International Finance multiple choice questions

1.   Companies typically want to participate in foreign direct investment because

a.         it is easier to protect trade secrets

b.        a smaller percentage of profits will have to be shared

c.         they can retain the right to make important business decisions

d.        all of the above

2.   Governments may try to restrict the influence of foreign companies in their economy by:

a.         mandating who can be hired in the company and at what wage

b.        requiring that a foreign firm owns at least 50% of a domestic business

c.         reducing government interference in international business

d.        all of the above

3.   The Smithsonian Agreement established that foreign currencies

a.         will have a fixed exchange rate against each other

b.        will float freely against each other in exchange

c.         established the value of a US dollar at $35/ounce

d.        will be used to create a large museum in Washington D.C.

4.  Bretton Woods established that

a.         the gold standard should be abandoned

b.        all currencies should be traded in US dollars

c.         exchange rates should be free floating

d.        there is no need for a central reserve asset

5.  An increases in US exports to foreign markets ________________ the amount of dollars in the foreign exchange and _______________ the value of the US dollar.

a.         increases, decreases

b.        increases, increases

c.         decreases, increases

d.        decreases, decreases

6.   All of the following influence the value of the US dollar in foreign exchange EXCEPT:

a.         Anti-trust legislation on international corporations

b.        Increases in the rate of inflation

c.         Governmental monetary policies

d.        Balance of payments

7.  If, as of today, the currency per US dollar rate for German marks is 2.2863. What is the US equivalent rate?

a.         4.5726

b.        .3752

c.         1.296

d.        .4374

8.   The quotation, Canada (dollar).... .7261 means

a.         it costs US$ .7261 to buy one Canadian dollar.

b.        it costs US$ 7.261 to buy one Canadian dollar.

c.         it costs Canadian Dollar .7261 to buy US$ 1.

d.        all of the above.

9.   How many US dollars will it take to purchase a Canadian item valued at 543 Canadian? 10. "Tariff" is a trade restriction. List one other trade restriction.

10. "Tariff" is a trade restriction. List one other trade restriction.