(Test Bank) International Financial Management

Madura, 13

Business

Test Bank

13th Edition

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Test Bank for International Financial Management, The downloadable file consists of 170 pages, and the total size of the file is 4.06 MB. Purchase now only for highly discounted price.

Author(s): Madura

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International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way 1/170 Home TEST BANK International Financial Management 13th Edition By Jeff Madura – Test Bank International Financial Management 13th Edition By Jeff Madura – Test Bank 🔍 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way 2/170 Description INSTANT DOWNLOAD WITH ANSWERS International Financial Management 13th Edition By Jeff Madura – Test Bank Chapter 6 1. To force the value of the pound to appreciate against the dollar, the Federal Reserve should: a. sell dollars for pounds in the foreign exchange market and the European Central Bank (ECB) should sell dollars for pounds in the 0 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way 3/170 foreign exchange market. b. sell pounds for dollars in the foreign exchange market and the European Central Bank (ECB) should sell dollars for pounds in the foreign exchange market. c. sell pounds for dollars in the foreign exchange market and the European Central Bank (ECB) should not intervene. d. sell dollars for pounds in the foreign exchange market and the European Central Bank (ECB) should sell pounds for dollars in the foreign exchange market. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 2. A weak dollar is normally expected to cause: a. high unemployment and high inflation in the U.S. b. high unemployment and low inflation in the U.S. 0 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way POINTS: 1 https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 4/170 c. low unemployment and low inflation in the U.S. d. low unemployment and high inflation in the U.S. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.04 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 3. A strong dollar is normally expected to cause: a. high unemployment and high inflation in the U.S. b. high unemployment and low inflation in the U.S. c. low unemployment and low inflation in the U.S. d. low unemployment and high inflation in the U.S. ANSWER: b 0 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way POINTS: 1 https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 5/170 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.04 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 4. To force the value of the British pound to depreciate against the dollar, the Federal Reserve should: a. sell dollars for pounds in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. b. sell pounds for dollars in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. c. sell pounds for dollars in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. d. sell dollars for pounds in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. ANSWER: c 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 6/170 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 5. Consider two countries that trade with each other, called X and Y. According to the text, inflation in Country X will have a greater impact on inflation in Country Y under the system. Now, consider two other countries that trade with each other, called A and B. Unemployment in Country A will have a greater impact on unemployment in Country B under the system. a. floating rate; fixed rate b. floating rate; floating rate c. fixed rate; fixed rate d. fixed rate; floating rate ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.01 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 7/170 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 6. A primary result of the Bretton Woods Agreement was: a. the establishment of the European Monetary System (EMS). b. establishing specific rules for when tariffs and quotas could be imposed by governments. c. establishing that exchange rates of most major currencies were to be allowed to fluctuate 1% above or below their initially set values. d. establishing that exchange rates of most major currencies were to be allowed to fluctuate freely without boundaries (although the central banks did have the right to intervene when necessary). ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 8/170 7. A primary result of the Smithsonian Agreement was: a. the establishment of the European Monetary System (EMS). b. establishing that exchange rates of most major countries were to be allowed to fluctuate 2.25% above or below their initially set values. c. establishing specific rules for when tariffs and quotas could be imposed by governments. d. establishing that exchange rates of most major currencies were to be allowed to fluctuate freely without boundaries (although the central banks did have the right to intervene when necessary). ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 8. Under a fixed exchange rate system: 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 9/170 a. a foreign exchange market does not exist. b. central bank intervention in the foreign exchange market is not necessary. c. central bank intervention in the foreign exchange market is often necessary. d. central bank intervention in the foreign exchange market is not allowed. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 9. Under a managed float exchange rate system, the Fed may attempt to stimulate the U.S. economy by the dollar. Such an adjustment in the dollar’s value should the U.S. demand for products produced by major foreign countries. a. weakening; increase 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 10/170 b. weakening; decrease c. strengthening; increase d. strengthening; decrease ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 10. The value of the Canadian dollar, Japanese yen, and Australian dollar with respect to the U.S. dollar are part of a: a. pegged system. b. fixed system. c. managed float system. d. crawling peg system. 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 11/170 ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 11. The interest rate of a country with a currency board: a. is less stable than it would be without a currency board. b. is typically below the interest rate of the currency to which it is tied. c. will move in tandem with the interest rate of the currency to which it is tied. d. is completely independent of the interest rate of the currency to which it is tied. