Chapter1

1. The most commonly accepted

goal of the MNC is:!
a. to maximize revenues
b. to maximize shareholder
wealth
c. to maximize profitability of the
firm
d. both a and b !
2. Agency costs are normally
larger for MNCs than for purely
domestic firms. Which of
the following is not a reason for
this larger agency cost?!
a. Monitoring managers of distant
subsidiaries in foreign countries is
more
difficult.
b. Managers from different
cultures may not follow uniform
goals.
 c. U.S. managers tend to
downplay the short-term effects of
decisions.
d. Sheer size of the larger MNCs
can create larger agency
problems. !
3. Several constraints confront the
MNC in its attempt to maximize
shareholder wealth.
Which of the following is probably
not a constraint?!
a. competitive
b. ethical
c. regulatory
d. environmental !
4. Part of the growth of
multinational business over time is
due to the realization that
specialization by countries can
increase production efficiency,
making trade essential
when a country focuses on the
products it produces best. This is
an example of which
theory of international business?!
a. product cycle theory
b. competitive advantage theory
c. imperfect markets theory
d. comparative advantage theory
!
5. According to the ___________,
firms become first established in
the home market as
a result of some perceived
advantage they would have over
existing competitors, such
as a need by the market for at
least one more supplier of the
product. Eventually, firms
will penetrate foreign markets to
satisfy foreign demand.!
a. product cycle theory
 b. imperfect markets theory
c. comparative advantage theory
d. none of the above !
6. Which method of international
business obligates a firm to
provide a specialized sales
or service strategy, support
assistance, and possibly an initial
investment in the entity in
exchange for periodic fees?!
a. joint venture
b. new foreign subsidiary
c. licensing
d. franchising !
7. Multinational firms face
exposure to many different types
of international risk. Which
of the following is not a type of
exposure mentioned in the text?!
a. diversifiable risk 分散风险
b. political risk
 c. foreign economies
d. exchange rate movements !
8. A firms expects to receive
$20,000 from domestic operations
and 20,000 British
pounds (£) from a business in
England. If the pound's value is
$1.25, the expected total
dollar cash flows are:!
a. $40,000
b. $36,000
c. $45,000
d. $20,000 !
Chapter1
1. The most commonly accepted
goal of the MNC is:!
a. to maximize revenues
b. to maximize shareholder
wealth
c. to maximize profitability of the
firm
 d. both a and b !
2. Agency costs are normally
larger for MNCs than for purely
domestic firms. Which of
the following is not a reason for
this larger agency cost?!
a. Monitoring managers of distant
subsidiaries in foreign countries is
more
difficult.
b. Managers from different
cultures may not follow uniform
goals.
c. U.S. managers tend to
downplay the short-term effects of
decisions.
d. Sheer size of the larger MNCs
can create larger agency
problems. !
3. Several constraints confront the
MNC in its attempt to maximize
shareholder wealth.
Which of the following is probably
not a constraint?!
a. competitive
b. ethical
c. regulatory
d. environmental !
4. Part of the growth of
multinational business over time is
due to the realization that
specialization by countries can
increase production efficiency,
making trade essential
when a country focuses on the
products it produces best. This is
an example of which
theory of international business?!
a. product cycle theory
b. competitive advantage theory
c. imperfect markets theory
d. comparative advantage theory
!
5. According to the ___________,
firms become first established in
the home market as
a result of some perceived
advantage they would have over
existing competitors, such
as a need by the market for at
least one more supplier of the
product. Eventually, firms
will penetrate foreign markets to
satisfy foreign demand.!
a. product cycle theory
b. imperfect markets theory
c. comparative advantage theory
d. none of the above !
6. Which method of international
business obligates a firm to
provide a specialized sales
or service strategy, support
assistance, and possibly an initial
investment in the entity in
exchange for periodic fees?!
a. joint venture
b. new foreign subsidiary
c. licensing
d. franchising !
7. Multinational firms face
exposure to many different types
of international risk. Which
of the following is not a type of
exposure mentioned in the text?!
a. diversifiable risk 分散风险
b. political risk
c. foreign economies
d. exchange rate movements !
8. A firms expects to receive
$20,000 from domestic operations
and 20,000 British
pounds (£) from a business in
England. If the pound's value is
$1.25, the expected total
dollar cash flows are:!
a. $40,000
b. $36,000
c. $45,000
d. $20,000 !
Chapter1
1. The most commonly accepted
goal of the MNC is:!
a. to maximize revenues
b. to maximize shareholder
wealth
c. to maximize profitability of the
firm
d. both a and b !
2. Agency costs are normally
larger for MNCs than for purely
domestic firms. Which of
the following is not a reason for
this larger agency cost?!
a. Monitoring managers of distant
subsidiaries in foreign countries is
more
difficult.
b. Managers from different
cultures may not follow uniform
goals.
c. U.S. managers tend to
downplay the short-term effects of
decisions.
d. Sheer size of the larger MNCs
can create larger agency
problems. !
3. Several constraints confront the
MNC in its attempt to maximize
shareholder wealth.
Which of the following is probably
not a constraint?!
a. competitive
 b. ethical
c. regulatory
d. environmental !
4. Part of the growth of
multinational business over time is
due to the realization that
specialization by countries can
increase production efficiency,
making trade essential
when a country focuses on the
products it produces best. This is
an example of which
theory of international business?!
a. product cycle theory
b. competitive advantage theory
c. imperfect markets theory
d. comparative advantage theory
!
