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Bài test tiếng Anh ngành ngân hàng và đáp án phần 21

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
1. Globalization refers to the removal of barriers to free trade and the closer integration of
national economies.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
2. While production of goods has been moved overseas, American consumers only
purchase domestic goods.
A) True
B)

False


Ans: B

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
3. The production of goods and services has also become highly globalized.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
4. Integration of the financial system globally is a result of deregulation of foreign
exchange markets, money and capital markets, and banking systems.
A) True
B)

False

Ans: A

Page 1


Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
5. A transnational corporation is a business firm that operates in more than one country
but is headquartered or based in its home country.
A) True
B)

False

Ans: B



Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
6. Wal-Mart is a transnational corporation.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
7. Differences in legal systems and tax codes have no impact on the way firms operate in
foreign countries.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
8. Legal systems can vary on simple matters, such as opening a business, selecting a site
location, and hiring employees.
A) True
B)

False

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Ans: A

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
9. English is the world's social language.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
10. English is the official business language, but not the world's social language.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
11. Cultural views shape business practices and people's attitudes toward business.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 1
Level of Difficulty: Easy
12. Both China and the nations that formerly made up the Soviet Union are currently
moving toward centrally planned economies.
A) True
B)

False

Page 3


Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: Easy
13. Country risk has no effect on a firm's cash flows.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: Easy
14. Stockholder wealth maximization is the accepted goal for firms in all countries around
the world.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: Easy
15. The European manager's goal is to earn as much wealth as possible for the firm while
considering the overall welfare of all stakeholders.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 3
Level of Difficulty: Easy
16. European firms focus on maximizing market share rather than stockholder wealth.
A) True
B)

False

Page 4


Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: Easy
17. Japanese managers focus on maximizing market share rather than stockholder wealth.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
18. The foreign exchange market is a group of international markets connected
electronically where currencies are bought and sold in wholesale amounts.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
19. Tokyo is the largest foreign exchange trading center.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 2
Level of Difficulty: medium
20. When a U.S. bank in Chicago gives a quote of £0.5089/$, it is a direct quote.
A) True
B)

False

Page 5


Ans: B

Format: True/False
Learning Objective: LO 2
Level of Difficulty: medium
21. If the exchange rate is the price in foreign currency for a dollar, the quote is called
direct quote.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 2
Level of Difficulty: medium
22. The bid quote is the rate at which the dealer will sell foreign currency.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
23. The decision to accept international projects with a positive NPV increases the value of
the firm and is consistent with maximizing stockholder wealth.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
24. Most companies find it easier to estimate the incremental cash flows for foreign
projects than for domestic projects.
A) True

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B)

False

Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
25. To convert the project's future cash flows into another currency, we need to come up
with projected or forecast exchange rates.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
26. To convert the project's future cash flows into another currency, we need to use today's
spot exchange rates.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 3
Level of Difficulty: medium
27. If a firm is located in a country with a relatively unstable political environment,
management will require a lower rate of return on capital projects.
A) True
B)

False

Ans: B

Page 7


Format: True/False
Learning Objective: LO 4
Level of Difficulty: medium
28. A Eurodollar is defined as a U.S. dollar deposited in a bank outside the United States.
A) True
B)

False

Ans: A

Format: True/False
Learning Objective: LO 5
Level of Difficulty: medium
29. Long-term loans of a Eurocurrency made to multinational corporations and
governments of poor credit quality are called Eurocredits.
A) True
B)

False

Ans: B

Format: True/False
Learning Objective: LO 4
Level of Difficulty: medium
30. Eurodollar and other Eurocurrency bonds have all characteristics identical to similar
U.S corporate bonds.
A) True
B)

False

Ans: B

Format: Multiple Choice
Learning Objective: LO 1
Level of Difficulty: Easy
31. Evidence of globalization include
A) Consumers in many countries buy goods that are purchased from a number of
countries, other than just their own.
B) Goods and services are produced around the world.
C)

The financial system has also become highly integrated.

D)

All of the above.

Page 8


Ans: D

Format: Multiple Choice
Learning Objective: LO 1
Level of Difficulty: Easy
32. Which one of the following statements about multinational firms is NOT true?
A) A multinational corporation is a business firm that operates in more than one
country but is headquartered or based in its home country.
B) Multinational corporations are owned by domestic stockholders only.
C)
D)

Multinational corporations may purchase raw materials from one country, obtain
financing from a capital market in another country, and produce finished goods
with labor and capital equipment from a third country.
All of the above

Ans: B

Format: Multiple Choice
Learning Objective: LO 1
Level of Difficulty: Easy
33. Factors that can cause international business transactions to differ from domestic deals
include all EXCEPT:
A) Exchange rate risk, legal systems, and country risk.
B)

Legal systems, cultural factors, and economic systems.

