InternationalFinancialManagement_5thEd_Eun_TestBank19

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19 Student: ___________________________________________________________________________ 1. Efficient cash management techniques can: A. reduce the investment in cash balances and foreign exchange transaction expenses B. provide for maximum return from the investment of excess cash C. result in borrowing at lowest rate when a temporary cash shortage exists D. all of the above 2. Cash management refers to: A. The decision to grant credit to customers or to remain "cash and carry". B. The investment the firm has in transaction balances and precautionary balances. C. A domestic firm's investment in foreign currency D. None of the above 3. Precautionary cash balances A. Are necessary in case the firm has underestimated the amount of cash need to cover transactions B. Are necessary to cover scheduled outflows of funds during a cash budgeting period. C. Both a) and b) D. None of the above 4. Precautionary cash balances A. Represent an increasingly-important source of interest income for many MNCs. B. Are necessary in case the firm has underestimated the amount needed to cover transactions. C. Are synonymous with speculative cash balances. D. None of the above. 5. Multinational cash management A. Is really no different for a MNC than for a purely domestic firm in a closed economy. B . Concerns itself with the size of cash balances, their currency denominations, and where these cash balances are located among the MNC's affiliates. C . Concerns itself with the size of cash balances and their currency denominations, but not where these cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue. D. None of the above 6. Good cash management boils down to A . Investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is a temporary cash shortage. B. Investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary cash shortage. C. Hedging currency exposure with judicious use of futures, forwards, and currency option contracts. D. None of the above 7. Many of the skills necessary for effective cash management are the same regardless of whether the firm has only domestic operations or if it operates internationally. A. False B. True
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ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into consumer size quantities and sells them through sales affiliates in Hong Kong and the United States. For a recent month, the following payments matrix of interaffiliate cash flows, stated in Singapore dollars, was forecasted. 8. Calculate, in Singapore dollars, the amount that the interaffiliate foreign exchange transaction will be reduced by with multilateral netting.
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This note was uploaded on 07/28/2011 for the course FIN 308 taught by Professor Canarella during the Summer '11 term at University of Nevada, Las Vegas.

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