5. According to the ___________,
firms become first established in
the home market as
a result of some perceived
advantage they would have over
existing competitors, such
as a need by the market for at
least one more supplier of the
product. Eventually, firms
will penetrate foreign markets to
satisfy foreign demand.!
a. product cycle theory
b. imperfect markets theory
c. comparative advantage theory
d. none of the above !
6. Which method of international
business obligates a firm to
provide a specialized sales
or service strategy, support
assistance, and possibly an initial
investment in the entity in
exchange for periodic fees?!
a. joint venture
b. new foreign subsidiary
 c. licensing
d. franchising !
7. Multinational firms face
exposure to many different types
of international risk. Which
of the following is not a type of
exposure mentioned in the text?!
a. diversifiable risk 分散风险
b. political risk
c. foreign economies
d. exchange rate movements !
8. A firms expects to receive
$20,000 from domestic operations
and 20,000 British
pounds (£) from a business in
England. If the pound's value is
$1.25, the expected total
dollar cash flows are:!
a. $40,000
b. $36,000
c. $45,000
 d. $20,000 !
Chapter1
1. The most commonly accepted
goal of the MNC is:!
a. to maximize revenues
b. to maximize shareholder
wealth
c. to maximize profitability of the
firm
d. both a and b !
2. Agency costs are normally
larger for MNCs than for purely
domestic firms. Which of
the following is not a reason for
this larger agency cost?!
a. Monitoring managers of distant
subsidiaries in foreign countries is
more
difficult.
 b. Managers from different
cultures may not follow uniform
goals.
c. U.S. managers tend to
downplay the short-term effects of
decisions.
d. Sheer size of the larger MNCs
can create larger agency
problems. !
3. Several constraints confront the
MNC in its attempt to maximize
shareholder wealth.
Which of the following is probably
not a constraint?!
a. competitive
b. ethical
c. regulatory
d. environmental !
4. Part of the growth of
multinational business over time is
due to the realization that
specialization by countries can
increase production efficiency,
making trade essential
when a country focuses on the
products it produces best. This is
an example of which
theory of international business?!
a. product cycle theory
b. competitive advantage theory
c. imperfect markets theory
d. comparative advantage theory
!
5. According to the ___________,
firms become first established in
the home market as
a result of some perceived
advantage they would have over
existing competitors, such
as a need by the market for at
least one more supplier of the
product. Eventually, firms
will penetrate foreign markets to
satisfy foreign demand.!
a. product cycle theory
b. imperfect markets theory
c. comparative advantage theory
d. none of the above !
6. Which method of international
business obligates a firm to
provide a specialized sales
or service strategy, support
assistance, and possibly an initial
investment in the entity in
exchange for periodic fees?!
a. joint venture
b. new foreign subsidiary
c. licensing
d. franchising !
7. Multinational firms face
exposure to many different types
of international risk. Which
of the following is not a type of
exposure mentioned in the text?!
a. diversifiable risk 分散风险
b. political risk
c. foreign economies
d. exchange rate movements !
8. A firms expects to receive
$20,000 from domestic operations
and 20,000 British
pounds (£) from a business in
England. If the pound's value is
$1.25, the expected total
dollar cash flows are:!
a. $40,000
b. $36,000
c. $45,000
d. $20,000
Chapter1
1. The most commonly accepted
goal of the MNC is:!
a. to maximize revenues
 b. to maximize shareholder
wealth
c. to maximize profitability of the
firm
d. both a and b !
2. Agency costs are normally
larger for MNCs than for purely
domestic firms. Which of
the following is not a reason for
this larger agency cost?!
a. Monitoring managers of distant
subsidiaries in foreign countries is
more
difficult.
b. Managers from different
cultures may not follow uniform
goals.
c. U.S. managers tend to
downplay the short-term effects of
decisions.
 d. Sheer size of the larger MNCs
can create larger agency
problems. !
3. Several constraints confront the
MNC in its attempt to maximize
shareholder wealth.
Which of the following is probably
not a constraint?!
a. competitive
b. ethical
c. regulatory
d. environmental !
4. Part of the growth of
multinational business over time is
due to the realization that
specialization by countries can
increase production efficiency,
making trade essential
when a country focuses on the
products it produces best. This is
an example of which
theory of international business?!
a. product cycle theory
b. competitive advantage theory
c. imperfect markets theory
d. comparative advantage theory
!
5. According to the ___________,
firms become first established in
the home market as
a result of some perceived
advantage they would have over
existing competitors, such
as a need by the market for at
least one more supplier of the
product. Eventually, firms
will penetrate foreign markets to
satisfy foreign demand.!
a. product cycle theory
b. imperfect markets theory
c. comparative advantage theory
d. none of the above !
6. Which method of international
business obligates a firm to
provide a specialized sales
or service strategy, support
assistance, and possibly an initial
investment in the entity in
exchange for periodic fees?!
a. joint venture
b. new foreign subsidiary
c. licensing
d. franchising !
7. Multinational firms face
exposure to many different types
of international risk. Which
of the following is not a type of
exposure mentioned in the text?!
a. diversifiable risk 分散风险
b. political risk
c. foreign economies
d. exchange rate movements !
8. A firms expects to receive
$20,000 from domestic operations
and 20,000 British
pounds (£) from a business in
England. If the pound's value is
$1.25, the expected total
dollar cash flows are:!
a. $40,000
b. $36,000
c. $45,000
d. $20,000
Chapter1
1. The most commonly accepted goal of the MNC is:

