Final Exam Sample Questions for MCQs

Final Exam Sample Questions for MCQs - Final Exam Sample...

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Final Exam Sample Questions for MCQs CH 10 1. Geographically diversified operations provide a natural hedge of transaction exposure to currency risk because ____. a. operating costs in one country are unlikely to be related to costs in another country b. it is easy to replace sales in one country with sales from another country * c. when one currency is depreciating, another currency must be appreciating d. Two of the above e. None of the above 2. The corporate treasury should charge ____ for hedging the currency risk exposures of individual business units within the firm. a. historical cost prices c. reservation prices * b. market prices d. the same price regardless of when the transactions are executed e. the most that the division can afford 3. Market prices allow the treasury to ____. a. avoid transactions costs on internal hedges * b. benchmark the costs of internal hedges c. use transfer prices to minimize the MNC’s tax liability d. More than one of the above e. None of the above 4. The preferred way to hedge transaction exposure to currency risk is ____. * a. by offsetting exposures within the firm b. through forward currency contracts c. through futures contracts d. through swap contracts e. None of the above - exposures should be left unhedged 5. The most popular instrument for hedging currency risk is a ____. * a. currency forward b. currency futures c. money market hedge d. currency option e. currency swap 6. A “disaster hedge” against adverse currency movements can be obtained with a ____. a. currency forward b. currency future c. money market hedge * d. currency option e. currency swap 1
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CH 11 1. Change in the value of future cash flows due to unexpected changes in exchange rates is called ____ to currency risk. * a. economic exposure b. operating exposure c. transaction exposure d. translation exposure e. None of the above 2. Change in financial accounting statements arising from unexpected changes in currency values is called ____ to currency risk. a. economic exposure b. operating exposure c. transaction exposure * d. translation exposure e. None of the above 3. Change in the value of contractual cash flows due to unexpected changes in currency values is called ____ to currency risk. a.
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Final Exam Sample Questions for MCQs - Final Exam Sample...

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