C)

Exchange rate risk, country risk, and size of market.

D)

Economic systems, cultural factors, and country risk

Ans: C

Format: Multiple Choice
Learning Objective: LO 1
Level of Difficulty: Easy
34. Which ONE of the following statements about the goal of the firm is true?
A) Stockholder value maximization is the accepted goal for firms in India.
B)

Firms in Germany focus on maximizing corporate wealth.

C)

The goal of the Japanese business manager is to increase the wealth and growth
of the keiretsu.
All of the above

D)

Page 9


Ans: D

Format: Multiple Choice
Learning Objective: LO 1
Level of Difficulty: Easy
35. Which ONE of the following statements about the goal of the firm is true?
A) Corporate wealth maximization is the accepted goal for firms in India.
B)

Firms in Australia focus on maximizing corporate wealth.

C)

The goal of the Japanese business manager is to increase the wealth and growth
of the keiretsu.
D) Private-sector firms in China focus on providing full employment in the
economy.
Ans: C

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
36. Economic benefits provided by the foreign exchange markets include:
A) A mechanism to transfer purchasing power from individuals who deal in one
currency to people who deal in a different currency.
B) A way for corporations to pass the risk associated with foreign exchange price
fluctuations to professional risk-takers.
C) A channel for importers and exporters to acquire credit for international business
transactions.
D) All of the above
Ans: D

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
37. The three largest foreign exchange markets based on daily volume are
A) London, New York, and Tokyo.
B)

New York, Tokyo, and Zurich.

C)

London, Tokyo, and Zurich.

D)

London, New York, and Singapore.

Ans: A

Page 10


Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
38. The major participants in the foreign exchange markets are
A) multinational commercial banks, large investment banking firms, and domestic
firms.
B) multinational commercial banks, local banks and domestic firms.
C)
D)

multinational commercial banks, large investment banking firms, and small
currency boutiques that specialize in foreign exchange transactions.
None of the above

Ans: C

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
39. Which ONE of the following statements is true?
A) Equilibrium occurs at the price at which the quantity of the currency demanded
exactly equals the quantity supplied.
B) Whatever causes U.S. residents to buy more or fewer foreign goods shifts the
demand curve for the foreign currency.
C) Whatever causes foreigners to buy more or fewer U.S. goods shifts the supply
curve for the foreign currency.
D) All of the above
Ans: D

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
40. If the foreign exchange rate is the price in foreign currency for a dollar, then the
exchange rate quote is called
A) an American quote.
B)

an indirect quote.

C)

a direct quote.

D)

a cross quote.

Ans: B

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Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
41. A European quote is the same as
A) an American quote.
B)

an indirect quote.

C)

a direct quote.

D)

a cross quote.

Ans: B

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
42. Which ONE of the following is an indirect quote from an American perspective?
A) £0.5125/$
B)

$0.006900/¥

C)

$1.5637/€

D)

¥115.23/€

Ans: A

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
43. The bid quote represents the rate at which
A) the dealer will buy foreign currency from you.
B)

the dealer will sell foreign currency to you.

C)

you can buy the foreign currency from the dealer.

D)

None of the above.

Ans: A

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Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
44. The ask quote represents the rate at which
A) the dealer will buy foreign currency from you.
B)

the dealer will sell foreign currency to you.

C)

you can sell the foreign currency to the dealer.

D)

None of the above.

Ans: B

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: Easy
45. The difference between the forward rate and the spot rate is called the
A) cross exchange rate.
B)

forward premium or forward discount.

C)

indirect quote.

D)

None of the above.

Ans: B

Format: Multiple Choice
Learning Objective: LO 3
Level of Difficulty: Easy
46. When performing capital budgeting analysis on international projects, managers
A) find it more difficult to estimate the incremental cash flows for foreign projects
B)

have to deal with foreign exchange rate risk on international capital investments.

C)

must incorporate a country risk premium when evaluating foreign business
activities.
All of the above.

D)

Ans: D

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Format: Multiple Choice
Learning Objective: LO 3
Level of Difficulty: Easy
47. The ways that a foreign government can affect the risk of a foreign project include:
A) Change tax laws in a way that adversely impacts the firm.
B)
C)
D)

Impose laws related to labor, wages, and prices that are more restrictive than
those applicable for domestic firms.
Disallow any remittance of funds from the subsidiary to the parent firm for either
a limited period of time or the duration of the project.
All of the above.