a) to maximize revenues
b) to maximize shareholder wealth
c) to maximize profitability of the firm
d) both a and b

2. Agency costs are normally larger for MNCs than for purely domestic firms. Which of the following is not a reason
for this larger agency cost?

a) Monitoring managers of distant subsidiaries in foreign countries is more

b) difficult.
c) Managers from different cultures may not follow uniform goals.
d) U.S. managers tend to downplay the short-term effects of decisions.
e) Sheer size of the larger MNCs can create larger agency problems.

3. Several constraints confront the MNC in its attempt to maximize shareholder wealth. Which of the following is
probably not a constraint?

a) competitive
b) ethical
c) regulatory
d) environmental
4. Part of the growth of multinational business over time is due to the realization that specialization by countries can
increase production efficiency, making trade essential when a country focuses on the products it produces best. This
is an example of which theory of international business?

a) product cycle theory

b) competitive advantage theory
c) imperfect markets theory
d) comparative advantage theory

5. According to the ___________, firms become first established in the home market as a result of some perceived
advantage they would have over existing competitors, such as a need by the market for at least one more supplier of
the product. Eventually, firms will penetrate foreign markets to satisfy foreign demand.

a) product cycle theory

b) imperfect markets theory
c) comparative advantage theory
d) none of the above

6. Which method of international business obligates a firm to provide a specialized sale or service strategy, support
assistance, and possibly an initial investment in the entity in exchange for periodic fees?!

a) joint venture
b) new foreign subsidiary
c) licensing
d) franchising

7. Multinational firms face exposure to many different types of international risk. Which of the following is not a type
of exposure mentioned in the text?

a) diversifiable risk
b) political risk
c) foreign economies
d) exchange rate movements

8. A firms expects to receive $20,000 from domestic operations and 20,000 British pounds (£) from a business in
England. If the pound's value is $1.25, the expected total dollar cash flows are:

