IBUS 401 Exam and final exam bundle
2025, international business exam, IBUS
questions and answers, global strategy
test, IBUS final 2025, business exam prep
A+
T/F: A centralized management style, where major decisions about a foreign subsidiary
are made by the parent company, results in an increase in agency costs - answers false
The valuation of an MNC should rise when an event causes the expected cash flows
from foreign to _________ and when foreign currencies denominating these cash flows
are expected to ___________. - answers increase; appreciate
Assume that an American firm wants to engage in international business without major
investment in the foreign country. Which method is least appropriate in this situation? -
answers direct foreign investment
Saller Co. has a subsidiary in Mexico. The expected cash flows in pesos to be received
in the future from this subsidiary have no changed since last month, but the valuation of
Saller Co. has declined since last month. What could've caused this decline in value? -
answers depreciation of the Mexican peso
Recently, the US experienced an annual balance of trade representing a _________ -
answers deficit
The primary component of the current account is the: - answers balance of trade
The demand for US exports tends to increase when: - answers the currencies of foreign
countries strengthen against the dollar
In recent years, the US had had a relatively (compared to other countries) _______
balance of trade _____ with China - answers large; deficit
Assume that a bank's bid rate on Swiss Francs is $.45 and its ask rate is $.47. Its bid-
ask percentage spread is: - answers about 4.26%
=(A-B/A)
The international money market primarily concentrates on: - answers short-term lending
(one year or less)
,If a US firm desires to avoid the risk from exchange rate fluctuations, and it is receiving
100,00 euros in 90 days, it could: - answers obtain a 90-day forward sale on euros
T/F: A put option is the amount or percentage by which the existing spot rate exceeds
the forward rate - answers false
An increase in US interest rates relative to German interest rates would likely ________
the US demand for euros and _______ the supply of euros for sale - answers reduce;
increase
If US inflation suddenly increased while European inflation stayed the same, there
would be: - answers an increased US demand for euros and a decreased supply of
euros for sale
Which of the following are considered as a factors affecting exchange rates? - answers
- Interest, Inflation, Income, Government Interventions, Expectations
What are the 6 ways firms engage in international business? - answers 1. International
Trade
2. Licensing
3. Franchising
4. Joint Ventures
5. Acquisition of foreign entities
6. Establishing new foreign subsidiaries
What are the financial derivatives used to hedge payables or receivables? - answers -
Forward Contract
- Futures Contract
- Call Option
- Put Option
A primary result of the Bretton Woods Agreement was: - answers establishing that
exchange rates of most major currencies were to be allowed to fluctuate 1% above or
below their initially set values
Assume a central bank exchanges its currency for other foreign currencies in the foreign
exchange market, but does not adjust for the resulting change in the money supply.
This is an example of: - answers non-sterile intervention
T/F: The establishment of the euro allows for more consistent economic conditions
across countries but eliminates the power of any individual European country to solve
local economic problems with its own unique monetary policy - answers true
If interest rate parity exists, then _______ is not feasible - answers covered interest
arbitrage
, According to interest rate parity (IRP): - answers the forward rate differs from the spot
rate by a sufficient amount to offset the interest rate differential between two currencies
Given a home country and a foreign country, purchasing power parity (PPP) suggests
that: - answers a home currency will depreciate if the current home inflation rate
exceeds the current foreign inflation rate
According to the international Fisher effect, if US investors expect a 5% rate of domestic
inflation over one year, and a 2% rate of inflation in European countries that use the
euro, and require a 3% real return on investments over one year, the nominal interest
rate on one-year US Treasury securities would be: - answers 8%
(nominal = real + expected inflation)
Which of the following techniques would best represent the use of today's forward
exchange rate to forecast the future exchange rate? - answers market-based
forecasting
Which of the following forecasting techniques would best represent the sole use of
historical currency values of the euro to predict the euro's future currency value? -
answers technical forecasting
Which of the following is not a forecasting technique mentioned in the text? - answers
accounting-based forecasting
Translation exposure reflects: - answers the exposure of a firm's financial statements to
exchange rate fluctuations
Transaction exposure reflects: - answers the exposure o a firm's international
contractual transactions to exchange rate fluctuations
Economic exposure reflects: - answers the exposure of a firm's cash flows to exchange
rate fluctuations
When the dollar strengthens, the reported consolidated earnings of US based MNCs
are ________ affected by translation exposure. When the dollar weakens, the reported
consolidated earnings are ________ affected. - answers unfavorably; favorably
T/F: An MNC can avoid translation exposure if its earnings are not remitted by the
foreign subsidiary to the parent - answers false
When determining whether a particular proposed project in a foreign country is feasible:
- answers country risk analysis should be incorporated within the capital budgeting
