IM Final Study Guide

These are international bonds, normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated. A. Eurobonds B. Convertible bonds C. Foreign bonds D. Regulatory bonds

A. Eurobonds.

_____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital. A. Profitability B. Performance C. Cash flow D. Efficiency

A. Profitability

Identify the incorrect statement regarding debt loans. A. They are made when a corporation sells stock to investors and gives its holders a claim to the firm's profit stream. B. Management has no discretion as to the amount it will pay investors. C. They include cash loans from banks and funds raised from the sale of corporate bonds to investors. D. They require the corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

A. They are made when a corporation sells stock to investors and gives its holders a claim to the firm's profit stream.

Which of the following is not likely to be a reason for investors to use the global capital market? A. They have a higher cost of capital as compared to purely domestic capital markets. B. They have a much wider range of investment opportunities than in a purely domestic capital market. C. They can diversify their portfolios internationally. D. They can reduce their risk through portfolio diversification to below what could be achieved in a purely domestic capital market.

A. They have a higher cost of capital as compared to purely domestic capital markets

When an investor purchases _____, he purchases the right to receive a specified fixed stream of income from the corporation for a specified number of years. A. a corporate bond B. a company share C. eurocurrency bonds D. equity holdings

A. a corporate bond

Under a strict currency board system, interest rates: A. adjust automatically. B. are constant. C. decline consistently. D. rarely move.

A. adjust automatically

The international capital market boom in the 1980s, 1990s, and 2000s can be attributed to the A. advances in information technology. B. increased regulations by governments. C. increase in real cost of recording, transmitting, and processing information. D. decreased acceptance of the free market ideology.

A. advances in information technology.

The great strength claimed for the gold standard was that it contained a powerful mechanism for achieving _____ by all countries. A. balance-of-trade equilibrium B. economic stability C. interest rate parity D. equal tariff levels

A. balance-of-trade equilibrium

A eurocurrency A. can be created anywhere in the world. B. should be created and banked in Europe. C. can be created only in its country of origin. D. refers to any former national currency of EU members.

A. can be created anywhere in the world

A(n) _____ brings together those who want to invest money and those who want to borrow money. A. capital market B. high net worth investor C. consumer market D. retailer

A. capital market

The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, except: A. choose, according to strategy, any position on the efficiency frontier as all positions are viable. B. pick a position on the efficiency frontier that is viable in the sense that there is enough demand to support that choice. C. configure its internal operations so that they support the position on the efficiency frontier. D. make sure that the right organization structure is in place to execute the strategy.

A. choose, according to strategy, any position on the efficiency frontier as all positions are viable.

The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as: A. consumer surplus per unit. B. producer surplus per unit. C. profit growth. D. profit per unit sold.

A. consumer surplus per unit.

The marketing and sales functions of a firm can help to create value through all of the following ways, except: A. creating goods and services. B. brand positioning. C. advertising. D. communicating consumer needs to R&D.

A. creating goods and services.

A strategy that focuses on increasing the attractiveness of a product is referred to as a(n): A. differentiation strategy. B. low cost strategy. C. effectiveness strategy. D. efficiency strategy.

A. differentiation strategy

Analysts who believe that the globalization of capital has serious inherent risks argue that: A. due to deregulation and reduced controls on cross-border capital flows, individual nations are becoming more vulnerable to speculative capital. B. most of the capital that moves internationally is pursuing long term gains, and it does not shift in and out of countries as quickly as conditions change. C. "hot money" is still relatively rare, primarily because although capital is free to move internationally, its owners and managers still prefer to keep most of it at home. D. the lack of short-term capital is due to the relative paucity of information that investors have about foreign investments.

A. due to deregulation and reduced controls on cross-border capital flows, individual nations are becoming more vulnerable to speculative capital.

Market makers are: A. financial service companies that connect investors and borrowers. B. those who want to borrow money including individuals, companies, and governments. C. nonbank financial institutions who want to invest money. D. high net worth individuals with surplus cash to reinvest.

A. financial service companies that connect investors and borrowers.

The Bretton Woods IMF Articles of Agreement, tried to impose discipline by adopting a _____ exchange rate system that was seen as a mechanism for controlling inflation and imposing economic discipline on countries. A. fixed B. floating C. dirty float D. pegged

A. fixed

In 2007, about a quarter of the IMF members had a(n) _____ exchange rate policy. A. fixed peg B. currency board C. free float D. adjustable peg

A. fixed peg

The main elements of the 1976 Jamaica agreement include all of the following except: A. floating rates were declared unacceptable. B. gold was abandoned as a reserve asset. C. total annual IMF quotas were increased to $41 billion. D. IMF members were permitted to sell their own gold reserves at the market price.