a) $40,000
b) $36,000
c) $45,000
d) $20,000

a) 10. A decentralized
management style is more
likely to result in higher
agency costs
b) because the subsidiary
managers may make
decisions that do not focus on
maximizing
c) the value of the entire
MNC.!
d) a. True
e) b. False !
f) 11. Using international
trade as a method of
conducting international
business is a
g) relatively bold approach
that can be used by firms to
penetrate markets.!
h) a. True
i) b. False !
j) 13. Under NAFTA, the low-
cost labor in Mexico has led
to a decrease in market share
for
k) some U.S. firms. This is
most pronounced in
technology-intensive
industries.!
l) a. True
m) b. False !
n) 14. Political risk represents
political actions taken by the
host government or the
public
o) that affect an MNC's cash
flows.!
p) a. True
q) b. False !
r) 16. Licensing is a venture
that is jointly owned and
operated by two or more
firms.!
s) a. True
t) b. False
10. A decentralized management
style is more likely to result in
higher agency costs
because the subsidiary managers
may make decisions that do not
focus on maximizing
the value of the entire MNC.!
a. True
b. False !
11. Using international trade as a
method of conducting
international business is a
relatively bold approach that can
be used by firms to penetrate
markets.!
a. True
b. False !
13. Under NAFTA, the low-cost
labor in Mexico has led to a
decrease in market share for
some U.S. firms. This is most
pronounced in technology-
intensive industries.!
a. True
b. False !
14. Political risk represents
political actions taken by the host
government or the public
that affect an MNC's cash flows.!
a. True
b. False !
16. Licensing is a venture that is
jointly owned and operated by two
or more firms.!
a. True
b. False
10. A decentralized management style is more likely to result in higher agency costs because the subsidiary
managers may make decisions that do not focus on maximizing the value of the entire MNC.

a) True
b) False

11. Using international trade as a method of conducting international business is a relatively bold approach that can
be used by firms to penetrate markets.!

a) True
b) False

13. Under NAFTA, the low-cost labor in Mexico has led to a decrease in market share for some U.S. firms. This is
most pronounced in technology-intensive industries.
 a) True
b) False

14. Political risk represents political actions taken by the host government or the public that affect an MNC's cash
flows.

a) True
b) False

16. Licensing is a venture that is jointly owned and operated by two or more firms.
a) True
b) False

Chapter2
1. Factor income represents income received by investors on foreign investments in financial assets (securities).
Factor income is part of which component of the balance of payments?

a) capital account
b) current account
c) balance of trade
d) none of the above

2. Which of the following are factors that affect international trade flows?

a) government restrictions
b) exchange rates
c) inflation
d) all of the above
e) none of the above

3. Even if a country's home currency weakens, its balance of trade will not necessarily improve immediately. This
may occur because:

a) many international trade transactions are prearranged and cannot be immediately adjusted
b) the currencies of some other countries may have strengthened
c) prices on goods will remain the same, making goods just as competitive
d) all of the above
e) none of the above

4. Which of the following factors will lead to an inflow of direct foreign investment (DFI) into a country?

a) high tax rates in the country where the investment flows

b) privatization in the country where the investment flows
 c) an expectation that the currency in the country where the investment flows will depreciate
d) all of the above
e) none of the above

5. Which of the following factors

will lead to an inflow of portfolio
investment into a
country, everything else held
constant?!
a. an expectation of a weaker
currency in the country where the
investment
flows
b. higher tax rates in the country
where the investment flows
c. higher interest rates in the
country where the investment
flows
d. none of the above
e. both a and c !
6. Among the major objectives of
the ________ are to promote
cooperation among
countries on international
monetary issues and to promote
stability in exchange rates.!
a. International Monetary Fund
(IMF)
b. World Bank
c. World Trade Organization
d. International Financial
Corporation
e. none of the above !
7. The World Bank does
cofinancing of loans with which of
the following entities?!
a. official aid agencies
b. export credit agencies
c. commercial banks
d. both a and c
e. all of the above !
8. ______________ is a component of
the capital account and represents
the
investment in fixed assets in
foreign countries that can be used
to conduct business
operations.!
a. Portfolio investment (Financial)
b. Direct foreign investment (DFI)
(Financial)
c. Other capital investment
(Financial)
d. Transfer payments
e. None of the above !
9. The General Agreement on
Tariffs and Trade (GATT):!
a. is an accord reached between
100 countries in 1980
b. reduced some tariffs by 80
percent on average
c. removed some tariffs over a
five- to ten-year period
 d. made more progress on
reducing tariffs in service
industries than in
manufacturing industries
e. none of the above !
10. The capital account is
primarily composed of
merchandise exports and imports
and
service exports and imports.
(current account)!
a. True
b. False !
11. Tariffs are taxes imposed on
imported goods.!
a. True
b. False !
12. In the long run, a weak dollar
is expected to cause a higher
balance of trade from
the U.S. perspective.!
a. True
b. False !
13. The General Agreement on
Tariffs and Trade (GATT) was
established in 1993 to
settle trade disputes and provide
a forum for multilateral trade
negotiations. It began
operations in 1995 with a
membership of 81 countries.!
a. True
b. False !
14. The International Development
Association (IDA) was created in
1960 with country
development objectives similar to
those of the World Bank. Its loan
policy is more
appropriate for less prosperous
nations.!
 a. True
b. False
5. Which of the following factors will lead to an inflow of portfolio investment into a country, everything else held
constant?

