Answer the following statements true (T) or false (F)
1. A forward exchange rate can be used to help establish the value of a currency at a future point in time.
2. Currency exchange rates may be either floating or fixed.
3. In a free market, the exchange rate between two currencies is determined by the supply of and demand for those currencies with the influence of the central bank.
4. Fundamental factors, such as inflation, interest rates, balance of payments and government policies do not play much of a role in explaining short and long term fluctuations of a currency value.
5. A foreign exchange rate specifies how much a currency is worth in terms of another currency.
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. TRUE
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Which of the following is considered to be generally easier in mechanistic organizations?
a. coordination b. delegating c. authority d. flexibility
Zoom Company, a distiller of liquors, ages its whiskeys for approximately 10 years. The firm must pay the costs to produce the whiskey and to store it during the aging process. Using the whiskey as collateral, Zoom could borrow to finance the costs incurred during the aging process; doing so would, however, lead to Zoom reporting increased liabilities. Instead, Zoom sells the whiskey to a bank
and agrees to oversee the aging process on the bank's behalf. At the completion of the aging, Zoom Company guarantees an ultimate selling price that pays the lender both the original purchase price and a reasonable return over that amount. Zoom a. bears the economic risks and must show a liability on its balance sheet. b. bears the economic risks and but does not show a liability on its balance sheet. c. does not bear the economic risks and must show a liability on its balance sheet. d. does not bear the economic risks and does not show a liability on its balance sheet. e. will likely record the transaction as a sale and not a loan.
Using the internal rate of return approach to ranking projects, which project(s) should the firm accept? (See Table 10.4 )
A) 1, 2, 3, 4, and 5 B) 1, 2, 3, and 5 C) 2, 3, 4, and 6 D) 1, 3, 4, and 6
Debt percentage is the ratio of debt to total capitalization.
Answer the following statement true (T) or false (F)