Exam 6: The International Monetary Environment and Financial Management in the Global Firm

When an American tourist exchanges dollars for yen at a Tokyo bank, which of the following is most likely applied?

Financing Corporate Expansion Intensity Games is an MNE based in San Francisco that manufactures a popular line of video game consoles and accessories. Intensity owns manufacturing facilities in China and Russia where the components of the game consoles are manufactured and assembled before being shipped around the world. Intensity also owns numerous subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity managers have determined that the firm needs to expand the Chinese facility to accommodate increased demand. The firm needs to raise several million dollars to finance the expansion. The financial managers of Intensity are discussing the various financing options available to the firm. -Which of the following most likely supports Intensity raising funds through intracorporate financing to expand its Chinese facility?

The Bretton Woods Agreement was enacted in the late 1960s when the U.S. needed to finance government programs and the Vietnam War.

The IMF's primarily criticized for requiring nations to undertake painful reforms.

The price of one currency expressed in terms of another is known as which of the following?

Any currency deposited in a bank outside its origin country is called ________.

The type of currency used only for domestic business transactions is known by which of the following terms?

If the supply of a currency rises, which of the following is most likely to be true regarding the currency's price?

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely not occur?

What does the central bank do in order to accommodate a nation's economic growth?

In a short essay, describe the three types of currency exposure, and explain how foreign currency translation works.

Unlike exporters and licensors, who both face currency risk, managers of foreign investment portfolios are sheltered from the rise and fall of exchange rates.

EZ Lawn Currency Risk The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers, blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in Florida, but the firm outsources inputs from a number of countries, each with varying degrees of economic stability. Given the importance of the firm's sourcing activities, EZ Lawn managers are discussing methods which might reduce the currency risk faced by EZ Lawn. -Which of the following would most likely be an effective currency risk strategy for EZ Lawn management?

A U.S. company that buys from a supplier whose currency is increasing against the dollar will most likely have to do which of the following if the price is expressed in the supplier's currency?

Plas-Tex Exporting Plas-Tex Plastic Company manufactures plastic storage containers of all different sizes. Plas-Tex has been exporting more storage containers to Europe recently because of the depreciation of the U.S. dollar relative to the euro. Plas-Tex CEO, Wayne Chisholm, has prepared a report for the annual shareholders meeting in which he outlines his manufacturing and sales recommendations for the upcoming year. -Which of the following questions would be more important for Chisholm to evaluate before presenting his manufacturing recommendations to shareholders?

EZ Lawn Currency Risk The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers, blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in Florida, but the firm outsources inputs from a number of countries, each with varying degrees of economic stability. Given the importance of the firm's sourcing activities, EZ Lawn managers are discussing methods which might reduce the currency risk faced by EZ Lawn. -Which of the following would most likely minimize the currency risk of EZ Lawn?

Each of the following characterizes the floating exchange rate system except ________.

In a short essay, explain the concept of currency risk. How can inflation and interest create currency risk?

Multilateral netting would enable an MNE with numerous subsidiaries to do which of the following?

On which of the following levels of the international monetary and financial systems pyramid are commercial banks categorized?