Some investors think that the Rumple Shirt Co.’s repurchase program was a bad deal for shareholders, because the company paid too much for its repurchased shares. Before the repurchase, the company’s shares traded for $30. Over the last quarter, Rumple repurchased 150 million shares (15% of shares outstanding) at an average price of $33 per […]
Which of the following is a variation of the accounting identity? A) Assets − Fixed assets = Equity − Liabilities B) Owner’s equity = Assets − Liabilities C) Equity − Liabilities = Assets D) Assets + Equity = Liabilities E) Assets + Lease obligations = Equity + Liabilities ANSWER B
Every ________ can be considered to have a corresponding flow of foreign money associated with it, and this flow of foreign money is recorded as a ________. A) credit transaction B) current account transaction C) debit transaction D) capital account transaction ANSWER Answer: B
Assume $1 buys .685 pounds and that $1 buys 78.342 yen. Calculate the cross rate. A) 114.38¥/£ B) .01¥/£ C) 53.66¥/£ D) 98.25¥/£ ANSWER A
The purchases of goods and assets by domestic residents from foreign residents are ________ because they cause an outflow of foreign exchange. ________ increase the demand for the foreign money in the foreign exchange market. A) credit transactions B) current account transactions C) debit transactions D) capital account transactions ANSWER Answer: C
Into what subcategory in the current account do you find the export and import of education, insurance, consulting, telecommunications, royalties on films, etc? A) unilateral current transfers, net B) balance on goods and services C) balance on current account D) services ANSWER Answer: D
In a freely floating exchange rate system, if the capital account surplus for the U.S. rises, what will most likely happen to the real value of the dollar? A) It will decline. B) It will rise. C) There is no impact on the dollar. D) The IMF will step in to adjust rising exchange rates. […]
All of the following are the reasons why Gross National Income does not equal Gross Domestic Product in an open economy EXCEPT: A) the capital and labor used to produce the goods in the domestic country do not need to be owned by domestic residents. B) the country may receive transfer payments from abroad or […]
The sale of American computers to the Spanish government shows up as A) a debit on the official reserves account. B) a credit on the official reserves account. C) a credit on the trade account. D) a debit on the current account. ANSWER Answer: C
Suppose the quote on pounds was $1.624-31. If you converted $10,000 to pounds and then back to dollars, how many dollars would you end up with? What will be an ideal response? ANSWER Answer: For $10,000, you would buy pounds at the asking price. Given this quote, the asking price would be $1.631/£. […]