a) an expectation of a weaker currency in the country where the investment flows

b) higher tax rates in the country where the investment flows
c) higher interest rates in the country where the investment flows
d) none of the above
e) both a and c

6. Among the major objectives of the ________ are to promote cooperation among countries on international
monetary issues and to promote stability in exchange rates.

a) International Monetary Fund (IMF)

b) World Bank
c) World Trade Organization
d) International Financial Corporation
e) none of the above

7. The World Bank does co-financing of loans with which of the following entities?

a) official aid agencies

b) export credit agencies
c) commercial banks
d) both a and c
e) all of the above

8. ______________ is a component of the capital account and represents the investment in fixed assets in foreign
countries that can be used to conduct business operations.

a) Portfolio investment (Financial)

b) Direct foreign investment (DFI) (Financial)
c) other capital investment (Financial)
d) Transfer payments
e) None of the above

9. The General Agreement on Tariffs and Trade (GATT):

a) is an accord reached between 100 countries in 1980

b) reduced some tariffs by 80 percent on average
c) removed some tariffs over a five- to ten-year period
d) made more progress on reducing tariffs in service industries than in manufacturing industries
e) none of the above

10. The capital account is primarily composed of merchandise exports and imports and service exports and imports.
(Current account)

a) True
b) False

11. Tariffs are taxes imposed on imported goods.!

a) True
b) False
12. In the long run, a weak dollar is expected to cause a higher balance of trade from the U.S. perspective.

a) True
b) False
13. The General Agreement on Tariffs and Trade (GATT) was established in 1993 to settle trade disputes and provide
a forum for multilateral trade negotiations. It began operations in 1995 with a membership of 81 countries.

a) True
b) False

14. The International Development Association (IDA) was created in 1960 with country development objectives
similar to those of the World Bank. Its loan policy is more appropriate for less prosperous nations.

a) True
b) False

15. Dumping reflects the exporting

of products by one country to
other countries at
prices above cost.!
a. True
b. False !
16. A graphical illustration of the
fact that the U.S. balance of trade
may actually
deteriorate in the short run as a
result of dollar depreciation is
called the J curve effect.!
a. True
b. False!
)
Chapter)3)
)
1. Which of the following is not a
motive for investing in foreign
markets?!
a. expectations of a weaker
foreign currency
b. international diversification
c. economic conditions
d. all of the above are motives for
investing in foreign markets !
2. Which of the following are
important attributes of banks that
provide foreign
exchange?!
a. speed of execution
b. advice about current market
conditions
c. forecasting advice
d. all of the above
 e. both b and c !
3. The bid rate for the British
pound is $1.65 and the ask rate is
$1.68. What is the
bid/ask spread?!
a. 1.82%
b. -1.82%
c. 1.79%
d. -1.79%
e. none of the above !
4. If the value of the Canadian
dollar (C$) is $0.65 and the euro
(€) is worth $0.90, what
is the value of the euro in
Canadian dollars?!
a. C$1.38
b. C$0.72
c. C$0.59
d. €0.72
e. none of the above !
5. The Eurodollar market grew
substantially in the 1960s and
1970s for which of the
following reasons?!
a. higher reserve requirements
for Eurobanks
b. U.S. regulations in 1968 which
limited foreign lending by U.S.
banks
c. higher spreads that Eurobanks
could charge on loans and
deposits
d. all of the above
e. both a and c !
6. Multinational corporations
sometimes borrow in the
Eurocredit market. These loans
are denominated in dollars and
many other currencies. The
common maturity for
Eurocredit loans is:!
 a. one year
b. three years
c. five years
d. ten years
e. thirty years !
7. A long-term bond that is issued
by a borrower foreign to the
country where the bond
is placed is called a:!
a. foreign bond
b. Eurobond
15. Dumping reflects the exporting
of products by one country to
other countries at
prices above cost.!
a. True
b. False !
16. A graphical illustration of the
fact that the U.S. balance of trade
may actually
deteriorate in the short run as a
result of dollar depreciation is
called the J curve effect.!
a. True
b. False!
)
Chapter)3)
)
1. Which of the following is not a
motive for investing in foreign
markets?!
a. expectations of a weaker
foreign currency
b. international diversification
c. economic conditions
d. all of the above are motives for
investing in foreign markets !
2. Which of the following are
important attributes of banks that
provide foreign
exchange?!
a. speed of execution
b. advice about current market
conditions
c. forecasting advice
d. all of the above
e. both b and c !
3. The bid rate for the British
pound is $1.65 and the ask rate is
$1.68. What is the
bid/ask spread?!
a. 1.82%
b. -1.82%
c. 1.79%
d. -1.79%
e. none of the above !
4. If the value of the Canadian
dollar (C$) is $0.65 and the euro
(€) is worth $0.90, what
is the value of the euro in
Canadian dollars?!
 a. C$1.38
b. C$0.72
c. C$0.59
d. €0.72
e. none of the above !
5. The Eurodollar market grew
substantially in the 1960s and
1970s for which of the
following reasons?!
a. higher reserve requirements
for Eurobanks
b. U.S. regulations in 1968 which
limited foreign lending by U.S.
banks
c. higher spreads that Eurobanks
could charge on loans and
deposits
d. all of the above
e. both a and c !
6. Multinational corporations
sometimes borrow in the
Eurocredit market. These loans
are denominated in dollars and
many other currencies. The
common maturity for
Eurocredit loans is:!
a. one year
b. three years
c. five years
d. ten years
e. thirty years !
7. A long-term bond that is issued
by a borrower foreign to the
country where the bond
is placed is called a:!
a. foreign bond
b. Eurobond
15. Dumping reflects the exporting of products by one country to other countries at prices above cost.

