Som 354 Final Exam Multiple Choice
already passed
The currency of the country of Venaria falls sharply in value against the currency of Lutetia, a
neighboring country. Which of the following is a consequence of this exchange rate movement?
A)Lutetia's products will achieve a competitive pricing in Venaria.
B)There will be no difference in the volume or direction of trade.
C)Lutetia's exports to Venadia will increase, because Lutetian goods will become cheaper in
Venadia.
D)Venadia's exports to Lutetia will increase, because Venadian goods will become cheaper in
Lutetia.
E)Venadia's products will cost more in Lutetia. - correct answer ✔✔D
The amount of value a firm creates is measured by
A)the difference between its costs of production and the value that consumers perceive in its
products.
B)dividing the net profits of the firm by total invested capital.
C)the difference between the previous year's profitability and the current year's profitability.
D)the sum of the profitability of the last two fiscal years.
E)dividing the market price of its products by the price that customers are actually willing to
pay. - correct answer ✔✔A
26)Which of the following is a function of the foreign exchange market?
A)To enable companies to engage in capital flight when countertrade is not possible
B)To reduce the economic exposure of a firm
C)To eliminate volatile changes in exchange rates
, D)To provide some insurance against foreign exchange risk
E)To protect short-term cash flow from adverse changes in exchange rates - correct answer
✔✔D
27)A French company wants to invest 20 million euros for three months. The company found
that investing in a Thai money market account would give it a higher interest rate than domestic
investments. Which of the following is true about this investment?
A)The investment is risk-free because the Thai money market is considered to be more stable
and secure than other markets.
B)The investment is risk-free because such investments also lock foreign exchange rates for the
duration of the investment.
C)The investment is not risk-free because money market instruments are considered to be the
most speculative of all investments.
D)The investment is risk-free because money market investments are considered to be
equivalent to bank deposits.
E)The investment is not risk-free because foreign currency movements in the intervening period
can affect the profitability of the firm. - correct answer ✔✔E
One of the reasons why a firm typically charges for a good or service less than the value placed
on that good or service by the customer is because
A)the firm frequently modifies its products to compete with the products introduced by other
firms.
B)it is highly unlikely that the same good or service will be available to the customers from other
firms.
C)it is normally impossible to segment a market based on each customer's reservation price.
D)the firm attempts to create value for the consumers by providing them a wide range of
products.
E)the value creation results in a corresponding reduction in costs of production. - correct
answer ✔✔C
already passed
The currency of the country of Venaria falls sharply in value against the currency of Lutetia, a
neighboring country. Which of the following is a consequence of this exchange rate movement?
A)Lutetia's products will achieve a competitive pricing in Venaria.
B)There will be no difference in the volume or direction of trade.
C)Lutetia's exports to Venadia will increase, because Lutetian goods will become cheaper in
Venadia.
D)Venadia's exports to Lutetia will increase, because Venadian goods will become cheaper in
Lutetia.
E)Venadia's products will cost more in Lutetia. - correct answer ✔✔D
The amount of value a firm creates is measured by
A)the difference between its costs of production and the value that consumers perceive in its
products.
B)dividing the net profits of the firm by total invested capital.
C)the difference between the previous year's profitability and the current year's profitability.
D)the sum of the profitability of the last two fiscal years.
E)dividing the market price of its products by the price that customers are actually willing to
pay. - correct answer ✔✔A
26)Which of the following is a function of the foreign exchange market?
A)To enable companies to engage in capital flight when countertrade is not possible
B)To reduce the economic exposure of a firm
C)To eliminate volatile changes in exchange rates
, D)To provide some insurance against foreign exchange risk
E)To protect short-term cash flow from adverse changes in exchange rates - correct answer
✔✔D
27)A French company wants to invest 20 million euros for three months. The company found
that investing in a Thai money market account would give it a higher interest rate than domestic
investments. Which of the following is true about this investment?
A)The investment is risk-free because the Thai money market is considered to be more stable
and secure than other markets.
B)The investment is risk-free because such investments also lock foreign exchange rates for the
duration of the investment.
C)The investment is not risk-free because money market instruments are considered to be the
most speculative of all investments.
D)The investment is risk-free because money market investments are considered to be
equivalent to bank deposits.
E)The investment is not risk-free because foreign currency movements in the intervening period
can affect the profitability of the firm. - correct answer ✔✔E
One of the reasons why a firm typically charges for a good or service less than the value placed
on that good or service by the customer is because
A)the firm frequently modifies its products to compete with the products introduced by other
firms.
B)it is highly unlikely that the same good or service will be available to the customers from other
firms.
C)it is normally impossible to segment a market based on each customer's reservation price.
D)the firm attempts to create value for the consumers by providing them a wide range of
products.
E)the value creation results in a corresponding reduction in costs of production. - correct
answer ✔✔C