analysis
2025, international business exam, IBUS
questions and answers, global strategy
test, IBUS final 2025, business exam prep
A+
T/F: A centralized management style, where major decisions about a foreign subsidiary
are made by the parent company, results in an increase in agency costs - answers false
The valuation of an MNC should rise when an event causes the expected cash flows
from foreign to _________ and when foreign currencies denominating these cash flows
are expected to ___________. - answers increase; appreciate
Assume that an American firm wants to engage in international business without major
investment in the foreign country. Which method is least appropriate in this situation? -
answers direct foreign investment
Saller Co. has a subsidiary in Mexico. The expected cash flows in pesos to be received
in the future from this subsidiary have no changed since last month, but the valuation of
Saller Co. has declined since last month. What could've caused this decline in value? -
answers depreciation of the Mexican peso
Recently, the US experienced an annual balance of trade representing a _________ -
answers deficit
The primary component of the current account is the: - answers balance of trade
The demand for US exports tends to increase when: - answers the currencies of foreign
countries strengthen against the dollar
In recent years, the US had had a relatively (compared to other countries) _______
balance of trade _____ with China - answers large; deficit
Assume that a bank's bid rate on Swiss Francs is $.45 and its ask rate is $.47. Its bid-
ask percentage spread is: - answers about 4.26%
=(A-B/A)
The international money market primarily concentrates on: - answers short-term lending
(one year or less)
,If a US firm desires to avoid the risk from exchange rate fluctuations, and it is receiving
100,00 euros in 90 days, it could: - answers obtain a 90-day forward sale on euros
T/F: A put option is the amount or percentage by which the existing spot rate exceeds
the forward rate - answers false
An increase in US interest rates relative to German interest rates would likely ________
the US demand for euros and _______ the supply of euros for sale - answers reduce;
increase
If US inflation suddenly increased while European inflation stayed the same, there
would be: - answers an increased US demand for euros and a decreased supply of
euros for sale
Which of the following are considered as a factors affecting exchange rates? - answers
- Interest, Inflation, Income, Government Interventions, Expectations
What are the 6 ways firms engage in international business? - answers 1. International
Trade
2. Licensing
3. Franchising
4. Joint Ventures
5. Acquisition of foreign entities
6. Establishing new foreign subsidiaries
What are the financial derivatives used to hedge payables or receivables? - answers -
Forward Contract
- Futures Contract
- Call Option
- Put Option
A primary result of the Bretton Woods Agreement was: - answers establishing that
exchange rates of most major currencies were to be allowed to fluctuate 1% above or
below their initially set values
Assume a central bank exchanges its currency for other foreign currencies in the foreign
exchange market, but does not adjust for the resulting change in the money supply.
This is an example of: - answers non-sterile intervention
T/F: The establishment of the euro allows for more consistent economic conditions
across countries but eliminates the power of any individual European country to solve
local economic problems with its own unique monetary policy - answers true
If interest rate parity exists, then _______ is not feasible - answers covered interest
arbitrage
, According to interest rate parity (IRP): - answers the forward rate differs from the spot
rate by a sufficient amount to offset the interest rate differential between two currencies
Given a home country and a foreign country, purchasing power parity (PPP) suggests
that: - answers a home currency will depreciate if the current home inflation rate
exceeds the current foreign inflation rate
According to the international Fisher effect, if US investors expect a 5% rate of domestic
inflation over one year, and a 2% rate of inflation in European countries that use the
euro, and require a 3% real return on investments over one year, the nominal interest
rate on one-year US Treasury securities would be: - answers 8%
(nominal = real + expected inflation)
Which of the following techniques would best represent the use of today's forward
exchange rate to forecast the future exchange rate? - answers market-based
forecasting
Which of the following forecasting techniques would best represent the sole use of
historical currency values of the euro to predict the euro's future currency value? -
answers technical forecasting
Which of the following is not a forecasting technique mentioned in the text? - answers
accounting-based forecasting
Translation exposure reflects: - answers the exposure of a firm's financial statements to
exchange rate fluctuations
Transaction exposure reflects: - answers the exposure o a firm's international
contractual transactions to exchange rate fluctuations
Economic exposure reflects: - answers the exposure of a firm's cash flows to exchange
rate fluctuations
When the dollar strengthens, the reported consolidated earnings of US based MNCs
are ________ affected by translation exposure. When the dollar weakens, the reported
consolidated earnings are ________ affected. - answers unfavorably; favorably
T/F: An MNC can avoid translation exposure if its earnings are not remitted by the
foreign subsidiary to the parent - answers false
When determining whether a particular proposed project in a foreign country is feasible:
- answers country risk analysis should be incorporated within the capital budgeting
analysis
