $400 billion C) equals about $700 billion D) exceeds $1 trillion ANSWER: 15. Futures contracts are typically _______; forward contracts are typically _______. A) sold on an exchange; sold on an exchange B) offered by commercial banks; sold on an exchange C) sold on an exchange; offered by commercial banks D) offered by commercial banks; offered by commercial banks ANSWER: 16. The value of the Australian dollar (A$) today is $0.73. Yesterday, the value of the Australian dollar was $0.69. The Australian dollar ________ by _______%. A) depreciated; 5.80 B) depreciated; 4.00 C) appreciated; 5.80 D) appreciated; 4.00 ANSWER:

17.

_________ is not a factor that causes currency supply and demand schedules to change. A) Relative inflation rates B) Relative interest rates C) Relative income levels D) Expectations E) All of the above are factors that cause currency supply and demand schedules to change.

ANSWER: 18. An increase in U.S. interest rates relative to German interest rates would likely ________ the U.S. demand for euros and _________ the supply of euros for sale. A) reduce; increase B) increase; reduce C) reduce; reduce D) increase; increase ANSWER: 19. Kalons, Inc. is a U.S.-based MNC that frequently imports raw materials from Canada. Kalons is typically invoiced for these goods in Canadian dollars and is concerned that the Canadian dollar will appreciate in the near future. Which of the following is not an appropriate hedging technique under these circumstances? A) purchase Canadian dollars forward. B) purchase Canadian dollar futures contracts. C) purchase Canadian dollar put options. D) purchase Canadian dollar call options. ANSWER: 20. The one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. The forward ________ is _______ percent. A) discount; 1.9 B) discount; 1.8 C) premium; 1.9 D) premium; 1.8 ANSWER: 21. Which of the following is the most likely strategy for a U.S. firm that will be receiving Swiss francs in the future and desires to avoid exchange rate risk (assume the firm has no offsetting position in francs)? A) purchase a call option on francs. B) sell a futures contract on francs. C) obtain a forward contract to purchase francs forward. D) all of the above are appropriate strategies for the scenario described. ANSWER: 22. When you own _______, there is no obligation on your part; however, when you own _______, there is an obligation on your part. A) call options; put options B) futures contracts; call options C) forward contracts; futures contracts D) put options; forward contracts ANSWER:

23. The shorter the time to the expiration date for a currency, the _______ will be the premium of a call option, and the _______ will be the premium of a put option, other things equal. A) greater; greater B) greater; lower C) lower; lower D) lower; greater ANSWER: 24. A weak dollar is normally expected to cause: A) high unemployment and high inflation in the U.S. B) high unemployment and low inflation in the U.S. C) low unemployment and low inflation in the U.S. D) low unemployment and high inflation in the U.S. ANSWER: 25. Under a managed float exchange rate system, the Fed may attempt to stimulate the U.S. economy by _______ the dollar. Such an adjustment in the dollars value should _______ the U.S. demand for products produced by major foreign countries. A) weakening; increase B) weakening; decrease C) strengthening; increase D) strengthening; decrease ANSWER: 26. The Fed may use a stimulative monetary policy with least concern about causing inflation if the dollars value is expected to: A) remain stable. B) strengthen. C) weaken. D) none of the above will have an impact on inflation. ANSWER: 27. If interest rate parity exists, then _______ is not feasible. A) forward realignment arbitrage B) triangular arbitrage C) covered interest arbitrage D) locational arbitrage ANSWER: 28. Which of the following operations benefits from appreciation of the firms local currency? A) borrowing in a foreign currency and converting the funds to the local currency prior to the appreciation. B) receiving earnings dividends from foreign subsidiaries. C) purchasing supplies locally rather than overseas.