Ans: D

Format: Multiple Choice
Learning Objective: LO 3
Level of Difficulty: Easy
48. The ways that a foreign government can adversely affect the risk of a foreign project
include all EXCEPT:
A) Change tax laws in a way that adversely impacts the firm.
B)
C)

Impose laws related to labor, wages, and prices that are more restrictive than
those applicable for domestic firms.
Remove tariffs and quotas on any imports.

D)

Disallow any remittance of funds from the subsidiary to the parent firm for either
a limited period of time or the duration of the project.
Ans: C

Format: Multiple Choice
Learning Objective: LO 5
Level of Difficulty: Easy
49. Country risk should be incorporated into the international capital budgeting analysis by
A) adjusting the firm's discount rate for the additional risk.
B)

increasing cash flow estimates from the project.

C)

doing nothing.

D)

None of the above.

Ans: A

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Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: Easy
50. The Euromarkets are
A) vast, largely unregulated money and capital markets existing in Tokyo, Hong
Kong, and Singapore.
B) vast, regulated money and capital markets with major financial centers in the
United Kingdom.
C) vast, regulated money and capital markets with major financial centers in the euro
zone.
D) None of the above.
Ans: A

Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: Easy
51. The Eurocurrency market is the
A) medium-term portion of the Euromarket.
B)

short-term portion of the Euromarket.

C)

long-term portion of the Euromarket.

D)

None of the above.

Ans: B

Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: Easy
52. Which ONE of the following statements about Eurocredits is true?
A) The international banking system gathers funds from businesses and governments
in the Eurocurrency market and then allocates funds to banks that have the most
profitable lending opportunities.
B) Eurocredits are denominated in all major Eurocurrencies, although the dollar is
the overwhelming favorite.
C) Eurocredits are short- to medium-term loans made to multinational corporations
and governments of medium to high credit quality.
D) All of the above.
Ans: D

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Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: medium
53. Long-term debt sold by a foreign firm to investors in a foreign country and
denominated in that country's currency is called a
A) Eurobond.
B)

municipal bond.

C)

foreign bond.

D)

currency bond.

Ans: C

Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: medium
54. Long-term debt instruments sold by firms to investors in countries other than the
country in whose currency the bonds are denominated
A) Samurai bonds.
B)

Eurobonds.

C)

foreign bonds.

D)

currency bonds.

Ans: B

Format: Multiple Choice
Learning Objective: LO 4
Level of Difficulty: medium
55. Which one of the following statements about Eurobonds is NOT true?
A) Multinational firms can use Eurobonds to finance international or domestic
projects.
B) Eurobonds are bearer bonds and do not have to be registered.
C)

Eurobonds are bonds that have to be registered.

D)

Eurobonds also pay interest annually.

Ans: C

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Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
56. Spot rate: Venkat Ram purchased a pair of dress shoes in Italy for €131.25. If the spot
exchange rate is $1.5621/€, what is the dollar cost of the shoes?
A) $205.03
B)

$84.02

C)

€131.25

D)

€84.02

Ans: A
Feedback:
Cost of shoes in Italy = €131.25
Spot rate = $1.5621/€
Dollar cost of shoes = €131.25 × $1.5621/€= $205.03
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
57. Spot rate: Starling Corporation purchased some components from a Mexican
manufacturer. They have to pay 110 million Mexican pesos for the goods today. The
spot rate today is MP10.3540/$. What is the dollar cost of this payable? Round to the
nearest dollar.
A) $110,000,000
B)

$10,623,913

C)

$11,110,235

D)

$1,138,940,000

Ans: B
Feedback:
Cost of payables = MP 110,000,000
Spot rate = MP 10.3540/$
Dollar cost of payables = MP 110,000,000 / MP 10.3540/$= $10,623,913.46

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Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
58. Spot rate: Tantrix, Inc., purchased its inventory from an Indian manufacturer at a cost
of Rs.5,325,000. The dollar cost of this payable is $125,634.07 at today's spot rate.
What is the spot rate today?
A) $4.2385/Rs.
B)

$42.3850/Rs.

