Strayer IT400 all quizzes

Strayer IT400 all quizzes

Question # 00082982 Posted By: shortone Updated on: 07/17/2015 08:39 PM Due on: 07/29/2015
Subject Business Topic General Business Tutorials:
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QUIZ 1

Question 1

3 out of 3 points

Correct

Privatization is often seen as a cure for bureaucratic inefficiency and waste; some economists estimate that privatization improves efficiency and reduces operating costs by as much as

Question 2

3 out of 3 points

Correct

Since the end of World War I, the dominant global currency has been the

Question 3

3 out of 3 points

Correct

The common monetary policy for the euro zone is now formulated by

Question 4

3 out of 3 points

Correct

Undoubtedly, we are now living in a world where all the major economic functions—consumption, production, and investment

Question 5

3 out of 3 points

Correct

Foreign-owned manufacturing companies in the world's most highly developed countries

Question 6

3 out of 3 points

Correct

Recent corporate scandals at firms such as Enron, WorldCom and the Italian firm Parmalat

Question 7

0 out of 3 points

Incorrect

Today for an MNC to produce merchandise in one country on capital equipment financed by funds raised in a number of different currencies through issuing securities to investors in many countries and then selling the finished product to customers in yet other countries is

Question 8

3 out of 3 points

Correct

Privatization

Question 9

3 out of 3 points

Correct

Most governments at least try to make it difficult for people to cross their borders illegally. This barrier to the free movement of labor is an example of


Put the following in correct date order:

Question 21

0 out of 3 points

Incorrect

The core of the Bretton Woods system was the

Question 22

3 out of 3 points

Correct

Following the demise of the Bretton Woods system, the IMF

Question 23

3 out of 3 points

Correct

To pave the way for the European Monetary Union, the member countries of the European Monetary System agreed to achieve a convergence of their economies. Which of the following is NOT a condition of convergence:

Question 24

3 out of 3 points

Correct

The Mexican Peso Crisis was touched off by

Question 25

3 out of 3 points

Correct

Put the following in correct date order:

Question 26

3 out of 3 points

Correct

Willem Duisenberg, the first president of the European Central Bank, defined "price stability" as an annual inflation rate of

Question 27

3 out of 3 points

Correct

The choice between the alternative exchange rate regimes (fixed or floating) is likely to involve a trade-off between

Question 28

0 out of 3 points

Incorrect

With regard to the current exchange rate arrangement between the U.S. and the U.K., it is best characterized as

Question 29

3 out of 3 points

Correct

A booming economy with a fixed or stable nominal exchange rate

Question 30

3 out of 3 points

Correct

Generally speaking, a country would be more prone to asymmetric shocks






QUIZ 2


Question 1

0 out of 3 points

Incorrect

Under the fixed exchange rate regime

Question 2

0 out of 3 points

Incorrect

Generally speaking, any transaction that results in a receipt from foreigners

Question 3

0 out of 3 points

Incorrect

As of 2007 gold accounting for

Question 4

0 out of 3 points

Incorrect

Suppose the McDonalds Corporation imports Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef producer.

Question 5

0 out of 3 points

to be known to all traders is _____.

Question 17

0 out of 3 points

Incorrect

The Bid price

Question 18

0 out of 3 points

Incorrect

Suppose you observe the following exchange rates: €1 = $1.50; ¥120 = $1.00. Calculate the euro-pound exchange rate.

Question 19

0 out of 3 points

Incorrect

Most interbank trades are

Question 20

0 out of 3 points

Incorrect

Suppose a bank customer with €1,000,000 wishes to trade out of euro and into Japanese yen. The dollar-euro exchange rate is quoted as $1.60 = €1.00 and the dollar-yen exchange rate is quoted at $1.00 = ¥120. How many yen will the customer get?

Question 21

0 out of 3 points

Incorrect

It is common practice among currency traders worldwide to both price and trade currencies against the U.S. dollar. In fact, 2007 BIS statistics indicate that about _________ of currency trading in the world involves the U.S. dollar on one side of the transaction.

