WGU C214 Finance Exam 259 Questions with
Verified Answers
difference b/w Actual and Expected Return -The potential loss or gain of a
transaction - the UNKNOWN FACTOR. - CORRECT ANSWER Risk
Money in (Sales or Revenue) MINUS Money out (expenses) Measured over a
period i.e. Jan - December - CORRECT ANSWER Income statements =
Canada - CORRECT ANSWER Which of the following is NOT given as an example
that has experienced significant country risk over recent years?
To reduce currency risk - CORRECT ANSWER Why would a farmer buy a hedge
when he signs a contract to sell produce overseas?
Decreases - CORRECT ANSWER If the value of the dollar increases, the price of
imports_______.
International competition - CORRECT ANSWER If a product is made 100%
domestically, what can affect its domestic market?
Sovereign wealth funds - CORRECT ANSWER Government funds designed to invest
abroad are termed:
ADR - CORRECT ANSWER A financial product in which banks bundle international
stocks so they can be sold on US exchanges in US dollars is termed a __________.
,labor - CORRECT ANSWER Outsourcing involves the ______ market.
to limit the ability of a foreign firm to take capital out of a country - CORRECT
ANSWER The purpose of currency restrictions is:
NAFTA - CORRECT ANSWER 1. Which of the following is NOT discussed in this
section as a potential cost of doing international business.
to protect domestic industries - CORRECT ANSWER What is the primary motive for
tariffs?
NAFTA; TPP - CORRECT ANSWER Two examples of US legislation to promote global
free trade are:
long - CORRECT ANSWER In finance jargon, what is another word that means to
buy an asset?
Currency Forward and Currency Future - CORRECT ANSWER What type of
derivative security discussed in this section allows companies to lock in an FX rate
for the future?
hedging - CORRECT ANSWER The general process of eliminating risk with FX is
referred to as:
,make no profits through exchange rate movements - CORRECT ANSWER The goal
of using a financial derivate such as a forward or future is to?
Financial derivatives; Direct investment - CORRECT ANSWER Which are two
primary methods used the mitigate FX risk?
Floating - CORRECT ANSWER Value of the currency is determined by supply and
demand
Fixed / Pegged - CORRECT ANSWER Not controlled entirely by market demand and
supply, but is partially controlled by government intervention that limits minimum
and maximum value
Managed - CORRECT ANSWER A country's monetary authority intervenes to
maintain a constant value of the country's currency
Managed Floating - CORRECT ANSWER The policy that allows a currency to float
within a minimum and a maximum is called:
Fixed/ pegged - CORRECT ANSWER If a country intervenes to maintain a constant
value of the country's currency, it is a ___________ exchange rate regime.
supply and demand in the open market - CORRECT ANSWER If a country follows a
floating exchange rate policy then the value of the currency is determined strictly
by:
, It takes 1.1 US dollars to buy 1 Canadian dollar - CORRECT ANSWER What does it
mean if the US dollar/Canadian dollar exchange rate is 1.1?
less - CORRECT ANSWER If Ford manufactures a vehicle in the US paying dollars
and sells it in Mexico collecting pesos, if the price in Mexico for the vehicle stays
constant, but the value of the Peso depreciates against the dollar, then Ford will
make ____________ profit measured in US dollars.
down - CORRECT ANSWER If a currency (Swiss Franc) appreciates relative to a
second currency (Chinese Yuan), then the exchange rate measured as SF/Yuan
goes:
1. makes exports relatively cheaper for foreign consumers.
makes imports relatively more expensive for domestic consumers.
in general a weaker currency can help a domestic economy. - CORRECT ANSWER
Why would a country have incentives to devalue its currency? A weaker currency
______________.
Regulate types of assets banks can hold
Monitor insurance industry
Systematic risk analysis
Monitor hedge fund industry - CORRECT ANSWER Which of the following is the
ways the Dodd Frank Act monitors capital markets?
