1. A US-based MNC expects to receive $20,000 from domestic operations and 20,000 British pound (£) from a business in England. If the pound’s value is $1.25, the expected total dollar cash flow are: (a) $41,000 (b) $36,000 (c) £46,000 (d) £45,000 2. Relatively high Lebanese inflation may result in an increase in the supply of Lebanese pound for sale and a reduction in the demand for Lebanese pound. (a) True (b) False 3. The premium of a currency call option will increase if: (a) The volatility of the underlying asset foes up. (b) The spot rate goes down. (c) The time to maturity goes down.

1. A US-based MNC expects to receive $20,000 from domestic operations and 20,000 British pound (£) from a business in England. If the pound’s value is $1.25, the expected total dollar cash flow are: (a) $41,000 (b) $36,000 (c) £46,000 (d) £45,000 2. Relatively high Lebanese inflation may result in an increase in the supply of Lebanese pound for sale and a reduction in the demand for Lebanese pound. (a) True (b) False 3. The premium of a currency call option will increase if: (a) The volatility of the underlying asset foes up. (b) The spot rate goes down. (c) The time to maturity goes down.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter17: Multinational Capital Structure And Cost Of Capital

Section: Chapter Questions

Problem 28QA

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