Question 22

0 out of 3 points

Incorrect

Suppose you observe the following exchange rates: €1 = $1.50; £1 = $2.00. Calculate the euro-pound exchange rate.

Question 23

0 out of 3 points

Incorrect

Suppose you observe the following exchange rates: €1 = $1.45; £1 = $1.90. Calculate the euro-pound exchange rate.

Question 24

3 out of 3 points

Correct

At the wholesale level

Question 25

0 out of 3 points

Incorrect

Suppose you observe the following exchange rates: €1 = $1.25; £1 = $2.00. Calculate the euro-pound exchange rate.

Question 26

0 out of 3 points

Incorrect

It is common practice among currency traders worldwide to both price and trade currencies against the U.S. dollar. Consider a currency dealer who makes a market in 5 currencies against the dollar. If he were to supply quotes for each currency in terms of all of the others, how many quotes would he have to provide?

Question 27

3 out of 3 points

Correct

You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.60 = €1.00 and the dollar-pound exchange rate is quoted at $2.00 = £1.00. If a bank quotes you a cross rate of £1.00 = €1.20 how much money can an astute trader make?

Question 28

0 out of 3 points

Incorrect

Intervention in the foreign exchange market is the process of

Question 29

3 out of 3 points

Correct

In the Interbank market, the standard size of a trade among large banks in the major currencies is

Question 30

3 out of 3 points

Correct

The AUD/$ spot exchange rate is AUD1.60/$ and the SF/$ is SF1.25/$. The AUD/SF cross exchange rate is _____.











QUIZ 3


Question 1

3 out of 3 points

Correct

The main approaches to forecasting exchange rates are

Question 2

3 out of 3 points

Correct

Consider a bank dealer who faces the following spot rates and interest rates. What should he set his 1-year forward bid price at?

Question 3

3 out of 3 points

Correct

The International Fisher Effect suggests that

Question 4

3 out of 3 points

Correct

Suppose you observe a spot exchange rate of $2.00/£. If interest rates are 5% APR in the U.S. and 2% APR in the U.K., what is the no-arbitrage 1-year forward rate?

Question 5

3 out of 3 points

Correct

A formal statement of IRP is

Question 6

3 out of 3 points

Correct

hange traded currency options

Question 19

0 out of 3 points

Incorrect

For European currency options written on euro with a strike price in dollars, what of the effect of an increase in the exchange rate S(€/$)?

Question 20

3 out of 3 points

Correct

Yesterday, you entered into a futures contract to buy €62,500 at $1.50 per €. Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted?

Question 21

3 out of 3 points

Correct

Suppose the futures price is below the price predicted by IRP. What steps would assure an arbitrage profit?

Question 22

3 out of 3 points

Correct

For European options, what of the effect of an increase in St?

Question 23

3 out of 3 points

Correct

Find the hedge ratio for a put option on $15,000 with a strike price of €10,000. In one period the exchange rate (currently S($/€) = $1.50/€) can increase by 60% or decrease by 37.5% (i.e. u = 1.6 and d = 0.625).

Question 24

3 out of 3 points

Correct

The "open interest" shown in currency futures quotations is

Question 25

3 out of 3 points

Correct

A European option is different from an American option in that

Question 26

3 out of 3 points

Correct

Yesterday, you entered into a futures contract to buy €62,500 at $1.50 per €. Suppose the futures price closes today at $1.46. How much have you made/lost?

Question 27

3 out of 3 points

Correct

The current spot exchange rate is $1.55 = €1.00 and the three-month forward rate is $1.60 = €1.00. Consider a three-month American call option on €62,500 with a strike price of $1.50 = €1.00. Immediate exercise of this option will generate a profit of

Question 28

3 out of 3 points

Correct

For European currency options written on euro with a strike price in dollars, what of the effect of an increase in r$?

Question 29

0 out of 3 points

Incorrect

Find the dollar value today of a 1-period at-the-money call option on €10,000. The spot exchange rate is €1.00 = $1.25. In the next period, the euro can increase in dollar value to $2.00 or fall to $1.00. The interest rate in dollars is i$ = 27.50%; the interest rate in euro is i€ = 2%.

