Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
Test Bank
Chapter 12: International Finance and Pricing Implications
1. Properties of money include all of the following EXCEPT ______.
a. acceptability
b. scarcity
c. durability
d. divisibility
e. dependability
2. The property of durability in money means ______.
a. It is acceptable in a region or area.
b. It is scarce.
c. It is not easily damaged or destroyed.
d. It is divisible.
e. People understand its value.
3. The property of divisibility in money means ______.
a. It is acceptable in a region or area.
b. You can “make change” for it.
c. It is not easily damaged or destroyed.
d. It is scarce.
e. People understand its value.
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
4. What involves the study of currency exchange, investments, and how these processes
influence business activities?
a. international business
b. international marketing
c. international economics
d. international finance
e. international trade
5. What represents any location, online or physical, where business or individuals can raise
funds?
a. investment brokerages
b. financial brokerages
c. investment houses
d. capital markets
e. banks
6. Companies raise two types of funds in global or local capital markets, including ______.
a. debt and capital
b. debt and loans
c. debt and equity
d. equity and stocks
e. equity and loans
7. What rate is the rate at which one country’s currency can be traded for another’s?
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. market rate
b. soft rate
c. exchange rate
d. hard rate
e. international rate
8. Nongovernmental factors that affect currency movement include all of the following EXCEPT
______.
a. individual and business transactions
b. inflation
c. proprietary business plans
d. interest rates
e. trade and investment activities
9. If a country imports more than it exports, it experiences which of the following?
a. trade barrier
b. trade gap
c. trade surplus
d. trade deficit
e. trade imbalance
10. A country with more exports than imports experiences which of the following?
a. trade barrier
b. trade gap
c. trade surplus
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
d. trade deficit
e. trade imbalance
11. When the United States exports $500 billion worth of goods and services but imports $700
billion, it experiences a ______.
a. trade barrier
b. trade gap
c. trade surplus
d. net trade differential
e. trade deficit
12. When Australia exports $300 billion in goods and services and imports $250 billion, it
experiences a ______.
a. trade barrier
b. trade gap
c. trade surplus
d. trade result
e. trade deficit
13. What occurs when the price of goods and services increase in a country?
a. inflation
b. recession
c. depression
d. price stabilization
e. market avoidance
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
14. The percentage rate paid for the use of money is referred to as which of the following?
a. call point
b. interest rate
c. market value
d. market return
e. appreciation effect
15. What states that the nominal or stated interest rate of a country is equal to the actual interest
rate plus the rate of inflation?
a. Webber effect
b. Thomson effect
c. Fischer effect
d. Wyndam effect
e. Zagorski effect
16. Which states that identical products should be priced identically in different markets, once
the price is converted to the same currency in each market?
a. the Law of One Price
b. the Law of Price Equalization
c. the Law of Market-Based Pricing
d. the Law of Expected Value
e. the Law of Equal Value
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
17. The Law of One Price means that ______.
a. Identical products should be priced identically in different markets, once the price is converted
to the same currency in each market.
b. Equal prices apply to all products.
c. Pricing differentials disappear across national boundaries, once the price has been converted.
d. The expected value of a product will be equal to its price.
e. Pricing problems occur when a company prices a product differently in other countries.
18. What occurs in circumstances in which the value of a currency is allowed to respond freely to
market forces?
a. fixed-rate exchange rate
b. floating exchange rate
c. market response rate
d. market-based exchange rate
e. market-demand exchange rate
19. A regime that predetermines the value of a currency is known as what?
a. market-based regime
b. fixed or pegged regime
c. communist regime
d. capitalistic regime
e. preforecast regime
20. What term refers to a government decrease in a par value?
a. currency establishment
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
b. currency reset
c. market adjustment
d. devaluation
e. revaluation
21. The primary authority for global currency stabilization is which of the following?
a. International Monetary Fund
b. International Currency Authority
c. International Currency Alliance
d. International Monetary Market
e. International Currency Administration
22. The International Monetary Fund is ______.
a. an organization that oversees the law of one price
b. a wing of the European Union
c. a for-profit financing company
d. the primary authority for global currency
e. an Asian organization that regulates trade in the Pacific Rim
23. What rates are exchange rates for the delivery of a currency at a specific point in the future?
a. closed
b. spot
c. call
d. future
e. forward
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
24. A forward rate that is larger than a spot rate is which of the following?
a. premium
b. spot
c. call
d. future
e. market
25. Which theory posits that in cases of complete openness and knowledge, speculation will not
lead to profit?
a. efficient currency theory
b. efficient exchange theory
c. efficient market theory
d. efficient economic theory
e. efficient transaction theory
26. Which ratings represent the chance that a country will default on governmental debt?
a. sovereign trade ratings
b. sovereign economic ratings
c. sovereign government ratings
d. sovereign debt ratings
e. sovereign currency ratings
27. Sovereign debt ratings ______.
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
a. measure the total amount of debt in a country
b. represent the chance that a country will default on governmental debt
c. measure a company’s total asset-to-debt ratio
d. measure the GDP of a company in relation to its trade deficit
e. represent the value of a nation’s total debt
28. Currency rates affect all of the following EXCEPT ______.
a. market share
b. valuations assigned to inventories
c. sales prices
d. costs of marketing activities
e. bottom-line profits
29. In the context of currency risk, which of the following involves purchasing various financial
instruments?
a. bonding
b. hedging
c. calling
d. closing
e. market skimming
30. What instrument allows a company to sell or buy a certain amount of a foreign currency at a
set exchange rate on a specific date?
a. close contracts
b. call contracts
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
c. pull contracts
d. rescind contracts
e. futures contracts
31. A bond that is sold outside of a home country and that is denominated in the currency of the
country of issue is which kind of bond?
a. host
b. home
c. currency
d. foreign
e. call
32. Which of the following is NOT a regional development or national bank that is presented in
the text?
a. U.S. Agency for International Development
b. Asian Development Bank
c. Global Commerce Bank
d. U.S. Export-Import Bank
e. European Investment Bank
33. What kind of bond is issued outside of a country that is denominated in a currency that is
different from the country in which it is purchased?
a. host bond
b. home bond
c. Eurobond
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
d. foreign bond
e. call bond
34. Two companies or countries engage in what kind of trade when goods are traded or
exchanged without the use of hard currency?
a. bilateral trade
b. fulfillment trade
c. counterbalanced trade
d. reciprocal trade
e. countertrade
35. As a term of payment, “COD” stands for which of the following?
a. call out delivery
b. close on delivery
c. credit on delivery
d. cash on delivery
e. call on delivery
36. As a term of payment, “CBD” stands for which of the following?
a. call before delivery
b. close before delivery
c. credit before delivery
d. cash before delivery
e. cancel before delivery
Instructor Resource
Baack et al., International Marketing, 2e
SAGE Publishing, 2019
37. The four major types of countertrade that are discussed in the text include all of the following
EXCEPT ______.
a. barter
b. buy-back
c. compensation deals
d. counterpurchases
e. call back agreements
38. What involves the direct exchange of goods between two companies?
a. barter
b. buy-back
c. compensation deals
d. counterpurchases
e. call back agreements
39. Which of the following include both cash payments and exchanges of materials?
a. barter
b. buy-back
c. compensation deals
d. counterpurchases
e. call back agreements
40. What kind of arrangements are agreements to sell one set of goods and services used in the
production of products for another set of goods and services?