IBUS 401 Final Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Imperfect Markets Theory - CORRECT ANSWER Explains non-transferability of resources in
international business.
Licensing - CORRECT ANSWER Firm provides technology for fees or benefits.
Sarbanes-Oxley Act (SOX) - CORRECT ANSWER 2002 law requiring internal reporting for
MNCs.
Centralized Management Style - CORRECT ANSWER Major decisions made by parent
company, increasing agency costs.
Balance of Trade - CORRECT ANSWER Difference between a country's exports and imports.
Current Account - CORRECT ANSWER Primary component includes trade balance and
income flows.
Currency Devaluation - CORRECT ANSWER Government action to reduce home currency
value.
Balance of Trade Deficit - CORRECT ANSWER Indicates excess imports over exports.
Bid Rate - CORRECT ANSWER Price at which a bank buys foreign currency.
Ask Rate - CORRECT ANSWER Price at which a bank sells foreign currency.
Bid-Ask Percentage Spread - CORRECT ANSWER Calculated as (Ask-Bid)/Ask x 100.
, Forward Purchase Contract - CORRECT ANSWER Agreement to buy currency at a future
date.
Put Option - CORRECT ANSWER Right to sell currency at a specified price.
Futures Contracts - CORRECT ANSWER Standardized contracts traded on exchanges.
Forward Contracts - CORRECT ANSWER Customized contracts typically offered by banks.
Speculation on Exchange Rates - CORRECT ANSWER Investing based on predicted currency
movements.
Nonsterilized Intervention - CORRECT ANSWER Central bank exchanges currency without
adjusting money supply.
Swiss Franc - CORRECT ANSWER Currency of Switzerland, often compared to USD.
Agency Costs - CORRECT ANSWER Costs arising from conflicts between management and
shareholders.
Interest Rate Differential - CORRECT ANSWER Difference in interest rates between two
countries.
Exchange Rate Fluctuations - CORRECT ANSWER Variations in currency value over time.
Volume - CORRECT ANSWER Amount of currency traded, affecting bid/ask spread.
Direct intervention - CORRECT ANSWER Government action to influence currency value.
Monetary policy - CORRECT ANSWER Central bank actions to manage money supply.
QUESTIONS AND CORRECT ANSWERS
Imperfect Markets Theory - CORRECT ANSWER Explains non-transferability of resources in
international business.
Licensing - CORRECT ANSWER Firm provides technology for fees or benefits.
Sarbanes-Oxley Act (SOX) - CORRECT ANSWER 2002 law requiring internal reporting for
MNCs.
Centralized Management Style - CORRECT ANSWER Major decisions made by parent
company, increasing agency costs.
Balance of Trade - CORRECT ANSWER Difference between a country's exports and imports.
Current Account - CORRECT ANSWER Primary component includes trade balance and
income flows.
Currency Devaluation - CORRECT ANSWER Government action to reduce home currency
value.
Balance of Trade Deficit - CORRECT ANSWER Indicates excess imports over exports.
Bid Rate - CORRECT ANSWER Price at which a bank buys foreign currency.
Ask Rate - CORRECT ANSWER Price at which a bank sells foreign currency.
Bid-Ask Percentage Spread - CORRECT ANSWER Calculated as (Ask-Bid)/Ask x 100.
, Forward Purchase Contract - CORRECT ANSWER Agreement to buy currency at a future
date.
Put Option - CORRECT ANSWER Right to sell currency at a specified price.
Futures Contracts - CORRECT ANSWER Standardized contracts traded on exchanges.
Forward Contracts - CORRECT ANSWER Customized contracts typically offered by banks.
Speculation on Exchange Rates - CORRECT ANSWER Investing based on predicted currency
movements.
Nonsterilized Intervention - CORRECT ANSWER Central bank exchanges currency without
adjusting money supply.
Swiss Franc - CORRECT ANSWER Currency of Switzerland, often compared to USD.
Agency Costs - CORRECT ANSWER Costs arising from conflicts between management and
shareholders.
Interest Rate Differential - CORRECT ANSWER Difference in interest rates between two
countries.
Exchange Rate Fluctuations - CORRECT ANSWER Variations in currency value over time.
Volume - CORRECT ANSWER Amount of currency traded, affecting bid/ask spread.
Direct intervention - CORRECT ANSWER Government action to influence currency value.
Monetary policy - CORRECT ANSWER Central bank actions to manage money supply.