Question 30

3 out of 3 points

Correct

Yesterday, you entered into a futures contract to sell €62,500 at $1.50 per €. Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted?











QUIZ 4



Question 1

3 out of 3 points

Correct

Suppose that Boeing Corporation exported a Boeing 747 to Lufthansa and billed €10 million payable in one year. The money market interest rates and foreign exchange rates are given as follows:

Assume that Boeing sells a currency forward contract of €10 million for delivery in one year, in exchange for a predetermined amount of U.S. dollar. Which of the following is (or are) true?

On the maturity date of the contract Boeing will:

(i) have to deliver €10 million to the bank (the counterparty of the forward contract)

(ii) take delivery of $14.6 million

(iii) have a zero net pound exposure

(iv) have a profit, or a loss, depending on the future changes in the exchange rate, from this British sale

Question 2

3 out of 3 points

Correct

Suppose that the exchange rate is €1.25 = £1.00.

Options (calls and puts) are available on the Philadelphia exchange in units of €10,000 with strike prices of $1.60/€1.00.

Options (calls and puts) are available on the Philadelphia exchange in units of £10,000 with strike prices of $2.00/£1.00.

For a U.S. firm to hedge a €100,000 payable,

Question 3

3 out of 3 points

Correct

Transaction exposure is defined as

Question 4

3 out of 3 points

Correct

In evaluating the pros and cons of corporate risk management, "market imperfections" refer to

Question 5

3 out of 3 points

Correct

If you have a long position in a foreign currency, you can hedge with:

Question 6

3 out of 3 points

Correct

An exporter can shift exchange rate risk to their customers by

Question 7

3 out of 3 points

Correct

If you own a foreign currency denominated bond, you can hedge with

Question 8

3 out of 3 points

Correct

A U.S.-based MNC with exposure to the Swedish krona could best cross-hedge with

Question 9

3 out of 3 points

Correct

An exporter faced with exposure to a depreciating currency can reduce transaction exposure with a strategy of

Question 10

0 out of 3 points

Incorrect

XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the one year forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of 0.012 cent per yen. The future dollar cost of meeting this obligation using the money market hedge is

Question 11

3 out of 3 points

Correct

XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank in Tokyo. Which of the following is NOT part of a money market hedge?

Question 12

3 out of 3 points

Correct

With any hedge

Question 13

Correct

Goldman Sachs estimates that as much as __% of the pretax profits that Porsche reported for a recent fiscal year came from skillfully executing currency options.

Question 26

3 out of 3 points

Correct

From the perspective of the U.S. firm that owns an asset in Britain, the exposure that can be measured by the coefficient b in regressing the dollar value P of the British asset on the dollar/pound exchange rate S using the regression equation is

Question 27

3 out of 3 points

Correct

Generally speaking, a firm is subject to high degrees of operating exposure

Question 28

3 out of 3 points

Correct

A purely domestic firm that sources and sells only domestically,

Question 29

3 out of 3 points

Correct

Before you can use the hedging strategies such as a forward market hedge, options market hedge, and so on, you should consider running a regression of the form . When reviewing the output, you should initially focus on

Question 30

3 out of 3 points

Correct

A firm that is committed to keeping manufacturing facilities in only the home country (and not developing multiple production sites in a variety of countries) can








QUIZ 5


Question 1

0 out of 3 points

Incorrect

In what year were U.S. MNCs mandated to implement FASB 52?

