INTB 200 EXAM 2 QUESTIONS AND ANSWERS
Unhappy with the speed with which the company's export initiative was going, the CEO
called Mary Adams, the person in charge of exports at Ambient Products, to understand
the reasons for the company's delay. Which of the following is a valid defense that Mary
Adams can use? - Answers - Exporters often face voluminous paperwork, complex
formalities, and many potential delays and errors.
According to Mendenhall and Oddou, which of the following dimensions that predicts
success in a foreign posting strengthens an expatriate's self-esteem, self-confidence,
and mental well-being? - Answers - cultural toughness
Which of the following is a disadvantage of an ethnocentric staffing policy? - Answers -
It leads to resentment in the host country.
Which of the following is a factor that resulted in the establishment of the European
Union (EU)? - Answers - devastation of Western Europe during two world wars and the
desire for a lasting peace
A regional free trade agreement will benefit the world only if: - Answers - the amount of
trade it creates exceeds the amount it diverts.
Where has the movement toward regional economic integration been most successful?
- Answers - Europe
Assume that the interest rate on borrowings in India is 1 percent while the interest rate
on bank deposits in a U.S. bank is 6 percent. John, an active currency trader, borrows
in Japanese yen, converts the money into U.S. dollars and deposits it in a U.S. bank.
John is engaging in: - Answers - carry trade.
The ________ is an attempt to establish a free trade area between Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. -
Answers - Association of Southeast Asian Nations
________ is a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and
Nicaragua, which began in the early 1960s but collapsed in 1969 due to war. - Answers
- CARICOM
________ is a pact that originated in 1988 to establish a free trade area now including
Argentina, Brazil, Paraguay, and Uruguay. - Answers - Mercosur
Which of the following is an expected consequence of the implementation of the North
American Free Trade Agreement? - Answers - Low-skilled jobs would be moved out to
Mexico resulting in lowering of average wage rates in the United States and Canada.
, Which of the following is a drawback of adopting the euro? - Answers - loss of control
over national monetary policy
Which of the following is responsible for proposing European Union legislation,
implementing it, and monitoring compliance with European Union laws bymember-
states? - Answers - European Commission
The European Economic Community became the European Union in 1993 following the
ratification of the: - Answers - Maastricht Treaty.
Which of the following states that for any two countries, the spot exchange rate should
change in an equal amount but in the opposite direction to the difference in nominal
interest rates between the two countries? - Answers - international Fisher effect
What can happen if a country's government does not control the rate of growth in
money supply? - Answers - Its currency could depreciate in the future.
Assume that the exchange rate between the British pound and the U.S. dollar is 1
pound = 2 dollars. An Armani jacket sells for $80 in New York and 40 pounds in London.
This is an example of: - Answers - the law of one price.
Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is 125 yen = 1
dollar. Sylvia finds out that the rate quoted in New York at 10:00 a.m. New York time
(3:00 p.m. in London) is 130 yen = 1 dollar. Sylvia decides to buy yen in New York and
sell it in London. Sylvia is engaging in: - Answers - arbitrage.
Which of the following is a key feature of the foreign exchange market? - Answers - The
foreign exchange market never sleeps.
Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market.
Which of the following is true of the foreign exchange dealers' market's expectations
about the dollar over the next 30 days? - Answers - The dollar will depreciate against
the euro.
Which of the following occurs when two parties agree to exchange currency and
execute the deal at some specific date in the future? - Answers - currency swap
Omega, Inc., a U.S.-based firm entered into an agreement with another party to
exchange currency and execute the deal at a specific date in the future. What is
Omega, Inc. engaging in when it insures itself against foreign exchange risk? - Answers
- currency swap
Which of the following was abandoned as per the Jamaica agreement of 1976? -
Answers - U.S. dollar as the reference currency
Unhappy with the speed with which the company's export initiative was going, the CEO
called Mary Adams, the person in charge of exports at Ambient Products, to understand
the reasons for the company's delay. Which of the following is a valid defense that Mary
Adams can use? - Answers - Exporters often face voluminous paperwork, complex
formalities, and many potential delays and errors.
According to Mendenhall and Oddou, which of the following dimensions that predicts
success in a foreign posting strengthens an expatriate's self-esteem, self-confidence,
and mental well-being? - Answers - cultural toughness
Which of the following is a disadvantage of an ethnocentric staffing policy? - Answers -
It leads to resentment in the host country.
Which of the following is a factor that resulted in the establishment of the European
Union (EU)? - Answers - devastation of Western Europe during two world wars and the
desire for a lasting peace
A regional free trade agreement will benefit the world only if: - Answers - the amount of
trade it creates exceeds the amount it diverts.
Where has the movement toward regional economic integration been most successful?
- Answers - Europe
Assume that the interest rate on borrowings in India is 1 percent while the interest rate
on bank deposits in a U.S. bank is 6 percent. John, an active currency trader, borrows
in Japanese yen, converts the money into U.S. dollars and deposits it in a U.S. bank.
John is engaging in: - Answers - carry trade.
The ________ is an attempt to establish a free trade area between Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. -
Answers - Association of Southeast Asian Nations
________ is a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and
Nicaragua, which began in the early 1960s but collapsed in 1969 due to war. - Answers
- CARICOM
________ is a pact that originated in 1988 to establish a free trade area now including
Argentina, Brazil, Paraguay, and Uruguay. - Answers - Mercosur
Which of the following is an expected consequence of the implementation of the North
American Free Trade Agreement? - Answers - Low-skilled jobs would be moved out to
Mexico resulting in lowering of average wage rates in the United States and Canada.
, Which of the following is a drawback of adopting the euro? - Answers - loss of control
over national monetary policy
Which of the following is responsible for proposing European Union legislation,
implementing it, and monitoring compliance with European Union laws bymember-
states? - Answers - European Commission
The European Economic Community became the European Union in 1993 following the
ratification of the: - Answers - Maastricht Treaty.
Which of the following states that for any two countries, the spot exchange rate should
change in an equal amount but in the opposite direction to the difference in nominal
interest rates between the two countries? - Answers - international Fisher effect
What can happen if a country's government does not control the rate of growth in
money supply? - Answers - Its currency could depreciate in the future.
Assume that the exchange rate between the British pound and the U.S. dollar is 1
pound = 2 dollars. An Armani jacket sells for $80 in New York and 40 pounds in London.
This is an example of: - Answers - the law of one price.
Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is 125 yen = 1
dollar. Sylvia finds out that the rate quoted in New York at 10:00 a.m. New York time
(3:00 p.m. in London) is 130 yen = 1 dollar. Sylvia decides to buy yen in New York and
sell it in London. Sylvia is engaging in: - Answers - arbitrage.
Which of the following is a key feature of the foreign exchange market? - Answers - The
foreign exchange market never sleeps.
Assume that the dollar is selling at a premium on the 30-day dollar/euro forward market.
Which of the following is true of the foreign exchange dealers' market's expectations
about the dollar over the next 30 days? - Answers - The dollar will depreciate against
the euro.
Which of the following occurs when two parties agree to exchange currency and
execute the deal at some specific date in the future? - Answers - currency swap
Omega, Inc., a U.S.-based firm entered into an agreement with another party to
exchange currency and execute the deal at a specific date in the future. What is
Omega, Inc. engaging in when it insures itself against foreign exchange risk? - Answers
- currency swap
Which of the following was abandoned as per the Jamaica agreement of 1976? -
Answers - U.S. dollar as the reference currency
