Saturday, November 9, 2019

Which one of the following is the risk that a firm faces when it opens a facility in a foreign country


Which one of the following is the risk that a firm faces when it opens a facility in a foreign country, given that the exchange rate between the firm's home country and this foreign country fluctuates over time? 
 
A. 
international risk

B. 
diversifiable risk

C. 
purchasing power risk

D. 
exchange rate risk

E. 
political risk
Refer to section 21.6


21.
The market value of the Blackwell Corporation just declined by 5 percent. Analysts believe this decrease in value was caused by recent legislation passed by Congress. Which type of risk does this illustrate? 
 
A. 
international risk

B. 
diversifiable risk

C. 
purchasing power risk

D. 
exchange rate risk

E. 
political risk
Refer to section 21.7


22.
Where does most of the trading in Eurobonds occur? 
 
A. 
Munich

B. 
Frankfurt

C. 
London

D. 
New York

E. 
Paris
Refer to section 21.1


23.
Which one of the following names matches the country where the bond is issued? 
 
A. 
Empire: United Kingdom

B. 
Western: United States

C. 
Samurai: China

D. 
Bulldog: France

E. 
Rembrandt: Netherlands
Refer to section 21.1

24.
The LIBOR is primarily used as the basis for the rate charged on: 
 
A. 
short-term debt in the Lisbon market.

B. 
mortgage loans in the Lisbon market.

C. 
Eurodollar loans in the London market.

D. 
U.S. federal funds.

E. 
interbank loans in the U.S.
Refer to section 21.1

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