Test bank International Finance MCQ wordChap 10.docx

1、Test bank International Finance MCQ wordChap 10Fundamentals of Multinational Finance, 3e (Moffett) Chapter 10 Operating Exposure10.1 Multiple Choice and True/False Questions1) Another name for operating exposure is _ exposure. A) economic B) competitive C) strategic D) all of the above Answer: D Top

2、ic: Operating Exposure Skill: Recognition2) What type of international risk exposure measures the change in present value of a firm resulting from changes in future operating cash flows caused by any unexpected change in exchange rates? A) transaction exposure B) accounting exposure C) operating exp

3、osure D) translation exposure Answer: C Topic: Operating Exposure Skill: Recognition3) The goal of operating exposure analysis is to identify strategic operating techniques the firm might adopt to enhance value in the face of unanticipated exchange rate changes. Answer: TRUE Topic: Operating Exposur

4、e Skill: Conceptual4) _ cash flows arise from intracompany and intercompany receivables and payments while _ cash flows are payments for the use of loans and equity. A) Financing; operating B) Operating; financing C) Operating; accounting D) Accounting; financing Answer: B Topic: Operating and Finan

5、cial Cash Flows Skill: Recognition5) Operating cash flows may occur in different currencies and at different times, but financing cash flows may occur only in a single currency. Answer: FALSE Topic: Operating and Financial Cash Flows Skill: Recognition 6) Which of the following is NOT an example of

6、a financial cash flow? A) parent invested equity capital B) interest on intrafirm lending C) payment for goods and services D) intrafirm principal payments Answer: C Topic: Financial Cash Flows Skill: Recognition7) Which of the following is NOT an example of an operating cash flow? A) management fee

7、s and distributed overhead B) royalties and license fees C) rent and lease payments D) dividend paid to parent company Answer: D Topic: Operating Cash Flows Skill: Recognition8) _ exposure is far more important for the long-run health of a business than changes caused by _ or _ exposure. A) Operatin

8、g; translation; transaction B) Transaction; operating; translation C) Accounting; translation; transaction D) Translation; operating; transaction Answer: A Topic: Operating; Transaction; and Translation Exposure Skill: Conceptual9) Expected changes in foreign exchange rates should already be factore

9、d into anticipated operating results by management and investors. Answer: TRUE Topic: Expectations Skill: Conceptual10) Under conditions of equilibrium, management would use _ exchange rate as an unbiased predictor of future spot rates when preparing operating budgets. A) the current spot B) the for

10、ward rate C) the black market D) none of the above Answer: B Topic: Forward Rate Skill: Conceptual 11) Simpson Sign Company based in Frostbite Falls, Minnesota has a 6-month C$100,000 contract to complete sign work in Winnipeg , Manitoba, Canada. The current spot rate is $1.02/C$ and the forward rat

11、e is $1.01/C$. Under conditions of equilibrium, management would use today _ when preparing operating budgets. A) $102,000 B) $101,000 C) $100,000 D) None of the above Answer: B Topic: Forward Rate Skill: Analytical12) In equilibrium, expected cash flow to amortize international debt obligations sho

12、uld reflect the _. A) current spot rate B) the spot rate when the loan was contracted C) the international Fisher effect D) none of the above Answer: C Topic: Exchange Rate Equilibrium Skill: Conceptual13) From an investors perspective, if the foreign exchange market is efficient, information about

13、expected changes in exchange rates should be widely known and thus reflected in a firms market value. Only _ in exchange rates or an _ foreign exchange market, should cause market value to change. A) expected changes; efficient B) unexpected changes; efficient C) expected changes; inefficient D) une

14、xpected changes; inefficient Answer: D Topic: Exchange Rate Equilibrium Skill: Conceptual14) Which of the following is NOT an example of diversifying operations? A) diversifying sales B) diversifying location of operations C) raising funds in more than one country D) sourcing raw materials in more t

