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Question
What is a firm engaging in when it insures itself against foreign exchange risk?A.Currency speculation
B.Carry trade
C.Hedging
D.Currency swap
E.Arbitrage
Answer
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Which of the following occurs when a government increases the money supply?
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Q:
Which of the following transactions is used to move out of one currency and into another for a limited period without incurring foreign exchange risk?
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To express the PPP theory in symbols, let P$ be the U.S. dollar price of a basket of particular goods and P be the price of the same basket of goods in Japanese yen. What does the purchasing power parity (PPP) theory predict to be the equivalent of the dollar/yen exchange rate, E$/?
A.E$/ = (1 + P)/P$
B.E$/ = (1 + P$)/P
C.E$/ = P/P$
D.E$/ = P$/P
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Q:
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A.€320
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Q:
What is meant by translation exposure?
A.The long-run effect of changes in exchange rates on future prices, sales, and costs
B.The impact of currency exchange rate changes on the reported financial statements of a company
C.The extent to which a firm's future international earning power is affected by changes in exchange rates
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Which of the following observations is true of technical analysis, an approach to exchange rate forecasting?
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C.borrow money in Rhodian currency, convert it into Maritian currency, and deposit it in a Maritian bank.
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A.Rising inflation
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What kind of demand is seen when a small change in price produces a large change in demand?
A.Elastic
B.Inelastic
C.Relative
D.Rigid
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In which of the following conditions does arbitrage occur?
A.When a firm offers a product at low prices through discount coupons and promotions
B.When a firm sells a product at higher prices to make a profit from relatively fewer sales
C.When a firm imports products from a manufacturer and distributes them directly through retail outlets
D.When a firm purchases products in a country where prices are lower and resells them in a country where prices are higher
E.When a firm prices its products at the least cost, risking losses, in order to grab market share
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If a firm favors a push strategy, using direct selling to educate potential consumers about the features of its products, what kind of products would it most likely sell?
A.Professional services
B.Food grains
C.Consumer products
D.Industrial products
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Which of the following is true of the barriers to international communication?
A.Noise tends to increase the probability of effective communication.
B.Source effects can be beneficial for an international business when potential consumers in a target country have a bias against foreign firms.
C.Many international businesses try to promote positive source effects by deemphasizing their foreign origins.
D.Fewer firms vie for the attention of prospective customers in developing countries, thus the noise level is lower.
E.Research suggests that a consumer may use country of origin as a cue when evaluating a product, particularly if he or she has detailed knowledge of the product.
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According to research, when do consumers usually use the country of origin as a cue when evaluating a product?
A.When a firm tries to deemphasize its foreign origins
B.When consumers lack detailed knowledge of a product
C.When an advertising campaign stresses the positive performance attributes of a product
D.When a limited number of messages compete with each other for consumers' attention
E.When a firm resorts to personal selling instead of mass media advertising