Quiz on International Finance

1. What is the main purpose of international finance? A. To manage the exchange of foreign currencies B. To facilitate global investments C. To reduce the risk of international trade D. To provide loans to foreign countries

2. What is the difference between a current account and a capital account? A. A current account is used to measure the flow of goods and services, while a capital account is used to measure the flow of investments B. A current account is used to measure the flow of investments, while a capital account is used to measure the flow of goods and services C. A current account is used to measure the flow of money, while a capital account is used to measure the flow of goods and services D. A current account is used to measure the flow of goods and services, while a capital account is used to measure the flow of money

3. What is the most important factor in determining the exchange rate between two countries? A. The amount of money in circulation B. The amount of goods and services traded between the two countries C. The amount of foreign investments in each country D. The economic stability of each country

4. True or False: International finance is only concerned with the movement of money between countries. A. True B. False

5. What are the three main components of international finance? A. Exchange rates, capital flows, and investments B. Exchange rates, imports and exports, and investments C. Exchange rates, capital flows, and foreign investments D. Exchange rates, imports and exports, and foreign investments

6. What is the primary goal of international finance? A. To reduce the risk of international trade B. To facilitate global investments C. To manage the exchange of foreign currencies D. To maximize profits for international businesses

Answer Key: 1. A 2. B 3. D 4. False 5. C 6. B

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International Finance Practice Sheet

1. What are the three main types of international finance?

A. Foreign Direct Investment (FDI), Portfolio Investment, and Trade Finance B. Trade Finance, International Banking, and Foreign Exchange C. Foreign Exchange, International Banking, and Foreign Direct Investment D. Foreign Exchange, International Banking, and Trade Finance

1. What is the purpose of international finance?

A. To facilitate the transfer of funds between countries B. To reduce the risk associated with international investments C. To increase the profitability of international investments D. To increase international trade

1. What is the primary difference between Foreign Direct Investment (FDI) and Portfolio Investment?

A. FDI involves direct ownership of assets, while portfolio investment involves indirect ownership through stocks and bonds. B. FDI involves indirect ownership through stocks and bonds, while portfolio investment involves direct ownership of assets. C. FDI involves ownership of foreign assets, while portfolio investment involves ownership of domestic assets. D. FDI involves ownership of domestic assets, while portfolio investment involves ownership of foreign assets.

1. What is the purpose of Trade Finance?

A. To facilitate the transfer of funds between countries B. To reduce the risk associated with international investments C. To increase the profitability of international investments D. To facilitate international trade by providing financing and payment services

1. True or False: International finance is the same as domestic finance.

A. True B. False

Answer Key: 1. A 2. D 3. B 4. D 5. B