15、han one country Answer: C Topic: Foreign Exchange Diversification Skill: Recognition15) Which of the following is NOT an example of diversification in financing? A) raising funds in more than one market B) raising funds in more than one country C) diversifying sales D) All of the above qualify. Answ

16、er: C Topic: Foreign Exchange Diversification Skill: Recognition 16) Management must be able to predict disequilibria in international markets to take advantage of diversification strategies. Answer: FALSE Topic: Foreign Exchange Diversification Skill: Conceptual17) When disequilibria in internation

17、al markets occur, management can take advantage by A) doing nothing if they are already diversified and able to realize beneficial portfolio effects. B) recognizing disequilibria faster than purely domestic competitors. C) shifting operational of financing activities to take advantage of the disequi

18、libria. D) all of the above. Answer: D Topic: Foreign Exchange Diversification Skill: Conceptual18) Purely domestic firms will be at a disadvantage to MNEs in the event of market disequilibria because A) domestic firms lack comparative data from its own sources. B) international firms are already so

19、 large. C) all of the domestic firms raw materials are imported. D) None of the above. Domestic firms are not at a disadvantage. Answer: A Topic: Foreign Exchange Diversification Skill: Conceptual19) Which of the following is probably NOT an advantage of foreign exchange risk management? A) the redu

20、ction of the variability of cash flows due to domestic business cycles B) increased availability of capital C) reduced cost of capital D) All of the above are potential advantages of foreign exchange risk management. Answer: D Topic: Foreign Exchange Diversification Skill: Recognition20) Which of th

21、e following is NOT an example of a form of political risk that might be avoided or reduced by foreign exchange risk management? A) expropriation of assets B) destruction of raw materials through natural disaster C) war D) unfavorable legal changes Answer: B Topic: Political Risk Skill: Recognition 2

22、1) Which of the following is NOT identified by your authors as a proactive management technique to reduce exposure to foreign exchange risk? A) matching currency cash flows B) currency swaps C) remaining a purely domestic firm D) parallel loans Answer: C Topic: Management of Foreign Exchange Risk Sk

23、ill: Recognition22) Which one of the following management techniques is likely to best offset the risk of long-run exposure to receivables denominated in a particular foreign currency? A) borrow money in the foreign currency in question B) lend money in the foreign currency in question C) increase s

24、ales to that country D) increase sales in this country Answer: A Topic: Management of Foreign Exchange Risk Skill: Conceptual23) Which one of the following management techniques is likely to best offset the risk of long-run exposure to payables denominated in a particular foreign currency? A) borrow

25、 money in the foreign currency in question B) lend money in the foreign currency in question C) rely on the Federal Reserve Board to enact monetary policy favorable to your exposure risk D) none of the above Answer: B Topic: Management of Foreign Exchange Risk Skill: Conceptual24) The particular str

26、ategy of trying to offset stable inflows of cash from one country with outflows of cash in the same currency is known as _. A) hedging B) diversification C) matching D) balancing Answer: C Topic: Management of Foreign Exchange Risk Skill: Recognition25) Which of the following is NOT an acceptable he

27、dging technique to reduce risk caused by a relatively predictable long-term foreign currency inflow of Japanese yen? A) Import raw materials from Japan denominated in yen to substitute for domestic suppliers. B) Pay suppliers from other countries in yen. C) Import raw materials from Japan denominate

28、d in dollars. D) Acquire debt denominated in yen. Answer: C Topic: Management of Foreign Exchange Risk Skill: Recognition 26) An MNE has a contract for a relatively predictable long-term inflow of Japanese yen that the firm chooses to hedge by seeking out potential suppliers in Japan. This hedging s

29、trategy is referred to as _. A) a natural hedge B) currency-switching C) matching D) diversification Answer: A Topic: Natural Hedge Skill: Recognition27) An MNE has a contract for a relatively predictable long-term inflow of Japanese yen that the firm chooses to hedge by paying for imports from Canada in Japanese yen. This hedging strateg