Question 2

3 out of 3 points

Correct

According to the monetary/nonmonetary method, monetary balance sheet accounts include

Question 3

0 out of 3 points

Incorrect

FASB 52 requires

Question 4

0 out of 3 points

Incorrect

Translation exposure, also frequently called accounting exposure, refers to the effect that an unanticipated change in exchange rates will have on the

Question 5

3 out of 3 points

Correct

The management of translation exposure is best described as

Question 6

3 out of 3 points

Correct

FASB 8 is essentially the

Question 7

Correct

A bank may establish a multinational operation for the reason of low marginal costs. The underlying rationale being that

Question 28

0 out of 3 points

Incorrect

On September 10, 1990 the published prices (cents on the dollar) on Latin American bank debt was quoted as follows:

Assume that the central banks of Mexico, Venezuela, and Chile redeemed their debts at 50 percent, 85 percent, and 76 percent, respectively, of face value in a debt-for-equity swap. If the three countries had equal political risk, based purely on financial considerations, the cost of a $40,000,000 assembly plant investment in local currency would be ranked (lowest to highest) in dollar cost as follows:

Question 29

0 out of 3 points

Incorrect

You entered in to a 3×6 forward rate agreement that obliged you to borrow $10,000,000 at 3%. Suppose at the maturity of the FRA, the correct interest rate is 3½%. Clearly you are better off since you have the ability to borrow $10,000,000 for 3 months at 3% instead of 3½%. What is the payoff at the maturity of the FRA?

Question 30

0 out of 3 points

Incorrect

Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in euros, at a cost of €160,000. The U.S. importer will contact his U.S. bank (where of course he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as €0.6250/$1.00. The importer accepts this price, so his bank will proceed to ____________ the importer's account in the amount of ____________.










QUIZ 6



Question 1

3 out of 3 points

Correct

With a bearer bond,

Question 2

3 out of 3 points

Correct

Underwriters for an international bond issue will commit their own capital to buy the issue from the borrower at a discount from the issue price. The discount, or underwriting spread, is typically

Question 3

3 out of 3 points

Correct

Eurobond market makers and dealers are members of the ______________, a self-regulatory body based in Zurich.

Question 4

0 out of 3 points

Incorrect

"Investment grade" ratings are in the following categories:

Question 5

0 out of 3 points

Incorrect

In any year, the Eurobond segment of the international bond market accounts for approximately what percent of new bond offering?

Question 6

3 out of 3 points

Correct

In any given year, about what percent of outstanding bonds are likely to be international rather than domestic bonds?

Question 7

0 out of 3 points

Incorrect

In contrast to many domestic bonds, which make _________ coupon payments, coupon interest on Eurobonds is typically paid _________

Question 8

3 out of 3 points

Correct

Global bond issues were first offered in

Question 9

0 out of 3 points

Incorrect

One unintended conse

Incorrect

"Call market" and "crowd trading" take place on

Question 24

3 out of 3 points

Correct

To avoid buying a stock at a price higher than your intention, you need to place ________ rather than a market order.

Question 25

3 out of 3 points

Correct

Companies domiciled in countries with weak investor protection can reduce agency costs between shareholders and management

Question 26

3 out of 3 points

Correct

Cross-correlations among major stock markets and exchange markets are

Question 27

3 out of 3 points

Correct

The sale of previously issued common stock traded between investors occurs in

Question 28

3 out of 3 points

Correct

A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as

Question 29

0 out of 3 points

Incorrect

The market capitalization of the developing world

Question 30

0 out of 3 points

Incorrect

In which type of policy actions by the Fed can liquidity "dry up"?








7



Question 1

3 out of 3 points

Correct

Pricing a currency swap after inception involves

Question 2

3 out of 3 points

Correct

Company X wants to borrow $10,000,000 floating for 1 year; company Y wants to borrow £5,000,000 fixed for 1 year. The spot exchange rate is $2 = £1 and IRP calculates the one-year forward rate as $2.00×(1.08)/£1.00×(1.06) = $2.0377/£1. Their external borrowing opportunities are:

A swap bank wants to design a profitable interest-only fixed-for-fixed currency swap. In order for X and Y to be interested, they can face no exchange rate risk

What must the values of A and B in the graph shown above be in order for the swap to be of interest to firms X and Y?

Question 3

3 out of 3 points

Correct

Use the following information to calculate the quality spread differential (QSD):

Question 4

3 out of 3 points

Correct

The primary reasons for a counterparty to use a currency swap are

Question 5

3 out of 3 points

Correct

A major risk faced by a swap dealer is mismatch risk. This is

Question 6

0 out of 3 points

Incorrect

A major risk that can be eliminated through a swap is exchange rate risk.

