Test bank International Finance MCQ (word)Chap 15.doc

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 15 Interest Rate and Currency Swaps 15.1 Multiple Choice and True/False Questions 1) The single largest interest rate risk of a firm is ________. A) interest sensitive securities B) debt service C) dividend payments D) accounts payable Answer: B Topic: Interest Rate Risk Skill: Recognition 2) A ________ rate is the rate of interest used in a standardized quotation, loan agreement, or financial derivative valuation. A) reference rate B) central rate C) benchmark rate D) none of the above Answer: A Topic: Reference Rate Skill: Recognition 3) The most widely used reference rate for standardized quotations, loan agreements, or financial derivative valuations is the ________. A) Federal Reserve Discount rate B) federal funds rate C) LIBOR D) one-year U.S. Treasury Bill Answer: C Topic: LIBOR Skill: Recognition 4) LIBOR is an acronym for A) Latest Interest Being Offered Rate. B) Large International Bank Offered Rate. C) Least Interest Bearing: Official Rate. D) London Interbank Offered Rate. Answer: D Topic: LIBOR Skill: Recognition 5) Corporate treasury departments have traditionally been A) profit centers. B) centers of aggressive profit taking. C) service or cost centers. D) none of the above. Answer: C Topic: Corporate Treasury Departments Skill: Recognition 6) As a management tool, a ________ is a rule, but a ________ is an objective. A) policy; goal B) goal; policy C) FIBOR; GIBOR D) none of the above Answer: A Topic: Policies and Goals Skill: Conceptual 7) The following would be an example of a policy, not a goal. A) Management shall minimize the firms overall weighted average cost of capital. B) Management shall maximize shareholders wealth. C) Management will not write uncovered options. D) Management will hire only happ