International Finance Quiz

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Questions and Answers

What is the main purpose of the foreign exchange market?

To facilitate currency exchange between buyers and sellers. (correct)
To establish and buy companies with a management role
To move funds for loans or small share holdings.
To impact international competitiveness by relocating manufacturing.

What is the purpose of the foreign exchange market?

The foreign exchange market facilitates currency exchange between buyers and sellers.

What is the difference between direct investment and portfolio investment?

Direct investment involves establishing or buying a company with a management role, while portfolio investment involves short-term movement of funds for loans or small share holdings.

What is the difference between direct investment and portfolio investment?

Direct investment involves establishing or buying a company with a management role, while portfolio investment involves short-term movement of funds for loans or small share holdings. (C) Signup and view all the answers

How do transnational corporations impact international competitiveness?

Transnational corporations impact international competitiveness by relocating manufacturing to low-labor cost countries and affecting currency values. Signup and view all the answers

How do transnational corporations impact international competitiveness?

By relocating manufacturing to low-labor cost countries and affecting currency values. (A) Signup and view all the answers

What are the factors that impact international financial flows?

Deregulation of financial markets, growth of transnational corporations, and globalization. (A) Signup and view all the answers

What are the three factors that impact international financial flows?

Deregulation of financial markets, growth of transnational corporations, and globalization impact international financial flows. Signup and view all the answers

What are the positive effects of de-regulation of financial flows?

More investment opportunities, faster and more efficient capital flows, and more competitive markets. (A) Signup and view all the answers

What are the positive effects of de-regulation of financial flows?

Positive effects of de-regulation include more investment opportunities, faster and more efficient capital flows, and more competitive markets. Signup and view all the answers

What are the negative effects of de-regulation of financial flows?

Negative effects of de-regulation include increased risk of financial instability, vulnerability to financial crises, and excessive speculation. Signup and view all the answers

What are the negative effects of de-regulation of financial flows?

Increased risk of financial instability, vulnerability to financial crises, and excessive speculation. (A) Signup and view all the answers

What are the initiatives to promote responsible use of financial flows?

Increasing financial literacy and education, increasing transparency, and promoting greater oversight and regulation. (A) Signup and view all the answers

What are initiatives to promote responsible use of financial flows?

Initiatives to promote responsible use of financial flows can include increasing financial literacy and education, increasing transparency, and promoting greater oversight and regulation. Signup and view all the answers

What is the difference between direct investment and portfolio investment?

How does direct investment differ from portfolio investment in terms of time horizon?

Direct investment has a long-term time horizon, while portfolio investment has a short-term time horizon. Signup and view all the answers

What are the factors that impact international financial flows?

Deregulation of financial markets, growth of transnational corporations, and globalization. (A) Signup and view all the answers

What is the impact of transnational corporations on currency values?

Transnational corporations can affect currency values by relocating manufacturing to low-labor cost countries. Signup and view all the answers

What is the impact of globalization on international financial flows?

Globalization has a significant impact on international financial flows by increasing the volume and speed of cross-border transactions. Signup and view all the answers

What is the potential downside of excessive speculation in financial markets?

Excessive speculation can lead to financial instability and vulnerability to financial crises. Signup and view all the answers

What is the role of financial literacy in promoting responsible use of financial flows?

Financial literacy can help individuals make informed decisions about their finances and promote responsible use of financial flows. Signup and view all the answers

Flashcards

Foreign exchange market purpose

Facilitates currency exchange between buyers and sellers.

Direct investment vs. portfolio investment

Direct: establishing/buying company with managerial role; Portfolio: short-term funds for loans/small shares.