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 12/170 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 12. The currency of Country X is pegged to the currency of Country Y. Assume that Country Y’s currency depreciates against the currency of Country Z. It is likely that Country X will export to Country Z and import from Country Z. a. more; more b. less; less c. more; less d. less; more ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 13/170 13. Assume Countries A, B, and C produce goods that are substitutes of each other and that these countries engage in trade with each other. Assume that Country A’s currency floats against Country B’s currency, and that Country C’s currency is pegged to B’s. If A’s currency depreciates against B, then A’s exports to C should , and A’s imports from C should . a. decrease; increase b. decrease; decrease c. increase; decrease d. increase; increase ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 14. 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: 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 14/170 a. pegged intervention. b. indirect intervention. c. nonsterilized intervention. d. sterilized intervention. e. A and D ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.03 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 15. If the Fed desires to weaken the dollar without affecting the dollar money supply, it should: a. exchange dollars for foreign currencies, and sell some of its existing Treasury security holdings for dollars. b. exchange foreign currencies for dollars, and sell some of its existing Treasury security holdings for dollars. 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 15/170 c. exchange dollars for foreign currencies, and buy existing Treasury securities with dollars. d. exchange foreign currencies for dollars, and buy existing Treasury securities with dollars. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 16. Which of the following is an example of direct intervention in foreign exchange markets? a. lowering interest rates. b. increasing the inflation rate. c. exchanging dollars for foreign currency. d. imposing barriers on international trade. 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 16/170 ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.03 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 17. A strong dollar places pressure on inflation, which in turn places pressure on the dollar. a. upward; upward b. downward; upward c. upward; downward d. downward; downward ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 17/170 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 18. The Fed may use a stimulative monetary policy with least concern about causing inflation if the dollar’s value is expected to: a. remain stable. b. strengthen. c. weaken. d. none of the above will have an impact on inflation. ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 18/170 19. A weaker dollar places ____ pressure on U.S. inflation, which in turn places ____ pressure on U.S. interest rates, which places _____ pressure on U.S. bond prices. a. upward; downward; upward b. upward; downward; downward c. upward; upward; downward d. downward; upward; upward e. downward; downward; upward ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 20. The euro is the currency: a. adopted in all western European countries as of 1999 . 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 19/170 b. adopted in all eastern European countries as of 1999 . c. adopted in all European countries as of 1999 . d. none of the above ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 21. The euro has not been adopted by: a. Slovenia. b. the U.K. c. Germany. d. France. ANSWER: b 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 20/170 POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 22. The exchange rate mechanism (ERM) refers to the method of linking currencies to each other within boundaries. a. Latin American b. European c. Asian d. North American ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.01 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 21/170 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 23. Countries that have adopted the euro must agree on a single policy. a. monetary b. fiscal c. worker compensation d. foreign relations ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 24. Countries that have adopted the euro tend to have very similar . 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 22/170 a. interest rates b. inflation rates c. income tax rates d. budget deficits ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 25. The risk-free interest rates among countries that have adopted the euro should: a. not necessarily be similar to risk-free rates in other countries. b. equal the U.S. risk-free rate. c. equal the risk-free rates in other European countries. d. equal the risk-free rates in Asian countries. 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 23/170 ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 26. Which of the following is true regarding the euro? a. Exchange rate risk between participating European currencies is completely eliminated, encouraging more trade and capital flows across European borders. b. It allows for more consistent economic conditions across countries. c. It prevents each country from conducting its own monetary policy. d. All of the above are true. ANSWER: d POINTS: 1 DIFFICULTY: Easy 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 24/170 LEARNING OBJECTIVES: INFM.MADU.15.06.02 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Knowledge 27. It has been argued that the exchange rate can be used as a policy tool. Assume that the U.S. government would like to reduce unemployment. Which of the following is an appropriate action given this scenario? a. Weaken the dollar b. Strengthen the dollar c. Buy dollars with foreign currency in the foreign exchange market d. Implement a tight monetary policy ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.04 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 0 6/20/2020 International Financial Management 13th Edition By Jeff Madura - Test Bank - Test Bank Way https://testbankway.com/product/international -financial -management -13th-edition -by-jeff-madura -test-bank/ 25/170 KEYWORDS: Bloom’s: Comprehension 28. It has been argued that the exchange rate can be used as a policy tool. Assume that the U.S. government would like to reduce inflation. Which of the following is an appropriate action given this scenario? a. Sell dollars for foreign currency b. Buy dollars with foreign currency c. Lower interest rates d. None of the above ANSWER: b POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: INFM.MADU.15.06.03 NATIONAL STANDARDS: United States – BUSPROG.INFM.MADU.15.03 STATE STANDARDS: United States – OH – DISC.INFM.MADU.15.02 KEYWORDS: Bloom’s: Comprehension 29. To strengthen the dollar using sterilized intervention, the Fed would 0