Finance Risk Assessment and Global Financial System Quiz
29 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which type of industry tends to have a short cash conversion cycle?

  • Retailers (correct)
  • Tech companies
  • Financial institutions
  • Heavy industries
  • What is the impact of the cash conversion cycle on structural working capital needs?

  • It stabilizes the working capital needs
  • It increases the working capital needs (correct)
  • It decreases the working capital needs
  • It has no impact
  • What is the typical cash conversion cycle for heavy industries?

  • Short
  • Variable
  • Medium
  • Long (correct)
  • Why do retailers tend to have a short cash conversion cycle?

    <p>Because they don't grant any payment terms to consumers</p> Signup and view all the answers

    What step in the process triggers the need for external financing according to the text?

    <p>Making an order to a supplier who will deliver the product</p> Signup and view all the answers

    What does looking at the global VIXX index help determine?

    <p>Current market risk</p> Signup and view all the answers

    What was the purpose of establishing the Financial Stability Board (FSB) in April 2009?

    <p>Enhance cooperation among supervisory bodies</p> Signup and view all the answers

    What is one of the key mandates of the Financial Stability Board (FSB)?

    <p>Promote coordination among financial regulators</p> Signup and view all the answers

    Why were global systemic banks instructed by the FSB to create an additional absorbency blanket?

    <p>To prevent easy bankruptcy of banks</p> Signup and view all the answers

    How did the COVID-19 pandemic impact the economy initially?

    <p>Resulted in widespread business closures</p> Signup and view all the answers

    Why did only certain companies like Amazon and Facebook benefit during the pandemic according to the text?

    <p>As stock markets plunged on increased corporate risk</p> Signup and view all the answers

    What does TERP stand for in the context of rights issue?

    <p>Theoretical Ex-rights Price</p> Signup and view all the answers

    In a 1 for 2 rights issue at €5 for a company with 1000 shares originally priced at €10, what will be the value of the rights issued to shareholders?

    <p>€3.33</p> Signup and view all the answers

    How is the adjustment factor calculated in a rights issue scenario?

    <p>TERP / Reference price</p> Signup and view all the answers

    What is the purpose of offering existing shareholders pre-emptive rights in a capital increase?

    <p>To prevent dilution of existing shareholders' ownership</p> Signup and view all the answers

    In the context of a rights issue, what might entice an existing shareholder to sell their rights to other interested parties?

    <p>To realize immediate cash gains</p> Signup and view all the answers

    If a company offers new shares resulting from a rights issue at a price lower than €8.33 due to economic problems, how much discount would this represent if the shares are offered at 5% less?

    <p>€0.37</p> Signup and view all the answers

    What is the purpose of a forward exchange in the context of currency hedging?

    <p>To agree on terms of exchange with future settlement</p> Signup and view all the answers

    In the given scenario, what is the currency denomination used by the European importer to budget for raw material purchase?

    <p>EUR</p> Signup and view all the answers

    What is the total amount of goods purchased by the European importer in the USA?

    <p>$60 million</p> Signup and view all the answers

    How does a forward exchange rate differ from a spot exchange rate?

    <p>A forward rate locks in the current exchange rate, while a spot rate fluctuates.</p> Signup and view all the answers

    What amount will the company pay to the bank according to the text?

    <p>$130 million</p> Signup and view all the answers

    The underlying asset in a forward exchange transaction is usually:

    <p>Currency</p> Signup and view all the answers

    What is the function of the Remitting Bank in a documentary credit transaction?

    <p>Send precise bank instructions to the Collecting Bank</p> Signup and view all the answers

    In a documentary credit transaction, what does the Importer need to do to receive the documents?

    <p>Sign a draft</p> Signup and view all the answers

    What is the main function of a Confirming Bank in a Letter of Credit?

    <p>Add its commitment to that of the Issuing Bank to pay the Exporter</p> Signup and view all the answers

    What is the difference between a revocable and an irrevocable documentary credit?

    <p>Revocable can be cancelled/amended without agreement, while irrevocable requires all parties' agreement.</p> Signup and view all the answers

    What is the role of an Advising Bank in a documentary credit transaction?

    <p>Confirm payment details with the Importer</p> Signup and view all the answers

    What is the purpose of the Letter of Credit in international trade transactions?

    <p>To secure good execution of commercial contracts between Exporter and Importer</p> Signup and view all the answers

    More Like This

    Use Quizgecko on...
    Browser
    Browser