Question 7

3 out of 3 points

Correct

Suppose the quote for a five-year swap with semiannual payments is 8.50—8.60 percent. This means

Question 8

3 out of 3 points

Correct

A major risk faced by a swap dealer is credit risk. This is

Question 9

3 out of 3 points

Correct

Floating for floating currency swaps

Question 10

0 out of 3 points

Incorrect

Consider the dollar- and euro-based borrowing opportunities of companies A and B.

A is a U.S.-based MNC with AAA credit; B is an Italian firm with AAA credit. Firm A wants to borrow €1,000,000 for one year and B wants to borrow $2,000,000 for one year. The spot exchange rate is $2.00 = €1.00 and the one-year forward rate is given by IRP as $2.00×(1.08)/€1.00×(1.06) = $2.0377/€1.

Is there a mutually beneficial swap?

Question 11

3 out of 3 points

Correct

A major risk faced by a swap dealer is exchange rate risk. This is

Question 12

3 out of 3 points

Correct

When a swap bank serves as a dealer:

Question 13

3 out of 3 points

Correct

Pricing an interest-only single currency swap after inception involves

.

Incorrect

A 5%-annual coupon British has a par value of £1,000, matures in five years, and has a yield to maturity of 4%. The current exchange rate is $2.00 = £1.00 and inflation is forecast at 3% in the U.S. and 2% in the U.K. per year for the next five years. If a dollar-based investor used forward contracts to redenominate this bond into dollars, what would be his rate of return?

Question 24

0 out of 3 points

Incorrect

Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested €10,000 to buy Microsoft shares for $120 per share; the exchange rate was $1.55 per euro. You sold the stock for $135 per share and converted the dollar proceeds into euro at the exchange rate of $1.50 per euro. Compute the rate of return on your investment in euro terms.

Question 25

3 out of 3 points

Correct

Assume that you have invested $100,000 in Japanese equities. When purchased the stock's price and the exchange rate were ¥100 and ¥100/$1.00 respectively. At selling time, one year after purchase, they were ¥110 and ¥110/$1.00. If the investor had sold ¥10,000,000 forward at the forward exchange rate of ¥105/$1.00 the dollar rate of return would be:

Question 26

3 out of 3 points

Correct

Suppose you are a euro-based investor who just sold Microsoft shares that you had bought six months ago. You had invested €10,000 to buy Microsoft shares for $120 per share; the exchange rate was $1.55 per euro. You sold the stock for $135 per share and converted the dollar proceeds into euro at the exchange rate of $1.50 per euro. How much of the return is due to the exchange rate movement?

Question 27

0 out of 3 points

Incorrect

Hedge fund advisors typically receive a "2-plus-twenty" management fee

Question 28

0 out of 3 points

Incorrect

Current research suggests that

Question 29

0 out of 3 points

Incorrect

Bema Gold is an exploration and production company that trades on the Toronto stock exchange. Assume that when purchased by an international investor the stock's price and the exchange rate were CAD5 and CAD1.0/USD0.72 respectively. At selling time, one year after the purchase date, they were CAD6 and CAD1.0/USD1.0. Calculate the investor's annual percentage rate of return in terms of the U.S. dollars.

Question 30

3 out of 3 points

Correct

Assume that you have invested $100,000 in British equities. When purchased, the stock's price and the exchange rate were £50 and £0.50/$1.00 respectively. At selling time, one year after purchase, they were £60 and £0.60/$1.00. If the investor had sold £50,000 forward at the forward exchange rate of £0.55/$1.00, the dollar rate of return would be:







QUIZ 8


Question 1

0 out of 3 points

Incorrect

Cross-border acquisitions of businesses are a politically sensitive issue,

Question 2

3 out of 3 points

Correct

During the five-year period 2004-2008,

3 out of 3 points

Correct

OPIC is the

Question 4

3 out of 3 points

Correct

Factors of production include land, labor, capital, and entrepreneurial ability. Of all the factor markets, the MOST IMPERFECT is the

Question 5

3 out of 3 points

Correct

The United States is the largest initiator of FDI. The largest recipient of FDI is

Question 6

3 out of 3 points

Correct

Once a MNC decides to undertake a foreign project, it can take various measures to minimize its exposure to political risk. These include

Question 7

0 out of 3 points

Incorrect

Which of the following is the most disingenuous argument in favor of FDI?

