1. The choice of when and how to source capital globally is usually aided early on by the advice of:

a. a commercial banker.

b. an investment banker.

c. your stock broker.

d. an underwriter.

2. The primary goal of both domestic and international portfolio managers is:

a. all of the other answers

b. to minimize the number of unique securities held in their portfolio.

c. to maximize return for a given level of risk, or to minimize risk for a given level of return.

d. to maximize their WACC.

3. The bill of lading is issued to the exporter by a common carrier transporting the merchandise. It serves three purposes: a receipt, a contract, and a document of title.

True

False

4. The current U.S. dollar-yen spot rate is ¥125/$. If the 90-day forward exchange rate is ¥127/$ then the yen is at a forward premium.

True

False

5. Jasper Pernik is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. Currently the spot price for the Japanese yen is ¥129.87/$ and the 6-month forward rate is ¥128.53/$. Jasper thinks the yen will move to ¥128.00/$ in the next six months. If Jasper buys $100,000 worth of yen at today's spot price and sells within the next six months at ¥128/$, he will earn a profit of:

a. $1460.94.

b. $146.09.

c. $101,460.94.

d. nothing; he will lose money