Test bank International Finance MCQ (word)Chap 15.docVIP

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 15  Interest Rate and Currency Swaps 15.1  Multiple Choice and True/False Questions 1)  The single largest interest rate risk of a firm is ________. A)  interest sensitive securities B)  debt service C)  dividend payments D)  accounts payable Answer:  B Topic:  Interest Rate Risk Skill:  Recognition 2)  A ________ rate is the rate of interest used in a standardized quotation, loan agreement, or financial derivative valuation. A)  reference rate B)  central rate C)  benchmark rate D)  none of the above Answer:  A Topic:  Reference Rate Skill:  Recognition 3)  The most widely used reference rate for standardized quotations, loan agreements, or financial derivative valuations is the ________. A)  Federal Reserve Discount rate B)  federal funds rate C)  LIBOR D)  one-year U.S. Treasury Bill Answer:  C Topic:  LIBOR Skill:  Recognition 4)  LIBOR is an acronym for A)  Latest Interest Being Offered Rate. B)  Large International Bank Offered Rate. C)  Least Interest Bearing: Official Rate. D)  London Interbank Offered Rate. Answer:  D Topic:  LIBOR Skill:  Recognition 5)  Corporate treasury departments have traditionally been A)  profit centers. B)  centers of aggressive profit taking. C)  service or cost centers. D)  none of the above. Answer:  C Topic:  Corporate Treasury Departments Skill:  Recognition 6)  As a management tool, a ________ is a rule, but a ________ is an objective. A)  policy; goal B)  goal; policy C)  FIBOR; GIBOR D)  none of the above Answer:  A Topic:  Policies and Goals Skill:  Conceptual 7)  The following would be an example of a policy, not a goal. A)  Management shall minimize the firms overall weighted average cost of capital. B)  Management shall maximize shareholders wealth. C)  Management will not write uncovered options. D)  Management will hire only happ