C)

Rs.42.3850/$

D)

Rs. 4.2385/$

Ans: C
Feedback:
Inventory cost to firm = Rs. 5,325,000
Dollar cost of purchase = $125,634.07
Spot rate at which the foreign currency revenue was converted:
Rs.5,325,000
=Rs.42.3850
$125,634.07
This is the same as $0.0236/Rs.
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
59. Spot rate: Suppose a Tata Nano car is priced at Rs. 100,000 in New Delhi and $3,129
in New York. In which place is the car more expensive if the spot rate is $0.0242/Rs.?
A) In New Delhi
B)

In New York

C)

It is same in both places.

D)

It cannot be determined.

Ans: B
Feedback:
Cost of car in New York = $3,129
Cost of car in New Delhi = Rs. 100,000
Spot rate = $0.0242/Rs.
Dollar cost in New Delhi = Rs. 100,000 × $0.0242/Rs.? = $2,420
The cost of the car is the higher in New York based on the spot rate!

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Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
60. Spot rate: If the spot rate is quoted as $0.009369/¥, what is the exchange rate in terms
of yen per dollar?
A) ¥0.009369/$
B)

¥0.936900/$

C)

¥106.7350/$

D)

¥16.7350/$

Ans: C
Feedback:
Spot rate = ¥0.009369/$
Direct quote = 1/ $0.009369/¥ = ¥106.7350/$
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
61. Spot rate: Given that the spot rate is $1.5136/€ and the 90-day forward quote is
$1.4974/€, we can say that
A) the U.S. dollar is at a forward premium against the euro.
B)

the U.S. dollar is at a forward discount against the euro.

C)

the euro is at a forward premium against the U.S. dollar.

D)

the dollar is at neither a premium nor a discount against the euro.

Ans: A
Feedback:
Since the forward quote of $1.4974/€ implies that fewer dollars will be needed to
purchase the euro compared to the spot rate of $1.5136/€, we can say that the U.S.
dollar is at a forward premium against the euro.
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
62. Spot rate: Given that the spot rate is ¥106.74/$ and the 180-day forward quote is
¥100.37/$, we can say that
A) the U.S. dollar is at a forward premium against the yen.
B)

the yen is at a forward premium against the U.S. dollar.

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C)

the yen is at a forward discount against the U.S. dollar.

D)

the dollar is at neither a premium nor a discount against the yen.

Ans: B
Feedback:
Since the forward quote of ¥100.37/$ implies that fewer yen will be needed to purchase
a dollar compared to the spot rate of ¥106.74/$, we can say that the U.S. dollar is at a
forward discount against the yen, or that the yen is at a forward premium against the
U.S. dollar.
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
63. Forward rate: Celio, Inc., sold equipment to an French firm and will receive
€1,249,425 in 30 days. If the company entered a forward contract to sell the euros at the
30-day forward rate of $1.5512/€, what is the dollar revenue received?
A) $1,249,425
B)

$805,457

C)

$1,938,108

D)

$1,312,224

Ans: C
Feedback:
Expected euro revenue = €1,249,425
30-day forward rate = $1.5512/€
Dollar revenue received = €1,249,425 × $1.5512/€= $1,938,108
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
64. Forward rate: Baljit, Inc., purchased machinery from a Japanese firm and will have to
pay ¥278.45 million in 90 days. The bank quotes a forward rate of ¥105.46/$ to buy the
required yen. What is the cost to Baljit in U.S. dollars?
A) $2,640,338
B)

$2,784,500

C)

$2,936,534

D)

$2,714,300

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Ans: A
Feedback:
Cost of machinery = ¥278.45 million
Forward rate = ¥105.46/$
Cost of equipment in dollars
= ¥278,450,000 / ¥105.46/$ = $2,640,337.57
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
65. Forward rate: John Travers is planning a holiday to Thailand but is concerned that the
U.S. dollar will decline in value before he makes his trip. His travel agent has planned a
trip for him for a total cost of 41,250 Thai baht. John plans to purchase the bahts
forward and is given a dollar estimate of $1,247.17 based on the 30-day forward quote.
What is the forward rate?
A) THB41.2500/$
B)

THB33.0785/$

C)

$0.0242/THB

D)

$1.2471/THB

Ans: B
Feedback:
Cost of trip = THB 41,250
Cost of trip based on forward rate = $1,247.17
30-day forward quote
= THB 41,250 / $1,247.17 = THB 33.0745/$
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
66. Bid-ask spread: A local bank has requested foreign exchange quotes for the Swedish
krona from Citibank. Citibank quotes a bid rate of $0.1652/SK and an ask rate of
$0.1667/SK. What is the bid-ask spread?
A) 1.2%
B)

2.1%

C)

0.9%

D)

0.65%

Ans: C

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Feedback:

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
67. Bid-ask spread: A foreign exchange dealer is willing to buy the New Zealand dollar
(NZ$) at $0.7621/NZ$ and will sell it at a rate of $0.7714/NZ$. What is the bid-ask
spread on the Danish krone?
A) 0.2%
B)

2.1%

C)

0.9%

D)

1.2%

Ans: D
Feedback:

Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: medium
68. Bid-ask spread: Banco Herrero wants to make a bid-ask spread of 0.55 percent on its
foreign exchange transactions. If the ask rate on the Mexican peso (MP) is
MP10.4192/$, what does the bid rate have to be?
A) MP10.3619/$
B)

MP10.4192/$

C)

MP10.4249/$

D)

MP10.2165/$

Ans: A

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Feedback:

The ask rate will have to be MP10.3619/$ to provide a 0.55 percent bid-ask spread.
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
69. Cross rate: Bartman Corporation observes that the Swiss franc (SF) is being quoted at
$0.6164/SF, while the Swedish krona (SK) is quoted at $0.1981/SK. What is the SK/SF
cross rate?
A) SK0.3214/SF
B)

SK3.1116/SF

C)

SK0.4183/SF

D)

SK2.1467/SF

Ans: B
Feedback:
To find the SK/SF cross rate, divide the Swiss franc quote by the Swedish krona quote.
Cross rate = $0.6164/SF / $0.1981/SK = SK3.1116/SF
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
70. Cross rate: Xecor Pharma just received revenues of $2,372,300 in Australian dollars
(A$). The only quotes management received are A$2.0651/£ and $1.8538/£. What is the
U.S. dollar value of the company's revenues? Round to the nearest dollar.
A) $4,397,770
B)

$4,899,037

C)

$2,129,533

D)

$9,081,834

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Ans: C
Feedback:
Revenues received by Xecor Pharma = $2,372,300
To determine the A$ /$ cross rate, you divide the A$ to £ quote by the $/£ quote.
Cross rate = A$2.0651/£ / $1.8538/£ = A$1/1.140/$
U.S. dollar value of their revenue
= $2,372,300 / A$1.1140/$
= $2,129,533
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
71. Cross rate: Trident Corp. recently purchased machinery parts worth 23.5 million
Mexican pesos (MP). Management needs to find out the U.S. dollar cost of the
payables. It has access to two quotes for Canadian dollars (C$): C$1.0774/$ and
C$0.0981/MP. What will it cost Trident to purchase 23.5 million Mexican pesos?
Round to the nearest dollar.
A) $2,531,890
B)

$2,305,350

C)

$2,139,735

D)

$1,987,325

Ans: C
Feedback:
Foreign currency payables = MP 23.5 million
To find the MP/$ quote, divide the C$/MP quote by the C$/$ quote.
Cross rate = C$0.0981/MP / C$1.0774/$ = $0.0910525/MP
Dollar cost of payables
= MP23,500,000 × $0.0910525/MP
= $2,139,735
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
72. Cross rate: Dresdner Bank has offered the following exchange rate quotes on Indian
rupees (Rs): Rs.83.7612/£ and $1.8654/£. What is the cross rate between the Indian
rupees and the U.S. dollar?
A) Rs. 44.9025/$
B)

Rs. 49.9375/$

C)

Rs. 51.2134/$

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D)

Rs. 36,7122/$

Ans: A
Feedback:
To find the Rs./$ cross rate, divide the Rs/£ quote by the $/£ quote.
Cross rate = Rs.83.7612/£/ $1.8654/£= Rs.44.9025/$
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
73. Forward premium: The spot rate on the London market was £0.5434/$, while the 90day forward rate was £0.5519/$. What is the annualized forward premium or discount
on the U.S. dollar for the period? Round to one decimal place.
A) 1.6% premium
B)

6.2% premium

C)

6.3% discount

D)

1.6% discount

Ans: B
Feedback:

The British pound is at a forward discount of 1.6 percent against the U.S. dollar as it
takes more pounds to buy a dollar at the forward rate. Or the U.S dollar is at a 90-day
forward premium of 1.56 percent against the British pound.
Format: Multiple Choice
Learning Objective: LO 2
Level of Difficulty: hard
74. Forward premium: Bank of America quoted the 180-day forward rate on the Japanese
yen at $0.009702/¥. The spot rate was quoted at $0.009466/¥. What is the forward
premium or discount on the Japanese yen? Round off to the nearest percent.
A) 7% premium
B)

7% discount

C)

5% premium

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