Question 8

3 out of 3 points

Correct

The third most important host country for FDI is

Question 9

3 out of 3 points

Correct

Severe imperfections in the labor market lead to

Question 10

0 out of 3 points

Incorrect

Considering the fact that many barriers to international portfolio investments have been dismantled in recent years,

Question 11

Correct

Assume that the risk-free rate of return is 4%, and the expected return on the market portfolio is 10%. If the systematic risk inherent in the stock of ABC Corporation is 1.80, using the Capital Asset Pricing Model (CAPM) calculate the expected return of ABC.

Question 26

0 out of 3 points

Incorrect

Corporations are becoming multinational not only in the scope of their business activities but also in their capital structure

Question 27

3 out of 3 points

Correct

The formula for beta is:

Question 28

0 out of 3 points

Question 29

3 out of 3 points

Correct

Recent studies suggest that agency costs of managerial discretion are lower in Japan than in the United States. This suggests that

Question 30

0 out of 3 points

Incorrect

The market risk premium











QUIZ 9



Question 1

3 out of 3 points

Correct

Consider a project with the following data:

The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $20,000 cash and borrow $80,000 at 6% with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs.

What is the NPV of the project using the APV methodology?

Question 2

3 out of 3 points

Correct

Sensitivity analysis in the calculation of the adjusted present value (APV) allows the financial manager to

Question 3

3 out of 3 points

Correct

As of today, the spot exchange rate is €1.00 = $1.50 and the rates of inflation expected to prevail for the next year in the U.S. is 2% and 3% in the euro zone. What is the one-year forward rate that should prevail?

Question 4

3 out of 3 points

Correct

In the APV model

Question 5

3 out of 3 points

Correct

Perhaps the most important decisions that confront the financial manager are

Question 6

3 out of 3 points

Correct

Some of the factors (with selected explanations) used in calculating the basic "net present value" and the "incremental" cash flows of a capital project are:

(i)- expected after-tax terminal value, including recapture of working capital

(ii)- net income, which belongs to the equity holders of the firm

(iii)- initial investment at inception

(iv)- depreciation, and the fact that depreciation is a noncash expense (i.e. it is removed from the calculation of net income, for tax purposes, but added back because it did not actually flow out of the firm)

(v)- weighted-average cost of capital

(vi)- the firm's after-tax payment of interest to debtholders

(vii)- economic life of the capital project in years

The "incremental" cash flows of a capital project is calculated by using:

Question 7

3 out of 3 points

Correct

What is the expected return on equity for a tax-free firm with a 15% expected return on assets that pays 12% on its debt, which totals 25% of assets?

Question 8

3 out of 3 points

Correct

Consider a project with the following data:

The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $20,000 cash and borrow $80,000 at 6% with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs.

When using the APV methodology, what is the NPV of the interest tax shield?

Question 9

3 out of 3 points

Correct

The adjusted present value (APV) model that is suitable for an MNC is the basic net present value (NPV) model expanded to

Question 10

3 out of 3 points

Correct

Consider a project with the following data:

The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $20,000 cash and borrow $80,000 at 6% with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs.

What is the NPV of the project using the WACC methodology?

Question 11

3 out of 3 points

Correct

As of today, the spot exchange rate is €1.00 = $1.25 and the rates of inflation expected to prevail for the next three years in the U.S. is 2% and 3% in the euro zone. What spot exchange rate should prevail three years from now?

Question 12

3 out of 3 points

Correct

What is the expected return on equity for firm in the 40% tax bracket with a 15% expected return on assets that pays 12% on its debt, which totals 25% of assets?

