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Question;Fundamentals of;Multinational Finance, 4e(Moffett);Chapter 11 Operating Exposure;Multiple Choice;and True/False Questions;11.1 Trident Corporation: A Multinational's;Operating Exposure;1) Another name;for operating exposure is ________ exposure.;A) economic;B) competitive;C) strategic;D) all of the;above;2) 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) transaction;exposure;B) accounting;exposure;C) operating;exposure;D) translation;exposure;3) The goal of;operating exposure analysis is to identify strategic operating techniques the;firm might adopt to enhance value in the face of unanticipated exchange rate;changes.;\;4) ________ cash;flows arise from intracompany and intercompany receivables and payments while;cash flows are payments for the use of loans and equity.;A) Financing;operating;B) Operating;financing;C) Operating;accounting;D) Accounting;financing;\;5) Operating cash;flows may occur in different currencies and at different times, but financing;cash flows may occur only in a single currency.;Answer: FALSE;6) Which of the;following is NOT an example of a financial cash flow?;A) parent;invested equity capital;B) interest on;intrafirm lending;C) payment for;goods and services;D) intrafirm;principal payments;7) Which of the;following is NOT an example of an operating cash flow?;A) management;fees and distributed overhead;B) royalties and;license fees;C) rent and lease;payments;D) dividend paid;to parent company;8) ________ exposure;is far more important for the long-run health of a business than changes caused;by ________ or ________ exposure.;A) Operating;translation, transaction;B) Transaction;operating, translation;C) Accounting;translation, transaction;D) Translation;operating, transaction;9) Expected;changes in foreign exchange rates should already be factored into anticipated;operating results by management and investors.;10) Under;conditions of equilibrium, management would use ________ exchange rate as an;unbiased predictor of future spot rates when preparing operating budgets.;A) the current;spot;B) the forward;rate;C) the black;market;D) none of the;above;11) Simpson Sign;Company based in Frostbite Falls, Minnesota has a 6-month C$100,000 contract to;complete sign work in Winnipeg, Manitoba, Canada. The current spot rate is $1.02/C$ and the;forward rate is $1.01/C$. Under conditions of equilibrium, management would use;today ________ when preparing operating budgets.;A) $102,000;B) $101,000;C) $100,000;D) None of the;above;12) The three;main types of foreign exchange risk are;A) operating;transaction, and translation.;B) translation;accounting, and operating.;C) transaction;accounting, and translation.;D) operating;currency, and market.;13) Operating;exposure referred to as MEDIUM RUN:EQUILIBRIUM has which of the following set;of characteristics?;A) It lasts two;to five years, has complete pass-through of exchange rate changes, and existing;competitors begin partial responses.;B) It lasts for;less than one year, has partial pass-through of exchange rate changes, and;existing competitors begin partial responses.;C) It lasts for;more than five years, has partial pass-through of exchange rate changes, and;existing competitors begin partial responses.;D) It lasts two;to five years, has partial pass-through of exchange rate changes, and existing;competitors begin partial responses.

 

Paper#51184 | Written in 18-Jul-2015

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