question 51

The current rate method is the most prevalent method today for the translation of financial statements.

Select one:

True

False

Question 52

Since in the U.S. the home currency is the dollar and the foreign currency is the euro, in New York USD 1.2174 = EUR 1.00 would be a direct quote on the euro and an indirect quote on the dollar.

Select one:

True

False

Question 53

From a financial management perspective, all of the following are primary risks associated with an international trade transaction EXCEPT:

Select one:

a. default risk

b. interest rate risk

c. noncompletion risk

d. currency risk

Question 54

ADRs cannot be exchanged for the underlying shares of the foreign stock, therefore, arbitrage cannot keep the prices in line with the foreign price of the stock.

Select one:

True

False

Question 55

For most firms, the cost of capital decreases to a low point as the firm ________ debt financing. At some point beyond this optimal level, the cost of capital increases as the amount of debt ________.

Select one:

a. decreases; decreases

b. increases; decreases

c. increases; increases

d. decreases; increases