A. floating rates were declared unacceptable

The amount of a currency need to purchase one ounce of gold under the gold standard was known as the: A. gold par value. B. gold standard. C. fixed gold rate. D. pegged rate.

A. gold par value

When a country pegs its currencies to gold and guarantees convertibility, the country is following the: A. gold standard. B. Bretton Woods system. C. fixed exchange system. D. floating exchange rate system.

A. gold standard

The great virtue claimed for a pegged exchange rate is that it: A. imposes monetary discipline on a country. B. leads to high inflation. C. leads to devaluation. D. increases fluctuations in exchange rates.

A. imposes monetary discipline on a country

The Bretton Woods agreement differed from the gold standard in that it: A. incorporated both discipline and flexibility. B. was a floating rate system. C. was based on the British pound. D. was a rigid system of fixed exchange rates.

A. incorporated both discipline and flexibility

The cost of capital: A. is the price of borrowing money, which is the rate of return that borrowers must pay investors. B. tends to be higher in an international capital market than it is in a purely domestic market. C. in a purely domestic market implies that borrowers must pay less to persuade investors to lend them their money. D. in an international market implies that borrowers will be able to pay more to persuade investors to lend them their money.

A. is the price of borrowing money, which is the rate of return that borrowers must pay investors.

A fixed exchange rate regime: A. modeled along the lines of the Bretton Woods system will not work. B. allows each country to choose its own inflation rate. C. is characterized by speculation that adds to the uncertainty surrounding future currency movements. D. leads to a situation where governments under political pressures expand monetary supply too rapidly, causing unacceptably high price inflation.

A. modeled along the lines of the Bretton Woods system will not work

A _____ means the value of the currency is fixed relative to a reference currency. A. pegged exchange rate B. dynamic exchange rate C. floating exchange rate D. fixed exchange rate

A. pegged exchange rate

Economist Martin Feldstein argues that the lack of patient money is due to the A. relative paucity of information that investors have about foreign investments. B. relative abundance of hot money. C. restrictions on international capital movements. D. increasing trend of excessive intra-day volatility in global capital markets.

A. relative paucity of information that investors have about foreign investments.

In 1997, the stock markets of several Asian countries, including South Korea, Malaysia, Indonesia, and Thailand, lost over 50 percent of their value in response to the Asian financial crisis, while at the same time the S&P 500 increased in value by over 20 percent. This indicates that: A. relatively low correlation exists between the movement of stock markets in different countries. B. international diversification has failed in reducing the risks of global capital movement. C. capital controls result in segmentation of different stock markets. D. the integration of global capital disproportionately favors developed countries in Europe and America.

A. relatively low correlation exists between the movement of stock markets in different countries.

Global expansion allows firms to achieve all of the following, except: A. standardize their product offering, marketing strategy, and business strategy for all national conditions. B. realize location economies by dispersing value creation activities to the optimal location. C. realize cost economies from experience effects generated by serving a larger market from a central location. D. expand the market for their domestic product offerings by selling those products in international markets.

A. standardize their product offering, marketing strategy, and business strategy for all national conditions.

All of the following statements regarding the effects of exchange rates on international portfolio diversification are true, except: A. the volatile exchange rates associated with the current floating exchange rate regime increase the risk-reducing effects of international portfolio diversification. B. floating exchange rates introduce an additional element of risk into investing in foreign assets. C. adverse exchange rate movements can transform otherwise profitable investments into unprofitable investments. D. uncertainty engendered by volatile exchange rates may act as a brake on the otherwise rapid growth of the international capital market.

A. the volatile exchange rates associated with the current floating exchange rate regime increase the risk-reducing effects of international portfolio diversification.

Bretton Woods set a restriction of _____ percent for devaluations of currency, if a currency became too weak to defend, without permission from the IMF. A. 5 B. 10 C. 15 D. 20

B. 10

Which of the following is not a feature of the eurobond market that makes it an appealing alternative to most major domestic bond markets? A. An absence of regulatory interference. B. Ability to offer the bonds to residents of the country in whose currency they are denominated. C. Less stringent disclosure requirements than in most domestic bond markets. D. A favorable tax status.

