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97. China's exchange rate is a:
98. China's exchange rate is pegged to the:
99. Arbitrage profit can be made by:
100. When Starbucks opens a location in Mexico City, this is an example of:
101. All of the following are ways to conduct international business EXCEPT:
102. All of the following are examples of factors that affect trading activity between countries
EXCEPT:
103. A golf club costs $100 in the United States. The same club costs AU$129 in Australia.
Assume that purchasing power parity holds. What is the exchange rate between the U.S. and
Australian dollars?
104. A golf club costs $112 in the United States. The same club costs AU$78 in Australia.
Assume that purchasing power parity holds. What is the exchange rate between the U.S. and
Australian dollars?
105. A large amount of foreign direct investment into a country will most likely result in:
106. Risks inherent in making investments in foreign countries include:
107. Tools that multinationals can use to help them reduce the risks inherent in making
investments in foreign countries include:
108. Over the past decade, China has acquired hundreds of billions of U.S. dollars due to the
trade imbalance between the two countries. The Chinese government has used many of these
dollars to purchase Treasury bonds. What would be the effect if China suddenly decided to sell
the majority of these Treasury bonds and exchange the dollars for pesos?
109. If the spot rate between the U.S. dollar and the Brazilian real is $1 = 2.0895 real and the
3-month forward rate is $1 = 2.1725 real, is the forward real selling at a discount or a premium?
110. If the spot rate between the U.S. dollar and the Mexican peso is $1 = 2.45 peso and the
3-month forward rate is $1 = 2.05 pesos, is the forward peso selling at a discount or a premium?
111. Suppose exchange rates between the U.S. dollar and the Mexican peso is 12.90 peso =
$1 and the exchange rate between the U.S. dollar and the euro is $1 = 0.90 euros. What is the
cross-rate of the Mexican peso to the euro?
112. International capital budgeting will require that managers:
113. If fewer dollars will buy a unit of foreign currency, then the dollar is:
114. If fewer dollars will buy a unit of foreign currency, then the foreign currency is:
115. If more dollars are required to buy a unit of foreign currency, then the dollar is:
116. If you are told that $1 will buy 25 Korean wons, then you were given a(n):
117. What is meant by hedging exchange rate risk and what are some ways it is done?
118. What are the advantages of borrowing money in the country you plan to invest in?
119. What is meant when it is said that the U.S. dollar is strengthening? How would it impact
your vacation abroad and foreign visitors to the United States?
120. What are the two methods financial managers can use for resolving the problem of
having cash flows from a foreign project in a foreign currency, while the discount rate is usually
evaluated from the domestic country perspective?
121. If a popular video gaming system costs $400 in the United States, what do you think it
should cost in Japan? What are some reasons that your price might not be right?
122. What is meant when it is said that the U.S. dollar is weakening? How would it impact your
vacation abroad and foreign visitors to the United States?
123. Explain why one would need to be able to compute currency exchanges, why direct quote
spot currency exchange rates, and when triangular arbitrage may be possible.
124. Explain patterns of increased capital involvement firms might use to seek to expand
business internationally.
125. Explain how interest rates and inflation influence forward exchange rates and future spot
rates.
126. Explain political risks when investing internationally and how it can be managed.
127. How might financial managers plan to work through capital budgeting issues for
international investments?
128. Who are the three counties represented in the North American Free Trade Agreement
(NAFTA)?
