1) 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
a.$0
b.-$135
c.$135
d.$405
e.$90
2) in reference to establishing “transfer prices” between the affiliates of an mnc, which
of the following relates to the “resale” price approach?
a.comparable uncontrolled price between unrelated firms
b.the price at which the good is resold by the distribution affiliate is reduced by an
amount to cover overhead costs and a reasonable profit
c.assumes that the manufacturing cost is readily available
d.is based on financial and economic models and econometric techniques
3) the rapid increase in cross-border m&a deals can be attributed to
a.the end of the greenfield erawe are running out of land
b.the lack of domestic investment opportunity
c.the ongoing liberalization of capital markets and the integration of the world economy
d.none of the above
4) so-called subprime mortgages were typically
a.not held by the originating bank, but instead were resold for packaging into
mortgage-backed securities
b.aggregated and then sliced into tranches each representing a different risk class: aaa,
aa-bb, or unrated
c.both a and b
d.none of the above
5) a representative office
a.is what lawyers’ offices are called in mexico
b.is a small service facility staffed by parent bank personnel that is designed to assist
mnc clients of the parent bank in dealings with the bank’s correspondents
c.is a small service facility staffed by correspondent bank personnel that is designed to
assist mnc clients of the parent bank in dealings with the bank’s correspondents
d.none of the above
6) governments regulate international trade
a.to raise revenue (e.g. through tariffs)
b.to protect domestic industries
c.to pursue other economic policy objectives (e.g. north korea forgoing trade)
d.all of the above
7) a u.s. firm holds an asset in great britain and faces the following scenario:
where,
p* = pound sterling price of the asset held by the u.s. firm
p = dollar price of the same asset
the “exposure” (i.e. the regression coefficient beta) is:
a.7,500
b.2,5000
c.-2,500
d.none of the above
8) generally unfavorable evidence on ppp suggests that
a.substantial barriers to international commodity arbitrage exist
b.tariffs and quotas imposed on international trade can explain at least some of the
evidence
c.shipping costs can make it difficult to directly compare commodity prices
d.all of the above
9) consider a british poundu.s. dollar dual currency bonds that pay £581.40 at maturity
per $1,000 of par value. if at maturity, the exchange rate is $1.90 = £1.00,
a.you should insist on getting paid in dollars
b.investors holding this bond are better off for the exchange rate
c.the issuer of the bond is worse off for the exchange rate
d.both b and c
10) factors affecting international equity returns are
a.macroeconomic variables that influence the overall economy
b.exchange rate changes
c.the industrial structure of the country
d.all of the above