B. Ability to offer the bonds to residents of the country in whose currency they are denominated.

_____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs. A. Efficiency matrixes B. Diminishing returns C. Cost plus curves D. Strategy convex curves

B. Diminishing returns

_____ arises when people behave recklessly because they know they will be saved if things go wrong. A. A debt situation B. Moral hazard C. A conflict of interest D. Policy failure

B. Moral hazard

The _____ suggested that it would be desirable for most major currencies to appreciate relative to the dollar, and signatories pledged to intervene in the foreign exchange markets, selling dollars, to achieve this objective. A. Louvre Accord B. Plaza Accord C. Bretton Woods Agreement D. gold standard

B. Plaza Accord

Which of the following is an example of a primary activity in a firm's value chain? A. Information systems B. Research and development C. Logistics D. Human relations

B. Research and development.

The International bank for Reconstruction and Development is also known as the: A. IMF. B. World Bank. C. European Central Bank. D. International Development Agency.

B. World Bank

In late 1997, a deal brokered by the _____ removed many of the restrictions on cross-border trade in financial services and facilitated further growth in the size of the global capital market. A. European Union B. World Trade Organization C. International Monetary Fund D. World Bank

B. World Trade Organization

A firm focusing on _____ will benefit by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. A. organizational advantage B. core competency C. competitive gains D. technical skill sets

B. core competency

According to data from the Bank for International Settlements, A. by late 2008, the stocks of cross-border bank loans were significantly less as compared to those in 1990. B. international equity issues were actually higher in 2007. C. outstanding international bonds in late 2008 were down from those in 1997. D. the international capital market was in recession from the 1980s to the early 2000s.

B. international equity issues were actually higher in 2007

The institutional arrangement that governs exchange rates is known as the: A. financial control system. B. international monetary system. C. international monetary fund. D. international financial regime.

B. international monetary system.

A foreign debt crisis: A. is a situation in which consumer spending patterns significantly affect a country's balance of payments, thereby affecting its currency. B. is a situation in which a country cannot service its debt obligations. C. refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits. D. occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency.

B. is a situation in which a country cannot service its debt obligations

An equity loan: A. does not give its holder a claim to a firm's profit stream. B. is made when a corporation sells stock to investors. C. includes cash loans from banks and funds raised from the sale of corporate bonds to investors. D. requires the corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

B. is made when a corporation sells stock to investors.

The main factor that makes the eurocurrency market attractive to both depositors and borrowers is that: A. it allows banks to offer lower interest rates to cash depositor on home currency deposits than on deposits made in eurocurrency. B. it lacks government regulation and banks are given much more freedom in their dealings in foreign currencies. C. it allows banks to charge borrowers a lower interest rate for borrowings in the home currency than for borrowings in eurocurrency. D. the spread between the eurocurrency deposit rate and lending rate is more than the spread between the domestic deposit and lending rates.

B. it lacks government regulation and banks are given mush more freedom in their dealings in foreign currencies.

The Bretton Woods Agreement could only work if the U.S. had: A. high inflation and no balance-of-payments deficit. B. low inflation and no balance-of-payments deficit. C. low inflation and a current account deficit. D. high inflation and a capital account surplus.

B. low inflation and no balance-of-payments deficit

According to Harvard economist Martin Feldstein _____ supports long-term cross-border capital flows. A. hot money B. patient money C. short-term capital D. investment capital

B. patient money

Under a pegged exchange rate regime, a country will peg the value of its currency to _____ so that its own currency rises too. A. its domestic inflation rate B. that of a major currency C. its interest rates D. its foreign exchange reserves

B. that of a major currency

The use of the forward market and swaps to protect against foreign exchange risk has increased markedly since: A. the breakdown of the gold standard. B. the collapse of the Bretton Woods system in 1973. C. the end of the Plaza Accord. D. the Louvre Accord ended in 1968.

B. the collapse of the Bretton Woods system in 1973.

The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because: A. the customer's disposable income is significantly higher than what the market demands. B. the customer captures some of that value in the form of a consumer surplus. C. regulatory mechanisms ensure that the customer is not overcharged for products/services. D. marketers implement psychological pricing tactics to ensure that customers perceive the prices to be low.

