Give an example of how the balance of payments provides information concerning exchange rate determination? What will be an ideal response? ANSWER Answer: The balance of payments provides information that is useful in understanding the determination of exchange rates and the growth prospects of a country. Persistent, large current account deficits, especially ones […]
Purchases and sales of foreign assets by domestic residents would appear in the ________ account of the balance of payments. A) current B) capital C) trade merchandise D) official settlement ANSWER Answer: B
Dinder Mufflin is a Pennsylvania-based paper company. Dinder Mufflin is all equity financed. Its shares are trading for $7.67 and it has 433 million shares outstanding. The company has excess cash of $831.36 million that it wants to distribute using a fixed-price tender offer. It has announced that it will pay $9.60 per share and […]
As the real value of the dollar rises, the balance on the current account is likely to ________. A) increase B) decrease C) stay the same D) move with the capital account adjustments factor ANSWER Answer: B
The Japanese current account surplus can best be attributed to A) the high rate of Japanese domestic investment. B) Japanese protectionism. C) the high rate of Japanese savings. D) government budget deficits. ANSWER Answer: C
Polaris Industries produces a wide range of outdoor leisure vehicles including all-terrain vehicles (ATV’s), motorcycles, and snowmobiles. Use the financial information in the table to calculate Polaris’ maximum sustainable growth rate. Selected Ratios Polaris Industries Inc As of December 31, Year 5 ROE 38.76% ROA 18.63% Net Profit Margin 7.51% Total Asset Turnover 2.48 Dividend […]
The three major accounts of the ________ are the current account, the capital account and the official settlements account. A) balance of payments B) balance of trade C) trade surplus D) trade deficit ANSWER Answer: A
When the yen is selling at a premium in the forward market, the euro price of the yen in the forward market €/¥ would be ________ the spot price of €/¥. A) smaller than B) the same as C) approximately the same as D) larger than ANSWER Answer: D
Exchange rates A) help increase a nation’s productivity level. B) are a minor consideration for foreign investors. C) are volatile and introduce a source of risk in international transactions. D) are currently fixed for the world’s major currencies. E) have little effect on the prices of imports and exports. ANSWER C
The right-hand side of the balance sheet shows A) the cash flow generated by a firm’s assets. B) how the firm financed its assets. C) the level of accumulated depreciation. D) profits earned by the firm in the current period. E) the firm’s good will. ANSWER B
