International Finance And Treasury - Study Mode
[#656] International Financial Corporation established in the year
Correct Answer
(D) 1956
Explanation
Solution: The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States. It was established in 1956, as the private-sector arm of the World Bank Group, to advance economic development by investing in for-profit and commercial projects for poverty reduction and promoting development.
[#657] For the purpose of translation exposure, historical rate is the rate prevalent on the date
Correct Answer
(D) The asset was acquired or the liability was incurred
Explanation
Solution: For the purpose of translation exposure, historical rate is the rate prevalent on the date of the asset was acquired or the liability was incurred. Translation exposure (also known as translation risk) is the risk that a company's equities, assets, liabilities or income will change in value as a result of exchange rate changes. This occurs when a firm denominates a portion of its equities, assets, liabilities or income in a foreign currency.
[#658] This is not established method of translation
Correct Answer
(C) Temporary method
Explanation
Solution: Temporary method is not established method of translation. Temporal rate method, or the historical rate method, is employed to convert the financial statements of a parent company’s foreign subsidiaries from its local currency to its “reporting” or “functional” currency when the functional currency and the local currency are not the same. Temporal Method is also utilized at the time of acquisition of assets and liabilities.
[#659] Two tier exchange rate system is a form of
Correct Answer
(C) Multiple exchange rate
Explanation
Solution: Two tier exchange rate system is a form of Multiple exchange rate. In a multiple exchange rate system, the concept is the same, except the market is divided into many different segments, each with its own foreign exchange rate, whether fixed or floating.
[#660] Which of the following is not a reason for international investment?
Correct Answer
(D) International investments have less political risk than domestic investments
Explanation
Solution: International investments have less political risk than domestic investments is not a reason for international investment. International investing is an investing strategy that involves selecting global investment instruments as part of an investment portfolio. People often invest internationally to broaden diversification and spread investment risk among foreign markets and companies.