Questions from Multinational Business Finance


Q: Define and give an example of each of the following quotes:

Define and give an example of each of the following quotes: a. Bid rate quote. b. Ask rate quote.

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Q: Define the law of one price carefully, noting its fundamental assumptions

Define the law of one price carefully, noting its fundamental assumptions. Why are these assumptions so difficult to find in the real world in order to apply the theory?

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Q: What are the differences in the cash flows used in a project

What are the differences in the cash flows used in a project point of view analysis and a parent point of view analysis?

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Q: Define the Fisher effect. To what extent do empirical test confirm

Define the Fisher effect. To what extent do empirical test confirm that the Fisher effect exists in practice?

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Q: Why is the approximate form of the Fisher effect frequently used instead

Why is the approximate form of the Fisher effect frequently used instead of the precise formulation? Does this introduce significant analysis error?

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Q: Define the international Fisher effect. To what extent do empirical tests

Define the international Fisher effect. To what extent do empirical tests confirm that the international Fisher effect exists in practice?

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Q: Define interest rate parity. What is the relationship between interest rate

Define interest rate parity. What is the relationship between interest rate parity and forward rates?

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Q: Define the terms covered interest arbitrage and uncovered interest arbitrage. What

Define the terms covered interest arbitrage and uncovered interest arbitrage. What is the difference between these two transactions?

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Q: Define uncovered interest arbitrage and explain what expectations an investor or speculator

Define uncovered interest arbitrage and explain what expectations an investor or speculator would need to undertake an uncovered interest arbitrage investment?

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Q: If someone you were working with argued that the current forward rate

If someone you were working with argued that the current forward rate quoted on a currency pair is the market's expectation of where the future spot rate will end up, what would you say?

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