Requires external audits of financial statements
Holds top management responsible for accurate accounting reports
Verified Answers
difference b/w Actual and Expected Return -The potential loss or gain of a
transaction - the UNKNOWN FACTOR. - CORRECT ANSWER Risk
Money in (Sales or Revenue) MINUS Money out (expenses) Measured over a
period i.e. Jan - December - CORRECT ANSWER Income statements =
Canada - CORRECT ANSWER Which of the following is NOT given as an example
that has experienced significant country risk over recent years?
To reduce currency risk - CORRECT ANSWER Why would a farmer buy a hedge
when he signs a contract to sell produce overseas?
Decreases - CORRECT ANSWER If the value of the dollar increases, the price of
imports_______.
International competition - CORRECT ANSWER If a product is made 100%
domestically, what can affect its domestic market?
Sovereign wealth funds - CORRECT ANSWER Government funds designed to invest
abroad are termed:
ADR - CORRECT ANSWER A financial product in which banks bundle international
stocks so they can be sold on US exchanges in US dollars is termed a __________.
,labor - CORRECT ANSWER Outsourcing involves the ______ market.
to limit the ability of a foreign firm to take capital out of a country - CORRECT
ANSWER The purpose of currency restrictions is:
NAFTA - CORRECT ANSWER 1. Which of the following is NOT discussed in this
section as a potential cost of doing international business.
to protect domestic industries - CORRECT ANSWER What is the primary motive for
tariffs?
NAFTA; TPP - CORRECT ANSWER Two examples of US legislation to promote global
free trade are:
long - CORRECT ANSWER In finance jargon, what is another word that means to
buy an asset?
Currency Forward and Currency Future - CORRECT ANSWER What type of
derivative security discussed in this section allows companies to lock in an FX rate
for the future?
hedging - CORRECT ANSWER The general process of eliminating risk with FX is
referred to as:
,make no profits through exchange rate movements - CORRECT ANSWER The goal
of using a financial derivate such as a forward or future is to?
Financial derivatives; Direct investment - CORRECT ANSWER Which are two
primary methods used the mitigate FX risk?
Floating - CORRECT ANSWER Value of the currency is determined by supply and
demand
Fixed / Pegged - CORRECT ANSWER Not controlled entirely by market demand and
supply, but is partially controlled by government intervention that limits minimum
and maximum value
Managed - CORRECT ANSWER A country's monetary authority intervenes to
maintain a constant value of the country's currency
Managed Floating - CORRECT ANSWER The policy that allows a currency to float
within a minimum and a maximum is called:
Fixed/ pegged - CORRECT ANSWER If a country intervenes to maintain a constant
value of the country's currency, it is a ___________ exchange rate regime.
supply and demand in the open market - CORRECT ANSWER If a country follows a
floating exchange rate policy then the value of the currency is determined strictly
by:
, It takes 1.1 US dollars to buy 1 Canadian dollar - CORRECT ANSWER What does it
mean if the US dollar/Canadian dollar exchange rate is 1.1?
less - CORRECT ANSWER If Ford manufactures a vehicle in the US paying dollars
and sells it in Mexico collecting pesos, if the price in Mexico for the vehicle stays
constant, but the value of the Peso depreciates against the dollar, then Ford will
make ____________ profit measured in US dollars.
down - CORRECT ANSWER If a currency (Swiss Franc) appreciates relative to a
second currency (Chinese Yuan), then the exchange rate measured as SF/Yuan
goes:
1. makes exports relatively cheaper for foreign consumers.
makes imports relatively more expensive for domestic consumers.
in general a weaker currency can help a domestic economy. - CORRECT ANSWER
Why would a country have incentives to devalue its currency? A weaker currency
______________.
Regulate types of assets banks can hold
Monitor insurance industry
Systematic risk analysis
Monitor hedge fund industry - CORRECT ANSWER Which of the following is the
ways the Dodd Frank Act monitors capital markets?
Requires external audits of financial statements
Holds top management responsible for accurate accounting reports
