International Financial Management

Hockey skates sell in Canada for 105 Canadian dollars. Currently, 1 Canadian dollar equals 0.71 U.S. dollar. If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?

$ 74.55

A box of candy costs 28.80 Swiss francs (SF) in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate?

$1 U.S. = 1.44 SF

If one Swiss franc can purchase $0.71 U.S. dollar, how many Swiss francs can one U.S. dollar buy?

1.41

Which of the following statements is NOT CORRECT?

Any bond sold outside the country of the borrower is called an international bond. Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold. (No) Foreign bonds and Eurobonds are two important types of international bonds. The term Eurobond specifically applies to any foreign bonds denominated in U.S. currency. (No)A Eurodollar is a U.S. dollar deposited in a bank outside the U.S.

If the inflation rate in the United States is greater than the inflation rate in Sweden, other things held constant, the Swedish currency will

Appreciate against the U.S. dollar.

What is the currency of the EMU?

Euro

Multinational financial management requires all of the following EXCEPT:

Political risk must be excluded from multinational corporate financial analyses.

Which of the following is NOT a reason why companies move into international operations?

To develop new markets for their finished products. (No) Because important raw materials are located abroad. To take advantage of lower production costs in regions of inexpensive labor. Taxes are lower for companies that do business outside of their home country. (no) To better serve their primary customers.