Top 250+ Solved International Financial Management MCQ Questions Answer
Q. Assume the Canadian dollar is equal to £0.51 and the Peruvian Sol is equal to £0.16. The value of the Peruvian Sol in Canadian dollars is:
a. about .3621 Canadian dollars.
b. about 2.36 Canadian dollars.
c. about .3137 Canadian dollars.
d. about 2.51 Canadian dollars.
Q. 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.
Q. From 1944 to 1971, the exchange rate between any two currencies was typically:
a. fixed within narrow boundaries.
b. floating, but subject to central bank intervention.
c. floating, and not subject to central bank intervention.
d. nonexistent; that is currencies were not exchanged, but gold was used to pay for all foreign transactions.
Q. 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
Q. When the foreign exchange market opens in the UK each morning, the opening exchange rate quotations will be based on the:
a. closing prices in the U.S. during the previous day.
b. closing prices in Canada during the previous day.
c. prevailing prices in locations where the foreign exchange markets have been open.
d. officially set by central banks before the U.S. market opens.
Q. A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be _____.
a. $13.64
b. $15.00
c. $16.50
d. 16.50 euros
Q. The value of the Australian dollar (A$) today is £0.41. Yesterday, the value of the Australian dollar was £0.38. The Australian dollar by _______%.
a. depreciated; 7.90
b. appreciated; 7.90
c. depreciated; 7.30
d. appreciated; 7.30
Q. An increase in UK interest rates relative to euro interest rates is likely to ________the UK demand for euros and _________ the supply of euros for sale.
a. reduce; increase
b. increase; reduce
c. reduce; reduce
d. increase; increase
Q. The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.72 perpound:
a. U.S. demand for pounds would exceed the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market.
b. U.S. demand for pounds would be less than the supply of pounds for sale and there would be a shortage of pounds in the foreign exchange market.
c. U.S. demand for pounds would exceed the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market.
d. U.S. demand for pounds would be less than the supply of pounds for sale and there would be a surplus of pounds in the foreign exchange market.
Q. If inflation in New Zealand suddenly increased while euro area inflation stayed the same, there would be:
a. an inward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
b. an outward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.
c. an outward shift in the demand schedule for NZ$ and an outward shift in the supply schedule for NZ$.
d. an inward shift in the demand schedule for NZ$ and an inward shift in the supply schedule for NZ$.
Q. Any event that reduces the euro area demand for Japanese yen should result in a(n) _______ in the value of the Japanese yen with respect to _______, other things being equal.
a. increase; euro
b. increase; noneuro currencies
c. decrease; noneuro currencies
d. decrease; euro
Q. News of a potential surge in U.S. inflation and zero Chilean inflation places _______ pressure on the value of the Chilean peso. The pressure will occur _______.
a. upward; only after the U.S. inflation surges
b. downward; only after the U.S. inflation surges
c. upward; immediately
d. downward; immediately
Q. Which of the following would likely have the least direct influence on a country's current account?
a. inflation.
b. national income.
c. exchange rates.
d. tariffs.