Question 1

The appropriate split of liquid balances between cash and marketable securities depends on all but

Accepted Answer

A)  interest rates 
B)  costs of buying and selling securities 
C)  the variability of cash flows 
D)  the existence of foreign exchange risk 
A)  interest rates 
B)  costs of buying and selling securities 
C)  the variability of cash flows 
D)  the existence of foreign exchange risk

Question 2

Why has the commercial paper market been dominated by the largest and most creditworthy firms?

Accepted Answer

A)  commercial paper bears only the name of the issuer and is unsecured 
B)  the largest companies can afford the flotation costs 
C)  credit reporting agencies screen out smaller firms 
D)  commercial paper is issued at a discount 
A)  commercial paper bears only the name of the issuer and is unsecured 
B)  the largest companies can afford the flotation costs 
C)  credit reporting agencies screen out smaller firms 
D)  commercial paper is issued at a discount

Question 3

What of the following reasons has NOT been cited as the root cause of inventory stockpiling by subsidiaries of multinationals?

Accepted Answer

A)  long delivery lead times 
B)  currency restrictions 
C)  customs delays 
D)  pegging the currency's exchange rate 
A)  long delivery lead times 
B)  currency restrictions 
C)  customs delays 
D)  pegging the currency's exchange rate

Question 4

One of the cash manager's greatest problems is that __________ wire transfers do not always operate with great efficiency globally.

Accepted Answer

A)  bank-to-bank 
B)  subsidiary-to-subsidiary 
C)  U. S. bank 
D)  U.K. bank 
A)  bank-to-bank 
B)  subsidiary-to-subsidiary 
C)  U. S. bank 
D)  U.K. bank

Question 5

SCI borrows SFr million from Credit Suisse for one year at 12% interest. Interest is prepaid. What is the effective SFr interest rate on SCI's loan?

Accepted Answer

A)  14.52% 
B)  13.64% 
C)  16.44% 
D)  21.22% 
A)  14.52% 
B)  13.64% 
C)  16.44% 
D)  21.22%

Question 6

Allied Products has been offered a one-year loan of £100,000 at 14%, payable at maturity. What is the effective pound interest rate on Allied's loan?

Accepted Answer

A)  14.0% 
B)  17.5% 
C)  15.2% 
D)  18.3% 
A)  14.0% 
B)  17.5% 
C)  15.2% 
D)  18.3%

Question 7

Suppose that a firm located in Belgium in 1994 can borrow dollars at 8% or Belgium francs at 14%. If the Belgian franc is expected to depreciate from BF58 = $1 at the beginning of the year to BF61 = $1 at the end of the year, then the expected dollar cost of the Belgian franc loan is

Accepted Answer

A)  8.39% 
B)  20.14% 
C)  12.37% 
D)  9.15% 
A)  8.39% 
B)  20.14% 
C)  12.37% 
D)  9.15%

Question 8

Liberalized credit terms involve the following costs EXCEPT

Accepted Answer

A)  risk of default 
B)  increased liquidity for the firm 
C)  increased interest expense on the larger investment in receivables 
D)  the deterioration of the value of accounts receivable denominated in buyer's currency 
A)  risk of default 
B)  increased liquidity for the firm 
C)  increased interest expense on the larger investment in receivables 
D)  the deterioration of the value of accounts receivable denominated in buyer's currency

Question 9

Suppose it is May 1985 and the current value of the Greek drachma is Dr 1 = $0.006369, but the expected spot rate 90 days hence is Dr 1 = $0.005980. What is the value of a sales order of Dr 50 million sold on 90-day terms?

Accepted Answer

A)  $318,450 
B)  $562,491 
C)  $299,000 
D)  5,430 
A)  $318,450 
B)  $562,491 
C)  $299,000 
D)  5,430

Question 10

Which of the following factors would NOT add value to centralized cash management?

Accepted Answer

A)  tax differentials across countries 
B)  violations of interest rate parity 
C)  differences between borrowing and lending rates 
D)  more freedom to local subsidiary project managers to handle local funds 
A)  tax differentials across countries 
B)  violations of interest rate parity 
C)  differences between borrowing and lending rates 
D)  more freedom to local subsidiary project managers to handle local funds

The appropriate split of liquid balances between cash and marketable securities depends on all but

Why has the commercial paper market been dominated by the largest and most creditworthy firms?

What of the following reasons has NOT been cited as the root cause of inventory stockpiling by subsidiaries of multinationals?

One of the cash manager's greatest problems is that __________ wire transfers do not always operate with great efficiency globally.

SCI borrows SFr million from Credit Suisse for one year at 12% interest. Interest is prepaid. What is the effective SFr interest rate on SCI's loan?

Allied Products has been offered a one-year loan of £100,000 at 14%, payable at maturity. What is the effective pound interest rate on Allied's loan?

Suppose that a firm located in Belgium in 1994 can borrow dollars at 8% or Belgium francs at 14%. If the Belgian franc is expected to depreciate from BF58 = $1 at the beginning of the year to BF61 = $1 at the end of the year, then the expected dollar cost of the Belgian franc loan is

Liberalized credit terms involve the following costs EXCEPT

Suppose it is May 1985 and the current value of the Greek drachma is Dr 1 = $0.006369, but the expected spot rate 90 days hence is Dr 1 = $0.005980. What is the value of a sales order of Dr 50 million sold on 90-day terms?

Which of the following factors would NOT add value to centralized cash management?

Introduction: Multinational Enterpriseand Multinational Financial Management

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Anaylsis

The Foreign Exchange Markets

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Market

The Euromarkets

The Cost of Capital for Foreign Investment

International Portfolio Investment

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Managing the Multinational Financial System

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Exam 19: Current Asset Management and Short Team Financing

The appropriate split of liquid balances between cash and marketable securities depends on all but

Why has the commercial paper market been dominated by the largest and most creditworthy firms?

What of the following reasons has NOT been cited as the root cause of inventory stockpiling by subsidiaries of multinationals?

One of the cash manager's greatest problems is that __________ wire transfers do not always operate with great efficiency globally.

SCI borrows SFr million from Credit Suisse for one year at 12% interest. Interest is prepaid. What is the effective SFr interest rate on SCI's loan?

Allied Products has been offered a one-year loan of £100,000 at 14%, payable at maturity. What is the effective pound interest rate on Allied's loan?

Suppose that a firm located in Belgium in 1994 can borrow dollars at 8% or Belgium francs at 14%. If the Belgian franc is expected to depreciate from BF58 = $1 at the beginning of the year to BF61 = $1 at the end of the year, then the expected dollar cost of the Belgian franc loan is

Liberalized credit terms involve the following costs EXCEPT

Suppose it is May 1985 and the current value of the Greek drachma is Dr 1 = $0.006369, but the expected spot rate 90 days hence is Dr 1 = $0.005980. What is the value of a sales order of Dr 50 million sold on 90-day terms?

Which of the following factors would NOT add value to centralized cash management?

Introduction: Multinational Enterpriseand Multinational Financial Management

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Anaylsis

The Foreign Exchange Markets

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Market

The Euromarkets

The Cost of Capital for Foreign Investment

International Portfolio Investment

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Managing the Multinational Financial System

Filters