Quiz about International Financial Management

Question 1

Recently, the UK experienced an annual balance of trade representing a __________.

Accepted Answer

deficit

Answer

large surplus (exceeding £100 billion)

Answer

level of zero

Answer

small surplus

Question 2

An increase in the current account deficit will place _______ pressure on the home
currency value, other things equal.

Accepted Answer

downward

Answer

upward

Answer

no

Answer

upward or downward (depending on the size of the deficit)

Question 3

The North American Free Trade Agreement (NAFTA) increased restrictions on:

Accepted Answer

none of the above.

Answer

trade between Canada and Mexico.

Answer

trade between Canada and the U.S.

Answer

direct foreign investment in Mexico by U.S. firms.

Question 4

The primary component of the current account is the:

Accepted Answer

balance of trade.

Answer

balance of capital market flows.

Answer

balance of money market flows.

Answer

unilateral transfers.

Question 5

A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

Accepted Answer

lower trade restrictions around the world.

Answer

increased trade restrictions outside of North America.

Answer

uniform environmental standards around the wor

Question 6

______________ is (are) income received by investors on foreign investments in
financial assets (securities).

Accepted Answer

Factor income

Answer

Portfolio income

Answer

Unilateral transfers

Answer

Direct foreign income

Question 7

Based on the text, it should be obvious that markets are__________ in reality, and consequently, monopolistic advantages _________ be exploited.

Accepted Answer

Imperfect; may possibly

Answer

Perfect; may possibly

Answer

Perfect; cannot

Answer

Imperfect; cannot

Question 8

If countries are highly influential upon each other, the correlations of their economic growth levels would likely be __________. A firm would benefit __________ by diversifying sales among these countries relative to another set of countries that were not influential upon each other.

Accepted Answer

close to zero; more

Answer

high and positive; more

Answer

high and positive; less

Answer

close to zero; less

Question 9

Which of the following is a reason to consider international business?

Accepted Answer

all of the above

Answer

economies of scale.

Answer

exploit monopolistic advantages.

Answer

diversification.

Question 10

Assume a U.S. firm initiates direct foreign investment in the U.K.. If the British pound is expected to appreciate against the dollar, the dollar value of earnings remitted to the parent should _______. The parent may request that the subsidiary _______ in order to benefit from the expectation about the pound.

Accepted Answer

increase; postpone remitting earnings until the pound strengthens

Answer

decrease; postpone remitting earnings until the pound strengthens

Answer

decrease; remit earnings immediately before the pound strengthens

Answer

increase; remit earnings immediately before the pound strengthens

Practice Test On: International Financial Management

Practice Test On:
International Financial Management