Question 1

________ risk measures the change in value of the firm that results from changes in future operating cash flows caused by unexpected changes in exchange rates.

Accepted Answer

A) Transaction 
B) Accounting 
C) Operating 
D) Translation 
A) Transaction 
B) Accounting 
C) Operating 
D) Translation

Question 2

Operating cash flows may occur in different currencies and at different times,but financing cash flows may occur only in a single currency.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is NOT an example of diversification in financing?

Accepted Answer

A) raising funds in more than one market 
B) raising funds in more than one country 
C) diversifying sales 
D) All of the above qualify. 
A) raising funds in more than one market 
B) raising funds in more than one country 
C) diversifying sales 
D) All of the above qualify.

Question 4

Which of the following is NOT a proactive policy for managing operating exposure?

Accepted Answer

A) matching currency of cash flow 
B) back-to-back loans 
C) cross currency swap agreements 
D) All of the above are proactive management policies for operating exposure. 
A) matching currency of cash flow 
B) back-to-back loans 
C) cross currency swap agreements 
D) All of the above are proactive management policies for operating exposure.

Question 5

An advantage of international diversification is the

Accepted Answer

A) reduction in the variability of future cash flows due to domestic business cycles. 
B) increase in the availability of capital. 
C) diversification of political risk. 
D) all of the above. 
A) reduction in the variability of future cash flows due to domestic business cycles. 
B) increase in the availability of capital. 
C) diversification of political risk. 
D) all of the above.

Question 6

________ cash flows arise from intracompany and intercompany receivables and payments while ________ cash flows are payments for the use of loans and equity.

Accepted Answer

A) Financing; operating 
B) Operating; financing 
C) Operating; accounting 
D) Accounting; financing 
A) Financing; operating 
B) Operating; financing 
C) Operating; accounting 
D) Accounting; financing

Question 7

Which of the following is NOT an operating cash flow?

Accepted Answer

A) intra-firm payable 
B) account receivable from an unrelated party 
C) interest payment by a subsidiary to a parent company 
D) account payable to a foreign subsidiary 
A) intra-firm payable 
B) account receivable from an unrelated party 
C) interest payment by a subsidiary to a parent company 
D) account payable to a foreign subsidiary

Question 8

An expected change in foreign exchange rates is not included in the definition of operating exposure,because both management and investors should have factored this information into their evaluation of anticipated operating results and market value.Describe how the expected change in foreign exchange rates would be reflected in the decision-making process from the perspective of a)management,b)debt service,c)the investor,and d)the broader macroeconomic perspective.

Accepted Answer

From a management perspective,budgeted f

Question 9

Which of the following is NOT an example of a financial cash flow?

Accepted Answer

A) parent invested equity capital 
B) interest on intrafirm lending 
C) payment for goods and services 
D) intrafirm principal payments 
A) parent invested equity capital 
B) interest on intrafirm lending 
C) payment for goods and services 
D) intrafirm principal payments

Question 10

What type of international risk exposure measures the change in present value of a firm resulting from changes in future operating cash flows caused by any unexpected change in exchange rates?

Accepted Answer

A) transaction exposure 
B) accounting exposure 
C) operating exposure 
D) translation exposure 
A) transaction exposure 
B) accounting exposure 
C) operating exposure 
D) translation exposure

Question 11

A ________ resembles a back-to-back loan except that it does not appear on a firm's balance sheet.

Accepted Answer

A) forward loan 
B) currency hedge 
C) counterparty 
D) currency swap 
A) forward loan 
B) currency hedge 
C) counterparty 
D) currency swap

Question 12

A ________ occurs when two business firms in separate countries arrange to borrow each other's currency for a specified period of time.

Accepted Answer

A) natural hedge loan 
B) forward loan 
C) currency switch loan 
D) back-to-back loan 
A) natural hedge loan 
B) forward loan 
C) currency switch loan 
D) back-to-back loan

Question 13

Most swap dealers arrange swaps so that each firm that is a party to the transaction knows who the counterparty is.

Accepted Answer

A) True 
 B)False

Question 14

Contractual approaches (i.e.,options and forwards)have occasionally been used to hedge operating exposure,but are costly and possibly ineffectual.

Accepted Answer

A) True 
 B)False

________ risk measures the change in value of the firm that results from changes in future operating cash flows caused by unexpected changes in exchange rates.

Operating cash flows may occur in different currencies and at different times,but financing cash flows may occur only in a single currency.

Which of the following is NOT an example of diversification in financing?

Which of the following is NOT a proactive policy for managing operating exposure?

An advantage of international diversification is the

cash flows arise from intracompany and intercompany receivables and payments while cash flows are payments for the use of loans and equity.

Which of the following is NOT an operating cash flow?

Which of the following is NOT an example of a financial cash flow?

What type of international risk exposure measures the change in present value of a firm resulting from changes in future operating cash flows caused by any unexpected change in exchange rates?

A ________ resembles a back-to-back loan except that it does not appear on a firm's balance sheet.

A ________ occurs when two business firms in separate countries arrange to borrow each other's currency for a specified period of time.

Most swap dealers arrange swaps so that each firm that is a party to the transaction knows who the counterparty is.

Contractual approaches (i.e.,options and forwards)have occasionally been used to hedge operating exposure,but are costly and possibly ineffectual.

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

Exam 11: Operating Exposure

________ risk measures the change in value of the firm that results from changes in future operating cash flows caused by unexpected changes in exchange rates.

Operating cash flows may occur in different currencies and at different times,but financing cash flows may occur only in a single currency.

Which of the following is NOT an example of diversification in financing?

Which of the following is NOT a proactive policy for managing operating exposure?

An advantage of international diversification is the

________ cash flows arise from intracompany and intercompany receivables and payments while ________ cash flows are payments for the use of loans and equity.

Which of the following is NOT an operating cash flow?

Which of the following is NOT an example of a financial cash flow?

What type of international risk exposure measures the change in present value of a firm resulting from changes in future operating cash flows caused by any unexpected change in exchange rates?

A ________ resembles a back-to-back loan except that it does not appear on a firm's balance sheet.

A ________ occurs when two business firms in separate countries arrange to borrow each other's currency for a specified period of time.

Most swap dealers arrange swaps so that each firm that is a party to the transaction knows who the counterparty is.

Contractual approaches (i.e.,options and forwards)have occasionally been used to hedge operating exposure,but are costly and possibly ineffectual.

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

cash flows arise from intracompany and intercompany receivables and payments while cash flows are payments for the use of loans and equity.