Managerial Finance Quiz Questions & Answers

Which of the following are reasons why companies move into international operations?

Select one:
a. To take advantage of lower production costs in regions of inexpensive labor.
b. To develop new markets for their finished products.
c. To better serve their primary customers.
d. Because important raw materials are located abroad.
e. All of the above.

If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy?

Select one:
a. 0.71
b. 1.41
c. 1.00
d. 2.81
e. 0.50

If one U.S. dollar buys 1.64 Canadian, how many U.S. dollars can you purchase for one Canadian dollar?

Select one:
a. 1.64
b. 3.28
c. 0.61
d. 1.00
e. 0.37

In 2010, a particular Japanese imported automobile sold for 1,476,000 yen or $8,200. If the car still sells for the same amount of yen today but the current exchange rate is 144 yen per dollar, what is the car selling for today in U.S. dollars? (Hint: Start by finding the exchange rate in 2010)

Select one:
a. $10,250
b. $12,628
c. $ 8,200
d. $ 5,964
e. $13,525

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.

Select one:
a. premium of 8%
b. premium of 18%
c. discount of 18%
d. discount of 8%
e. premium of 16%

One British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12 percent against the pound over the next 30 days. How many dollars will a pound buy in 30 days? (Hint: Use future value concept)

Select one:
a. 1.82
b. 3.64
c. 1.12
d. 2.04
e. 1.63

A year ago, MC Hammer Company had inventory in Britain valued at 240,000 pounds. The exchange rate for dollars to pounds was 1£ = 2 U.S. dollars. This year the exchange rate is 1£ = 1.82 U.S. dollars. The inventory in Britain is still valued at 240,000 pounds. What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates? (Hint: Gain/loss is the difference between the total value of the last period and current period)

Select one:
a. -$240,000
b. -$ 43,200
c. $ 0
d. $ 43,200
e. $ 47,473

If the inflation rate in the United States is greater than the inflation rate in Sweden, other things held constant, the Swedish currency will

Select one:
a. Appreciate against the U.S. dollar.
b. Depreciate against the U.S. dollar.
c. Remain unchanged against the U.S. dollar.
d. Appreciate against other major currencies.
e. Appreciate against the dollar and other major currencies.

Suppose that 144 yen could be purchased in the foreign exchange market for one U.S. dollars today. If the yen is expected to depreciate by 8 percent tomorrow, how many yen could one U.S. dollar buy tomorrow? (Hint: Use future value concept)

Select one:
a. 155.5 yen
b. 144.0 yen
c. 72.0 yen
d. 133.5 yen
e. 78.0 yen

Solartech Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, Solartech agreed to make the bill payable in yen, thus agreeing to take on exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would Solartech actually receive after it exchanged yen for U.S. dollars? (Hint: You are converting Yen to U.S. dollar based on the current value of Yen to one U.S. dollar)

Select one:
a. $1,000,000
b. $1,025,000
c. $1,075,958
d. $ 929,404
e. $ 975,610