Question 1Suppose that currently 1 British pound equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc?1 British pound equals 3.2400 Swiss francs1 British pound equals 2.6244 Swiss francs1 British pound equals 1.8588 Swiss francs1 British pound equals 1.0000 Swiss francs1 British pound equals 0.3810 Swiss francs Question 2Which of the following statements is NOT CORRECT?Any bond sold outside the country of the borrower is called an international bond.Foreign bonds and Eurobonds are two important types of international bonds.Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold.The term Eurobond applies only to foreign bonds denominated in U.S. currency.A foreign bond might pay a higher nominal interest rate than a U.S. bond.Question 3Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00 and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?0.430.861.411.642.27Question 4Which of the following is NOT a reason why companies move into international operations?To take advantage of lower production costs in regions where labor costs are relatively low.To develop new markets for the firm s products.To better serve their primary customers.Because important raw materials are located abroad.To increase their inventory levels.
