International Finance
Question Bank
Course Introduction
International Finance explores the financial management of firms operating in a global environment, examining key concepts such as foreign exchange markets, currency risk, international monetary systems, and cross-border investment. The course delves into the determinants of exchange rates, the functioning of international financial markets, and the effects of government policies on international financial flows. Through case studies and applied analysis, students gain an understanding of how multinational corporations manage risk, structure global financing, and address challenges related to international trade, investment strategies, and global financial regulation.
Recommended Textbook
International Business The Challenges of Globalization 8th Edition by John Wild
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16 Chapters
1649 Verified Questions
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Page 2
Chapter 1: Globalization
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Sample Questions
Q1) Compare and contrast the purposes of the World Bank and the International Monetary Fund.
Answer: The World Bank is an agency created to provide financing for national economic development efforts.The initial purpose of the World Bank was to finance European reconstruction following the Second World War.It later shifted its focus to the general financial needs of developing countries,and today it finances many economic development projects in Africa,South America,and Southeast Asia. The International Monetary Fund (IMF)is an agency created to regulate fixed exchange rates and enforce the rules of the international monetary system.Today,the IMF has 185 member countries.Some of the purposes of the IMF include promoting international monetary cooperation;facilitating expansion and balanced growth of international trade;avoiding competitive exchange devaluation;and making financial resources temporarily available to members.
Q2) ________ place limits on the quantity of a product being imported.
A)Embargoes
B)Trade blocs
C)Nontariff barriers
D)Anti-dumping duties
Answer: C
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Page 3
Chapter 2: Cross-Cultural Business
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Sample Questions
Q1) The French Government promotes the concept of ________ by building museums and monuments to preserve the legacies of important events and people.
A)subculture
B)national culture
C)popular culture
D)monoculture
Answer: B
Q2) The Toro-Hessians are a minority group in the Margoza Archipelago,with a set of preferences,attitudes,and taboos,distinct from that of the national culture.Therefore,they are often overlooked when foreign businesses choose to customize their products for the inhabitants of the islands.The Toro-Hessian community is an example of ________.
A)cultural universal
B)monoculture
C)subculture
D)stratification
Answer: C
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Chapter 3: Political Economy and Ethics
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100 Verified Questions
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Sample Questions
Q1) Under a(n)________ political system,the state reigns supreme over institutions such as family,religion,business,and labor.
A)pluralistic
B)totalitarian
C)democratic
D)anarchist
Answer: B
Q2) ________ is the environmental impact of greenhouse gases (measured in units of carbon dioxide)that results from human activity.
A)Carbon footprint
B)Greenhouse log
C)Carbon cycle
D)Greenhouse check
Answer: A
Q3) When a country's religious leaders are also its political leaders,its political system is called a theocracy.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Economic Development of Nations
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Sample Questions
Q1) The relative ability of two countries' currencies to buy the same basket of goods in those two countries is called ________.
A)gross national product
B)gross domestic product
C)purchasing power
D)purchasing power parity
Q2) A solid grasp of local values,customs,and traditions can help reduce a company's exposure to political risk.
A)True
B)False
Q3) Local content regulations are primarily intended to ________.
A)address cultural differences between local employees and expatriates
B)encourage MNEs to increase production activities in a country
C)address contract negotiation difficulties
D)assess local tax rates on MNEs
Q4) Country risk is considered similar to ________.
A)political risk
B)commercial risk
C)currency risk
D)cross-cultural risk
Page 6
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Chapter 5: International Trade Theory
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Sample Questions
Q1) Discuss the three essential pillars of the theory of mercantilism.
Q2) According to Michael Porter,advanced factors account for the sustained competitive advantage a country enjoys in a product.
A)True
B)False
Q3) According to mercantilism,the accumulation of national wealth depended on the
A)increase in a nation's trade surplus
B)increase in a nation's trade deficit
C)expansion of a nation's total value of trade
D)expansion of a nation's total volume of trade
Q4) The theory of absolute advantage measures a nation's wealth by determining the ________.