B. the customer captures some of that value in the form of a consumer surplus.

Under the gold standard, the U.S. dollar could be converted into _____ grains of fine gold. A. 10.1 B. 17.3 C. 23.33 D. 480

C. 23.33

_____ are sold outside of the borrower's country and are denominated in the currency of the country in which they are issued. A. Eurobonds B. Convertible bonds C. Foreign bonds D. Regulatory bonds

C. Foreign bonds

_____ position themselves to make "long bets" on assets that they think will increase in value, and "short bets" on assets that they think will decline in value. A. Growth funds B. Arbitrageurs C. Hedge funds D. Debt funds

C. Hedge funds

The _____ function creates value by ensuring the company has the right mix of people to perform activities effectively. A. information systems B. company infrastructure C. human resources D. logistics

C. Human resources

Which of the following is an example of a support activity in a firm's value chain? A. R&D B. Customer service C. Human resources D. Marketing and sales

C. Human resources

In 1976, the _____ formalized the floating exchange rate system that followed the collapse of fixed exchange rate system. A. gold standard B. Plaza Accord C. Jamaica Agreement D. Louvre Accord

C. Jamaica Agreement

Under the _____ of 1987, the Group of Five agreed that exchange rates had realigned sufficiently from earlier levels and pledged to support the stability of exchange rates around their current levels by intervening in the foreign exchange market when necessary. A. Plaza Accord B. Jamaica Agreement C. Louvre Accord D. Bretton Woods Agreement

C. Louvre Accord

Which of the following is not a trend toward deregulation that facilitated the growth of the international capital market? A. The U.S., in 1970s and early 80s, allowing foreign banks to enter the U.S. capital market and domestic banks to expand their operations overseas. B. Great Britain's removal of barriers, in October 1986, that had existed between banks and stockbrokers and allowed foreign financial service companies to enter the British stock market. C. Restrictions on the entry of foreign securities houses in Japan, and Japanese banks not being allowed to open international banking facilities. D. In Germany, foreign banks being allowed to lend and manage foreign euro issues, subject to reciprocity agreements.

C. Restrictions on the entry of foreign securities houses in Japan, and Japanese banks not being allowed to open international banking facilities.

Which of the following is an impact of the growth of international communication technology, on the financial industry? A. The emergence of a segregated international capital market. B. Complexity of the data volume restricts trading to "acceptable hours." C. Shocks that occur in one financial center now spread around the globe very quickly. D. Lack of systems integration hinders real-time data transfer across different countries.

C. Shocks that occur in one financial center now spread around the globe very quickly.

_____ activities of the value chain provide inputs that allow the primary activities to occur. A. Complementary B. Basic C. Support D. Core

C. Support

_____ refers to movements in a stock portfolio's value that are attributable to macroeconomic forces affecting all firms in an economy, rather than factors specific to an individual firm. A. Financial risk B. Portfolio risk C. Systematic risk D. Unplanned risk

C. Systematic risk.

Which of the following statements regarding barriers to cross-border capital flows is not true? A. They limit the ability of capital to roam the world freely in search of the highest risk-adjusted return. B. They can lead to too much capital being invested in some markets and too little in others, at any one time. C. They are no longer responsible for the relatively low correlation between the movements of stock markets in different countries. D. They include limits on the amount of a firm's stock that a foreigner can own and limits on the ability of a country's citizens to invest their money outside that country.

C. They are no longer responsible for the relatively low correlation between the movements of stock markets in different countries.

Identify the incorrect statement pertaining to commercial banks. A. They perform an indirect connection function. B. They lend investors money to borrowers at a higher rate of interest, making a profit from the difference in interest rates. C. They bring investors and borrowers together and charge commissions for it. D. They take cash deposits from corporations and individuals and pay them a rate of interest in return.

C. They bring investors money to borrowers together and charge commissions for it.

According to a study by Bruno Solnik: A. a fully diversified portfolio of international stocks is only about 75 percent as risky as a typical individual stock. B. a fully diversified portfolio of U.S. stocks is about 2 percent as risky as a typical individual stock. C. a fully diversified portfolio that contains stocks from many countries is less than half as risky as a fully diversified portfolio that contains only U.S. stocks. D. there is no relationship between international diversification and risk.

C. a fully diversified portfolio that contains stocks from many countries is less than half as risky as a fully diversified portfolio that contains only U.S. stocks.

When the income a country's residents earn from exports is equal to the money its residents pay to other countries for imports, the country is said to: A. be in current account equilibrium. B. be in capital account equilibrium. C. be in balance-of-trade equilibrium. D. have a managed float.

C. be in balance-of-trade equilibrium

When a country commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate, the country has adopted a _____ system of exchange rates. A. pegged B. floating C. currency board D. fixed

C. currency board

When a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of a currency, a(n) _____ has occurred. A. foreign debt crisis B. banking crisis C. currency crisis D. exchange crisis

C. currency crisis

As an investor increases the number of stocks in her portfolio, the portfolio's risk: A. increases initially. B. does not change. C. declines rapidly in the beginning. D. increases exponentially beyond a point.

C. declines rapidly in the beginning.

The _____ shows all of the different positions a firm can adopt with regard to adding value to the product and low cost assuming the firm's internal operations are configured efficiently to support a particular position. A. strategic choice curve B. strategy convex C. efficiency frontier D. experience curve

C. efficiency frontier

In a _____ exchange rate system, the value of a set of currencies is fixed against each other at some mutually agreed on exchange rate. A. pegged B. dirty C. fixed D. direct

C. fixed

According to some analysts, under a _____ regime, countries are limited in their ability to use monetary policy to expand or contract their economies by the need to maintain exchange rate parity. A. managed float B. dirty float C. fixed exchange rate D. floating exchange rate

C. fixed exchange rate

When the foreign exchange market determines the relative value of a currency, we say that the currency is adhering to a(n): A. volatile exchange rate. B. pegged exchange rate. C. floating exchange rate. D. fixed exchange rate.

C. floating exchange rate.

The global trend toward the deregulation of financial markets has been facilitated by all of the following developments, except: A. the development of the eurocurrency market. B. pressure from financial services companies wanting to operate in a less regulated environment. C. increasing rejection of the free market ideology associated with an individualistic political philosophy. D. changes in the U.S. that allowed foreign banks to enter the U.S. capital market and domestic banks to expand their operations overseas

C. increasing rejection of the free market ideology associated with an individualistic political philosophy.

Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as: A. factor economies. B. production economies. C. location economies. D. value creation economies.

C. location economies.

Michael Porter has argued that _____ and _____ are two basic strategies for creating value and attaining a competitive advantage in an industry. A. differentiation; price competition B. economies of scale; diversification. C. low cost; differentiation D. efficiency; promotion

C. low cost; differentiation

Most economists trace the breakup of the Bretton Woods fixed exchange rate system, in 1973, to the: A. rise of communism in Eastern Europe. B. economic integration movement sweeping Western Europe. C. macroeconomic policy package in the U.S. during 1965 to 1968. D. increase in inflation and the worsening of the British foreign trade position.

C. macroeconomic policy package in the U.S. during 1965 to 1968

Because of the long-term implications of volatile exchange rates, firms should: A. use the forward market because it is a perfect predictor of future exchange rates. B. get complete insurance coverage for exchange rates that might occur several years in the future. C. pursue strategies that reduce economic exposure. D. avoid transactions that involve foreign currencies

C. pursue strategies that reduce economic exppsure.

A banking crisis: A. is a situation in which consumer spending patterns significantly affect a country's balance of payments, thereby affecting its currency. B. is a situation in which a country cannot service its debt obligations. C. refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits. D. occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency

C. refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits

Pegged exchange rates are popular among many of the world's: A. highly developed nations. B. richest nations. C. smaller nations. D. large economies.

C. smaller nations

A consumer surplus can be best described as: A. what the consumer has "left-over" after a purchase. B. how much extra a consumer has to pay for a product. C. value for the money. D. the premium charged for a quality product.

C. value for the money.

Which of the following are among the best examples of market makers? A. Individuals B. Regulatory agencies C. Governments D. Commercial banks

D. Commercial banks

Which of the following is a drawback of the eurocurrency market? A. High reserve ratio requirements B. Higher cost of transaction C. Lower interest rates on deposits D. Exposure to foreign exchange risk

D. Exposure to foreign exchange risk.

_____ activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and aftersales service. A. Support B. Subordinate C. Ancillary D. Primary

D. Primary.

Which event was initially responsible for London becoming the leading center of eurocurrency trading? A. Regulations that discouraged British banks from trading in the eurocurrency market. B. Strengthening of the British pound against major European currencies in the 1960s. C. Collapse of the Bretton Woods system. D. Prohibition of British banks from lending British pounds to finance non-British trade.

D. Prohibition of British banks from lending British pounds to finance non-British trade.

Which of the following statements is not true? A. The way to increase the profitability of a firm is to create more value. B. The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. C. The more value customers place on a firm's products, the higher the price the firm is able to charge for those products. D. The price a firm charges for a good or service is typically more than the value the customer places on that good or service.

D. The price a firm charges for a good or service is typically more than the value the customer places on that good or service.