Question 13

3 out of 3 points

Correct

Assume that XYZ Corporation is a leveraged company with the following information:

Calculate the debt-to-total-market-value ratio that would result in XYZ having a weighted average cost of capital of 9.3%.

Question 14

3 out of 3 points

Correct

As of today, the spot exchange rate is €1.00 = $1.25 and the rates of inflation expected to prevail for the next year in the U.S. is 2% and 3% in the euro zone. What is the one-year forward rate that should prevail?

Question 15

3 out of 3 points

Correct

Capital budgeting analysis is very important, because it

Question 16

3 out of 3 points

Correct

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($0

0 out of 3 points

Incorrect

The U.S. IRS allows transfer prices to be set using the resale price method. This method requires

Question 25

3 out of 3 points

Correct

Not all countries allow MNCs the freedom to net payments,

Question 26

3 out of 3 points

Correct

Cash management refers to

Answer

Question 27

3 out of 3 points

Correct

Simplify the following set of intra company cash flows for this Swiss Firm.

Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

Question 28

3 out of 3 points

Correct

In reference to establishing "transfer prices" between the affiliates of an MNC, which of the following relates to the "resale" price approach?

Question 29

3 out of 3 points

Correct

ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States. For a recent month, the following payments matrix of interaffiliate cash flows, stated in Singapore dollars, was forecasted.

Which of the following is an accurate chart of their current situation?

Question 30

0 out of 3 points

Incorrect

For the U.S. affiliate shown below, net all its inter-affiliate receipts against all its disbursements.

Use the following exchange rates

The net inter-affiliate cash flow for the U.S. affiliate is
















QUIZ 10


• uestion 1

3 out of 3 points

Countertrade transactions are

• Question 2

3 out of 3 points

A bill of lading

• Question 3

3 out of 3 points

Forfaiting, in which a bank purchases at a discount from an importer a series of promissory notes in favor of an exporter,

• Question 4

3 out of 3 points

Export-Import Bank (Eximbank) is an independent agency of the United States government that facilitates and finances U.S. export trade. Eximbank's purpose is to provide financing in situations where private financial institutions are unable or unwilling to because of which of the following reasons:

\

• Question 5

3 out of 3 points

A banker's acceptance is created when

Answer

• Question 6

3 out of 3 points

Through its Medium and Long-Term Guarantee Program, Eximbank helps U.S. exporters develop and expand their overseas sales by

.

• Question 7

0 out of 3 points

A time draft

• Question 8

3 out of 3 points

The three basic documents needed in a foreign trade transaction are

• Question 9

3 out of 3 points

The armed forces of ____________ leads all government agencies in countertrade.

• Question 10

3 out of 3 points

In the event of a default

• Question 11

3 out of 3 points

Countertrade transactions

Answer

• Question 12

3 out of 3 points

A typical foreign trade transaction requires three basic documents

• Question 13

3 out of 3 points

Suppose the face amount of a promissory note is $1,000,000 and the importer's bank charges an acceptance commission of 1.5 percent. The note is for 60 days. Calculate the amount of the acceptance commission that the bank will charge.

• Question 14

3 out of 3 points

The ________ sends a purchase order to the ________. The ________ applies to his bank for a letter of credit.


• Question 24

3 out of 3 points

The three basic types of taxation are

• Question 25

3 out of 3 points

The two main objectives of taxation are

• Question 26

3 out of 3 points

The idea that the tax burden a host country imposes on the foreign subsidiary of a MNC should be the same regardless of the country in which the MNC is incorporated and the same as that placed on domestic firms is earned is referred to as

• Question 27

3 out of 3 points

The term "capital-import neutrality" refers to

• Question 28

3 out of 3 points

Tax neutrality is determined

• Question 29

3 out of 3 points

The United States withholds ___________ percent of passive income from taxpayers that reside in countries with which it does not have withholding tax treaties.

• Question 30

3 out of 3 points

A withholding tax is defined by your textbook as
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