A)amount of gold it has on reserve
B)quantity of minerals it has on reserve
C)total trade volume in the country
D)living standards of its people
Q5) Describe the potential benefits of international trade.Why would a nation trading with a neomercantilist country be at a disadvantage?
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Chapter 6: Political Economy of Trade
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Sample Questions
Q1) Unwanted cultural influence in a nation can cause governments to block imports that it believes are harmful.
A)True
B)False
Q2) The belief that Freeland's emerging industries need protection from international competition during their development phase is an example of ________.
A)a local content requirement
B)a normal trade relation
C)the infant industry argument
D)the political motive of Freeland
Q3) Which of the following financial companies in the United States is involved in activities of selling of goods abroad,and offers insurance on foreign accounts receivable?
A)National Cooperative Bank
B)Overseas Private Investment Corporation
C)Export-Import Bank
D)Inter-American Development Bank
Q4) Explain how tariffs protect domestic producers,and describe how a foreign trade zone might offset the effects of tariffs.
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Chapter 7: Foreign Direct Investment
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104 Flashcards
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Sample Questions
Q1) Tax breaks on profits earned abroad and political pressures are used by ________.
A)host countries to promote FDI
B)host countries to restrict FDI
C)home countries to promote FDI
D)home countries to restrict FDI
Q2) A system of production in which each of a product's components is produced in the location where the cost of producing that component is lowest is called ________ production.
A)rationalized
B)craft
C)job
D)customized
Q3) The requirement that a sufficient portion of a product's content must originate within a certain market to escape tariff charges is an example of a(n)________.
A)ad valorem tariff
B)market imperfection
C)tariff-quota
D)subsidy
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9
Chapter 8: Regional Economic Integration
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Sample Questions
Q1) The main difference between a free trade area and a customs union is that the members of a customs union ________.
A)agree to the free movement of all factors of production
B)harmonize their tax,monetary,and fiscal policies and create a common currency
C)agree to treat trade with all nonmember nations in a similar manner
D)accept a common stance on economic and political policies regarding nonmember nations
Q2) The ________ called for banking in a single common currency,setting up of monetary and fiscal targets,and political union of the European Union members.
A)Maastricht Treaty
B)European monetary union
C)Single European Act
D)Copenhagen Criteria
Q3) When trade diversion occurs,buyers will likely pay less for products.
A)True
B)False
Q4) The Southern Common Market is also referred to as MERCOSUR.
A)True
B)False
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Chapter 9: International Financial Markets
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Sample Questions
Q1) Which of the following is a major purpose of the international capital market?
A)to reduce entrepreneurial initiatives
B)to increase the cost of borrowing
C)to reduce risk for lenders
D)to reduce the money supply for borrowers
Q2) An exchange rate calculated using two other exchange rates is called a(n)________.
A)interest arbitrage
B)forward contract
C)forward rate
D)cross rate
Q3) Forward rates represent the expectations of currency traders and bankers regarding a currency's future spot rate.
A)True
B)False
Q4) The process of aggregating the currencies that one bank owes another and then carrying out the transaction is called clearing.
A)True
B)False
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Chapter 10: International Monetary System
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Sample Questions
Q1) Purchasing power parity does not hold for single products,it is meaningful only when applied to a basket of goods.
A)True
B)False
Q2) Predictable exchange rates increase the need for currency hedging.
A)True
B)False
Q3) Sam has been studying the price of wheat across markets.If a kilogram of wheat costs 1.5 in France and $1 in the United States,the law of one price would tell us
A)the expected exchange rate between the euro and the dollar is 1.5/$
B)wheat is over priced in France
C)wheat is under priced in France
D)an arbitrage opportunity exists in the international wheat market
Q4) As the unpredictability of exchange rates increases,so does the cost of insuring against the accompanying risk.
A)True
B)False
Q5) Briefly describe how exchange rates influence business activities.
Q6) Discuss the challenges involved in forecasting exchange rates.
