1. Recently, financial markets have become highly integrated. This development (Points : 3) allows...

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1. Recently, financial markets have become highly integrated. This development (Points : 3) allows investors to diversify their portfolios internationally. allows minority investors to buy and sell stocks. has increased the cost of capital for firms. answers a) and c) are both correct. 2. Deregulation of world financial markets (Points : 3) provided a natural environment for financial innovations, like currency futures and options. has promoted competition among market participants.

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1. Recently, financial markets have become highly integrated. This development (Points : 3) allows investors to diversify their portfolios internationally. allows minority investors to buy and sell stocks. has increased the cost of capital for firms. answers a) and c) are both correct. 2. Deregulation of world financial markets (Points : 3) provided a natural environment for financial innovations, like currency futures and options. has promoted competition among market participants. has encouraged developing countries such as Chile, Mexico, and Korea to liberalize by allowing foreigners to directly invest in their financial markets. all of the above 3. The Nestlé Corporation, a well-known Swiss MNC, used to issue two different classes of common stock, bearer shares and registered shares, and foreigners were allowed to hold only (Points : 3) registered shares. bearer shares. voting shares. convertible shares. 4. Suppose that you are a U.S. producer of a commodity good competing with foreign producers. Your inputs of production are priced in dollars and you sell your output in dollars. If the U.S. currency depreciates against the currencies of our trading partners, (Points : 3) your competitive position is likely improved. your competitive position is likely worsened. your competitive position is unchanged. 5. The massive privatization that is currently taking place in formerly socialist countries, will likely (Points : 3) eventually enhance the standard of living to these countries' citizens. depend on private investment. increase the opportunity set facing these countries' citizens. all of the above 6. Most governments at least try to make it difficult for people to cross their borders illegally. This barrier to the free movement of labor is an example of (Points : 3) information...

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Robert · Accepted Answer

1. Undoubtedly, we are now living in a world where all the major economic functions—consumption, production, and investment (Points : 3)
	       are still inherently local.
       are still regional in nature.
       are slowly becoming globalized.
       are highly globalized.
Question 2.2. Balance of payments (Points : 3)
       is defined as the statistical record of a country's international transactions over a certain period of time presented in the form of a double-entry bookkeeping.
       provides detailed information concerning the demand and supply of a country's currency.
       can be used to evaluate the performance of a country in international economic competition.
       all of the above
Question 3.3. Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in Euros, at a cost of €512,100. The U.S. importer will contact his U.S. bank (where of course he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as €1.0242/$1.00. The importer accepts this price, so his bank will ____________the importer's account in the amount of ____________. (Points : 3)
       debit, $500,000
       credit, €512,100
       credit, $500,000
       debit, €512,100
Question 4.4. How many methods of foreign currency translation have been used in recent years? (U.S. GAAP.) (Points : 3)
       One
       Two
       Three
       Four
Question 5.5. Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 = $2. One year later, the stock rises to £60. You are happy with your 20 percent return on the stock, but when you sell the stock and exchange your £60 for dollars, you only get $45 since the pound has fallen to £1 = $0.75. This loss of value is an example of (Points : 3)
       exchange rate risk.
       political risk.
       market imperfections.
       weakness in the dollar.
Question 6.6. At the wholesale level (Points : 3)
       most trading takes place OTC between individuals on the floor of the exchange.
       most trading takes place over the phone.
       most trading flows over Reuters and EBS platforms.
       most trading flows through specialized "broking" firms.
Question 7.7. Recent corporate scandals at firms such as Enron, WorldCom and the Italian firm Parmalat (Points : 3)
       show that managers might be tempted to pursue their own private interests at the expense of shareholders.
       show that Italian shareholders are better at monitoring managerial behavior than U.S. shareholders.
       show that white-collar criminals hardly ever get punished.
       show that socialism is a better way to go than capitalism.
Question 8.8.  Most interbank trades are (Points : 3)
       speculative or arbitrage transactions.
       simple order processing for the retail client.
       overnight loans from one bank to another.
       brokered by dealers.
Question 9.9. The owners of a business are the (Points : 3)
       taxpayers.
       workers.
       suppliers.
       shareholders.
Question 10.10.  Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso depreciates drastically against the U.S. dollar, as it did in December 1994. This means (Points : 3)
       your company's products can be priced out of the Mexican market, as the peso price of American imports will rise following the peso's fall.
       your firm will be able to charge more in dollar terms while keeping peso prices stable.
       your domestic competitors will enjoy a period of facing little price competition from Mexican imports.
       both b) and c) are correct
Question 11.11. Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost? (Points : 3)
       Lost $0.04 per € or $2,500
       Made $0.04 per € or $2,500
       Lost $0.06 per € or $3,750
       None of the above
Question 12.12. The balance of payments records (Points : 3)
       only international trade, (exports and imports).
       only cross-border investments (FDI and portfolio investment).
       not only international trade, (exports and imports) but also cross-border investments.
       none of the above
Question 13.13. The difference between a broker and a dealer is (Points : 3)
       dealers sell drugs; brokers sell houses.
       brokers bring together buyers and sellers, but carry no inventory; dealers stand ready to buy and sell from their inventory.
       brokers transact in stocks and bonds; currency is bought and sold through dealers.
       none of the above
Question 14.14.  Mislocated funds are defined as: (Points : 3)
       Funds being found in the wrong account.

1. Recently, financial markets have become highly integrated. This development (Points : 3) allows investors to diversify their portfolios internationally. allows minority investors to buy and sell...

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