10. Blocked funds is an example of a making a foreign investment. 0 a. exchange
ID: 2793128 • Letter: 1
Question
10. Blocked funds is an example of a making a foreign investment. 0 a. exchange rate risk b. geographic risk c. political risk d. competition risk 11. An exchange rate that is utilized for transactions meant for immediate delivery is called: a. forward rate b. futures rate c. bid rate d. spot rate 12. The theory that can be used to relate differences in interest rates in two countries to the ratios of spot and forward exchange rates of the two countries is known as a. interest rate arbitrage b. interest rate parity c. purchasing power parity d. domestic preference theo 13. A company that makes physical investments in another country is known as a. multinational corporation b. domestic corporation c. national corporation d. local corporationExplanation / Answer
10. Blocked fund is an example of a political risk of making a foreign investment. Blockage of fund happens due to country’s restriction of foreign currency exchange to maintain its foreign currency reserve where companies are not allowed to take their profit from subsidiary firm to parent company in another country for some time period.
Therefore correct answer is option c. political risk
11. An exchange rate that utilized for transaction meant for immediate delivery is called spot rate. Spot rate is price quoted for immediate settlement and immediate delivery for a currency, stock or commodity.
Therefore correct answer is option d. Spot rate
12. The theory that can be used to relate differences in interest rate in two countries to the ratios of spot and forward exchange rates of two countries is known as interest rate parity. The interest rate parity relates the spot exchange rate, forward exchange rate and nominal exchange rates of two countries.
Therefore correct answer is option b. interest rate parity
13. A company that makes physical investment in another country is known as Multinational Corporation. Multinational corporations have physical investments in many countries and do not limit itself in one country therefore it is known as multinational.
Therefore correct answer is option a. Multinational Corporation
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.