Page 12
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Chapter 11: International Strategy and Organization
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Sample Questions
Q1) A(n)________ structure separates domestic from international business activities by creating a separate global branch with its own manager.
A)international area
B)international division
C)global matrix
D)global product
Q2) Which of the following statements is true of objectives?
A)Objectives of individual business units in a company tend to be stated in the most general terms.
B)Objectives become more precise at the level of individual departments.
C)Objectives at the highest level in an organization tend to be more specific.
D)Objectives at the highest level in an organization are more concrete as they contain numerical targets.
Q3) Support activities assist companies in performing their primary activities.
A)True
B)False
Q4) How do national and international business environments influence multinational strategy formulation?
Q5) Explain how a global strategy complements a corporate growth strategy.
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Chapter 12: Analyzing International Opportunities
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Sample Questions
Q1) While assessing the market potential of emerging markets,market consumption capacity is generally obtained through estimates of energy consumption.
A)True
B)False
Q2) Products made in emerging countries tend to be evaluated more positively than those from relatively more developed countries.
A)True
B)False
Q3) It is often difficult to conduct focus groups in ________ cultures where people have a tendency to agree with others in the group.
A)collectivist
B)masculine
C)low uncertainty avoidance
D)long term oriented
Q4) Companies usually create a single marketing plan to be used in all markets in which they sell their products.
A)True
B)False
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Page 14
Chapter 13: Selecting and Managing Entry Modes
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Sample Questions
Q1) Cross licensing occurs when companies use licensing agreements to swap intangible property with one another.
A)True
B)False
Q2) Which of the following financing methods entails the greatest risk for exporters?
A)supersedeas bond
B)advance payment
C)letter of credit
D)open account
Q3) Which of the following is a method of export/import financing in which the importer's bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document?
A)sight draft
B)bill of lading
C)letter of credit
D)bill of exchange
Q4) What are the differences between a turnkey project and a strategic alliance?
Q5) What are the different financing methods available to exporters and importers?
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Chapter 14: Developing and Marketing Products
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Sample Questions
Q1) If Silk Industries is interested in creating buyer demand that will encourage channel members to stock its products,it should employ ________.
A)a pull strategy
B)a push strategy
C)horizontal integration
D)vertical integration
Q2) A pricing policy in which one selling price is established for all international markets is called ________.
A)dual pricing
B)value-based pricing
C)worldwide pricing
D)target pricing
Q3) ________ refers to the number of intermediaries between producer and buyer.
A)Critical path
B)Channel length
C)Frequency
D)Value density
Q4) Using examples,explain the circular process of marketing communication.
Q5) Describe any four factors that affect international product strategies.
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Chapter 15: Managing International Operations
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Sample Questions
Q1) The board will also examine new production techniques the company could use to create its product.This examination is a part of ________.
A)capacity planning
B)process planning
C)facilities location planning
D)centralized production
Q2) Debt appeals to companies because it lowers the amount of taxes the companies must pay.
A)True
B)False
Q3) The process by which a company extends its control over additional stages of production is called vertical integration.
A)True
B)False
Q4) Availability and cost of labor in the local market is crucial to process planning.
A)True
B)False
Q5) What are the options available to companies seeking financial resources?
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Chapter 16: Hiring and Managing Employees
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Sample Questions
Q1) One challenge facing Hudson Foods as it expands into Europe is getting through all the bureaucratic and legal regulations surrounding the food industry.Erica plans to hire a manager to ensure that this challenge is overcome.Who among the following will Erica most likely recruit for this position?
A)a local manager with strong government contacts
B)an experienced manager from the Hudson Foods U.S.headquarters
C)a native of the target market who is a recent U.S.college graduate
D)a candidate from the U.S.with extensive management experience in the frozen food industry
Q2) Codetermination allows labor representatives to participate in high-level company meetings.
A)True
B)False
Q3) Citizens who are working and living in their home country are called expatriates. A)True
B)False
Q4) What factors influence the wages of nonmanagerial workers?
Q5) Briefly explain how companies compensate managers in international markets.
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