Business Finance - Practice Test

[#236] A company might prefer to raise more debt capital rather than equity capital for:

(A) it may help in minimization its tax expenses

(B) it reduces the risk of bankruptcy

(C) it is a reassure its shareholders

(D) the company may get more owners

Correct Answer

(A) it may help in minimization its tax expenses

[#237] All of the following are types of financial instruments except

(A) currency forward contracts

(B) swap agreements

(C) currency futures contracts

(D) money market hedge

Correct Answer

(D) money market hedge

[#238] The segments of international financial market include 1. Foreign Exchange Market 2. International Arbitrage Market 3. International Money Market 4. International Bond Market Select the correct answer by using the options given below

(A) Both 1 and 4

(B) 1, 3 and 4

(C) 2, 3 and 4

(D) All of the above

Correct Answer

(D) All of the above

[#239] The instrument chosen for enhancement of international liquidity is

(A) Society for Worldwide Inter-bank Financial Telecommunications (SWIFT)

(B) Special Drawing Rights (SDRs)

(C) Multilateral Netting

(D) Netting of Payments

Correct Answer

(B) Special Drawing Rights (SDRs)

[#240] Which of the following are rules to use when choosing between forward contracts and currency options?

(A) When the quantity of a foreign-currency cash outflow is known, buy the currency forward

(B) When the quantity of a foreign currency cash outflow is unknown, buy the currency forward

(C) When the quantity of a foreign currency cash flow is partially known and partially uncertain, use a forward contract to hedge the known and unknown portions

(D) when the quantity of a foreign currency cash inflow is known, buy the currency forward

Correct Answer

(A) When the quantity of a foreign-currency cash outflow is known, buy the currency forward

Business Finance - Study Mode

[#236] A company might prefer to raise more debt capital rather than equity capital for:

Correct Answer

[#237] All of the following are types of financial instruments except

Correct Answer

[#238] The segments of international financial market include 1. Foreign Exchange Market 2. International Arbitrage Market 3. International Money Market 4. International Bond Market Select the correct answer by using the options given below

Correct Answer

[#239] The instrument chosen for enhancement of international liquidity is

Correct Answer

[#240] Which of the following are rules to use when choosing between forward contracts and currency options?

Correct Answer