a) True
b) False

16. A graphical illustration of the fact that the U.S. balance of trade may actually deteriorate in the short run as a
result of dollar depreciation is called the J curve effect.

a) True
 b) False

Chapter3
1. Which of the following is not a motive for investing in foreign markets?

a) expectations of a weaker foreign currency

b) international diversification
c) economic conditions
d) all of the above are motives for investing in foreign markets

2. Which of the following are important attributes of banks that provide foreign exchange?

a) speed of execution
b) advice about current market conditions
c) forecasting advice
d) all of the above
e) both b and c

3. The bid rate for the British pound is $1.65 and the ask rate is $1.68. What is the bid/ask spread?!

a) 1.82%
b) -1.82%
c) 1.79%
d) -1.79%
e) none of the above

4. If the value of the Canadian dollar (C$) is $0.65 and the euro (€) is worth $0.90, what is the value of the euro in
Canadian dollars?

a) C$1.38
b) C$0.72
c) C$0.59
d) €0.72
e) none of the above

5. The Eurodollar market grew substantially in the 1960s and 1970s for which of the following reasons?

a) higher reserve requirements for Eurobanks

b) U.S. regulations in 1968 which limited foreign lending by U.S. banks
c) higher spreads that Eurobanks could charge on loans and deposits
d) all of the above
e) both a and c

6. Multinational corporations sometimes borrow in the Euro credit market. These loans are denominated in dollars
and many other currencies. The common maturity for Euro credit loans is:

a) one year
b) three years
c) five years
d) ten years
e) thirty years

7. A long-term bond that is issued by a borrower foreign to the country where the bond is placed is called a:

a) foreign bond
 b) Eurobond
c) Euro credit bond
d) all of the above

8. A stock offering by foreign corporations in the U.S. is called a (an):

a) American depository receipt (ADR)

b) Yankee stock offering
c) floating rate note (FRN)
d) none of the above

9. The most common type of foreign exchange transaction is for immediate exchange at the so-called forward rate.

a) True
b) False

10. A purchaser of a currency put option buys the right to sell a specific currency at a specific price within a specific
period of time.

a) True
b) False

11. In December 1987, 12 major industrialized countries met in Buenos Aires and agreed on standardized guidelines
for bank capital classification. This agreement was called the "Brazil Accord."

a) True
b) False (Basel Accord)

12. Loan rates float in accordance with the movement of some market interest rate, such as the Lisbon Intrabank
Offer Rate (LIBOR). It is the rate commonly charged for loans between Eurobanks.

a) True
b) False

13. The adoption of the euro discouraged MNCs based in Europe to issue stock.!

a) True
b) False (The adoption of the euro encouraged MNCs based in Europe to issue stock. Investors throughout
Europe were more willing to invest in stocks if they did not have to worry about exchange rate effects)