D) exporting to foreign countries. ANSWER: 29. When the dollar strengthens, the reported consolidated earnings of U.S.-based MNCs are _______ affected by translation exposure. When the dollar weakens, the reported consolidated earnings are __________ affected. A) favorably; favorably affected but by a smaller degree B) favorably; favorably affected by a higher degree C) unfavorably; favorably affected D) favorably; unfavorably affected ANSWER: 30. Assume zero transaction costs. If the 180-day forward rate is an accurate estimate of the spot rate 180 days from now, then the real cost of hedging receivables will be: A) positive. B) negative. C) positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount. D) zero. ANSWER: 31. It is generally least difficult to effectively hedge various types of: A) translation exposure. B) transaction exposure. C) economic exposure. D) A and C ANSWER: 32. A macro-assessment of country risk: A) is adjusted for the particular business of the firm involved. B) excludes all aspects relevant to a particular firm or project. C) A and B D) none of the above ANSWER:

33. To best reduce exposure to a host government takeover, a subsidiary could: A) use a long-run profit perspective for business in that country. B) hire people from its own country if the host government does not cooperate. C) attempt to obtain supplies from its parent. D) borrow funds from its parent rather than from the host countrys creditors. ANSWER:

34. Higher interest rates in a foreign country tend to ________ the growth of an economy and ________ demand for the MNCs product. A) increase; increase B) reduce; reduce C) increase; reduce D) reduce; increase ANSWER: 35. A product cycle is the process by which a firm provides a specialized sales or service strategy, support assistance, and possibly an initial investment in the franchise in exchange for periodic fees. A) true. B) false. ANSWER: 36. The forward rate is the exchange rate used for immediate exchange of currencies. A) true. B) false. ANSWER: 37. A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency. A) true. B) false. ANSWER: 38. A futures contract is a contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date. A) true. B) false. ANSWER: 39. Non-deliverable forward contracts (NDFs) are frequently used for currencies in emerging markets. A) true. B) false. ANSWER: 40. The price of a futures contract will generally vary significantly from that of a forward contract. A) true. B) false. ANSWER:

41. The writer of a call option is obligated to sell the underlying currency to the buyer of the option if the option is exercised. A) true. B) false. ANSWER: 42. If an investor who has previously purchased a futures contract wishes to liquidate his or her position, he or she would sell an identical futures contract with the same settlement date. A) true. B) false. ANSWER: 43. Under a pegged exchange rate system, the home currencys value is pegged to a foreign currency or to some unit of account. A) true. B) false. ANSWER: 44. The establishment of the euro allows for more consistent economic conditions across countries but eliminates the power of any individual European country to solve local economic problems with its own unique monetary policy. A) true. B) false. ANSWER: 45. Currency devaluation can boost a countrys exports, but currency revaluation can increase foreign competition. A) true. B) false. ANSWER: 46. Research indicates that deviations from purchasing power parity (PPP) are reduced over the long run. A) true. B) false. ANSWER: 47. Corporations tend to make only limited use of technical forecasting because it typically focuses on the near future, which is not very helpful for developing corporate policies. A) true. B) false. ANSWER:

48. Inflation and interest rate differentials between the U.S. and foreign countries are examples of variables that could be used in fundamental forecasting. A) true. B) false. ANSWER: 49. If foreign exchange markets are strong-form efficient, then all relevant public and private information is already reflected in todays exchange rates. A) true. B) false. ANSWER: 50. Two highly negatively correlated currencies act almost as if they are the same currency. A) true. B) false. ANSWER: 51. A reduction in hedging will probably reduce transaction exposure. A) true. B) false. ANSWER: 52. To hedge a payable position with a currency option hedge, an MNC would write a call option. A) true. B) false. ANSWER: 53. If an MNC is hedging various currencies, it should measure the real cost of hedging in each currency as a dollar amount for comparison purposes. A) true. B) false. ANSWER:

54. If an MNC is extremely risk-averse, it may decide to hedge even though its hedging analysis indicates that remaining unhedged will probably be less costly than hedging. A) true. B) false. ANSWER:

55. Hedging translation exposure with forward contracts can backfire if the currency being hedged depreciates. A) true. B) false. ANSWER: 56. Higher interest rates tend to increase the growth of an economy and increase the demand for an MNCs products. A) true. B) false. ANSWER: 57. While an overall risk rating of a country can be useful, it cannot always detect upcoming crises. A) true. B) false. ANSWER: 58. Delphi analysis examines the financial and political factors of various countries and attempts to identify which factors help to distinguish between tolerable-risk and intolerable-risk countries. A) true. B) false. ANSWER: 59. In assessing the risk of an individual project, the expected correlation of the new projects returns with those of the prevailing business should be considered. A) true. B) false. ANSWER: 60. They key to international diversification is selecting foreign projects whose performance levels are highly correlated over time. A) true. B) false. ANSWER: