If the underlying transaction gives you a liability, denominated in foreign currency, the general principal behind a money market hedge states you need an equivalent ________ in the money market to provide a hedge. A) liability B) asset C) forward contract D) foreign bank account ANSWER Answer: B
Date: September 19th, 2020
Processing float is the delay between the receipt of a check by a payee and its deposit in firm’s account. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which one of the following would be the most logical reason to use a synthetic forward contract to hedge? A) forward contracts are not available in the currency of choice B) when time horizons are short, forward contracts can be expensive C) the underlying transaction is too risky D) the underlying transaction gives you an […]
Date: September 19th, 2020
Receipts and disbursements management techniques are aimed at minimizing a firm’s financing requirements by taking advantage of certain imperfections in the collection and payment system. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A bond that promises to pay the owner a single payment denominated in euros or pounds is known as a ________ bond. A) debenture B) variable interest rate C) pure discount D) foreign ANSWER Answer: C
Date: September 19th, 2020
If you were attempting to characterize the currency in a floating rate system, the most important factor to analyze is the ________ of the future exchange rate changes. A) conditional distribution B) histogram C) sample mean D) sample variance ANSWER Answer: A
Date: September 19th, 2020
In which one of the following systems would it be least difficult to quantify the currency risk? A) floating exchange system B) target zone system C) pegged exchange rate system D) currency board ANSWER Answer: A
Date: September 19th, 2020
What are the savings of marginal bad debts under the proposed plan? (See Table 14.7) A) $500,000 B) $50,000 C) $10,000 D) $5,000 ANSWER B
Date: September 19th, 2020
What is the cost of the marginal cash discount? (See Table 14.7) A) $768,750 B) $300,000 C) $307,500 D) $230,625 ANSWER D
Date: September 19th, 2020
What is the net result of increasing the cash discount? (See Table 14.7) A) +$33,750 B) -$33,750 C) +$128,750 D) -$58,750 ANSWER C
Date: September 19th, 2020