Why do many companies borrow funds in their domestic currency even though the eurocurrency markets may offer more attractive interest rates? A. To reduce operational expenses B. To avoid systemic risk C. To avoid reinvestment risk D. To avoid foreign exchange risk

D. To avoid foreign exchange risk.

The relatively low correlation between the movements of stock markets in different countries reflects all of the following basic factors except: A. countries pursue different macroeconomic policies and face different economic conditions, so their stock markets respond to different forces and can move in different ways. B. different stock markets are still somewhat segmented from each other by capital controls. C. restrictions on cross-border capital flows still separate different stock markets. D. barriers to cross-border capital flows drastically increase the ability of capital to roam the world freely in search of the highest risk-adjusted return.

D. barriers to cross-border capital flows drastically increase the ability of capital to roam the world freely in search of the highest risk-adjusted return.

When the central bank of a country intervenes in the foreign exchange market to try to maintain the value of its currency if it depreciates too rapidly against an important reference currency, the country is said to be following a _____ system. A. fixed exchange rate B. clean float C. floating exchange rate D. dirty float

D. dirty float

A managed-float system is also known as a: A. fixed exchange rate system. B. floating exchange rate system. C. pegged exchange rate system. D. dirty-float exchange rate system.

D. dirty-float exchange rate system

A(n) _____ is any currency banked outside of its country of origin. A. dollar amount B. global currency C. international currency D. eurocurrency

D. eurocurrency

Under the Bretton Woods, all countries fixed the value of their currency in terms of: A. the British pound. B. the euro. C. the U.S. dollar. D. gold.

D. gold

The gold standard had its origin in the use of _____ as a medium of exchange, unit of account, and store of value. A. the U.S. dollar B. the British pound C. paper currency D. gold coins

D. gold coins

The 1995 Mexican currency crisis and the 1997 Asian financial crisis were the result of all of the following except: A. excessive foreign borrowings. B. a weak or poorly regulated banking system. C. high inflation rates. D. high balance-of-trade surplus.

D. high balance-of-trade surplus

In 1997, the IMF agreed to provide the Thai government with $17.2 billion in loans to help its shattered economy. While doing so, IMF imposed all of the following restrictions except: A. the government was to increase taxes. B. public spending needed to be cut. C. several state-owned businesses were to be privatized. D. interest rates were to be reduced.

D. interest rates were to be reduced.

According to Harvard economist Martin Feldstein, "patient money" A. is relatively abundant. B. implies short-term capital. C. is another term for "hot money." D. is still relatively rare.

D. is still relatively rare.

Companies with historic roots in one nation are broadening their stock ownership by listing their stock in the equity markets of other nations because of all of the following reasons, except: A. listing stock on a foreign market is often a prelude to issuing stock in that market to raise capital. B. they can tap into the liquidity of foreign markets, thereby increasing the funds available for investment and lowering the firm's cost of capital. C. it facilitates future acquisitions of foreign companies. D. it helps in decreasing the company's visibility with local employees, customers, suppliers, and bankers.

D. it helps in decreasing the company's visibility with local employees, customers, suppliers, and bankers.

Which of the following statements about the financial services industry is not true? A. It is an information-intensive industry. B. It has been revolutionized more than any other industry by advances in information technology since the 1970s. C. It is now technologically possible for financial services companies to engage in 24-hour-a-day trading. D. It saw the real cost of recording, transmitting, and processing information increase by 25 percent between 1964 and 1990.

D. it saw the real cost of recording, transmitting, and processing information increase by 25 percent between 1964 and 1990

The IMF has been criticized because of all of the following reasons except: A. it has a "one-size-fits-all" approach to macroeconomic policy is inappropriate for many countries. B. its rescue efforts are exacerbating a problem known to economists as moral hazard. C. it has become too powerful for an institution that lacks any real mechanism for accountability. D. its lax macroeconomic policies in the Asian crisis were not well suited to countries suffering from a private sector debt crisis with deflationary undertones.

D. its lax macroeconomic policies in the Asian crisis were not well suited to countries suffering from a private sector debt crisis with deflationary undertones.

According to the text, various studies have confirmed that despite casual observations different national stock markets appear to be: A. positively correlated. B. negatively correlated. C. strongly correlated. D. only moderately correlated

D. only moderately correlated.

The percentage increase in net profits over time measures: A. capital return. B. profitability. C. net profits. D. profit growth.

D. profit growth.

All of the following are benefits of global capital markets, except: A. they increase the supply of funds available to borrowers. B. that the risk to the investment portfolio is reduced to below what could be achieved in a purely domestic capital market. C. they provide a wider range of investment opportunities to investors. D. they have higher cost of capital as compared to purely domestic capital markets.

D. they have higher cost of capital as compared to purely domestic capital markets