4Recemtity the Briish pound erin be c) Coventry might try d sone of the above. l

Question

4Recemtity the Briish pound erin be c) Coventry might try d sone of the above. lower d c prices be- -priced beer bgind i dian subsidiary records the acco nts receivable i, Candan doles and-a-on …ofp ds. Later, when the U.S parent pays the subsidiary the costracted USdollr mount the Camadin dll appreciated 10% against the US dolls. In this esample, te Ca lan ry will E a) 10% foreign exchange loss on US dolr accouts Since the Canadian finn issUS subsidiary, nether a piuis wa berecordeL Any pin or loss will be recorded only by d) 16. If an imbalance results from the accounting method used for trnslation, the imbellance is a) the bank; the post office b) depreciation; the market for foreign exchange swaps c) current income; equity reserves current liabilities; equity reserves 17. Other things equal, a firm would rather have ____ in a deprecining curency, and a) b) e) d) accounts receivable; accounts payable accounts receivable; accounts receivable accounts payable; accounts receivable none of the above 18. What type of international risk exposure measures the change-present value ofaim resling future operating cash flows caused by any nexpected change in exchange aes? a) transaction exposure b) accounting exposure e) operating exposure d) translation exposure 19. A major U.S. multinational firm has forecast the euro/dollar rate to be EL.10S one year hence, and n exchange rate of $1.40 for the British pound (E) in the same period. What does this imply the company's enxpected rate for euro per pound to be in one year? a) 1.40E b) £1.40/E c) £1.54/E d) E1.54/E Which of the following is NOT true regarding a letter of credit? a) The importer and exporter agree on a transaction. b) The importer applies to its local bank for the issuance of a letter of credit c) The exporter applies to its local bank for the issuance of a letter of credit. d) The importer's bank cuts a sales contract based on its assessment of the creditworthiness of the importe 20. 21. is the process that cancels via offiset all, or part, of the debt owed by one entity to another related a) Syndicated banking b) Centralized depositing c) Multilateral netting d) Debt cancellation

Explanation / Answer

19.

Cross exchnage rate between Euro and Pound = 1.10 × 1.40

= 1.54 Euro per Pound.

Cross exchnage rate between Euro and Pound is 1.54 Euro per Pound.

Option (D) is correct answer.

20.

The exporter applies to its local bank for the issuance of line of credit is not true about letter of credit.

Option (C) is not true.

21.

Debt cancelation is is the process that cancel via offset all or part of the debt owed by one entiry to another entity.

Option (D) is correct answer.

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