Question 1

Which of the following is subject to translation exposure?

Options :

A : A German company with a subsidiary in Spain

B : A Spanish company with revenues in euros

C : A Japanese subsidiary in the United States with U.S. dollar liabilities

D : A U.K. company that exports goods to the United States

Answer: C

Question 2

Which of the following would MOST LIKELY cause a decrease in a company's deposited checks availability?

Options :

A : The depository bank institutes an earlier deposit deadline.

B : The Federal Reserve implements same-day presentment

C : The company-s lockbox bank implements weekend processing.

D : The company encodes its own checks prior to deposit.

Answer: A

Question 3

An inverted yield curve occurs when which of the following is true?

Options :

A : As rates on current issues rise, the price of existing issues falls

B : In anticipation of lower long-term rates, investors push short-term rates down.

C : The longer the maturity of the investment, the greater the risk of a price decline.

D : The longer the maturity of the investment, the lower the rate of return.

Answer: D

Question 4

All of the following items may be found on an income statement EXCEPT:

Options :

A : cost of goods sold.

B : prepaid expenses.

C : interest expense.

D : taxes

Answer: B

Question 5

The yield curve is inverted. A creditworthy firm considering alternative debt maturities would MOST LIKELY:

Options :

A : enter into a short-term floating rate agreement.

B : obtain long-term fixed interest rate debt.

C : roll-over short-term debt at each maturity.

D : obtain a long-term floating rate agreement.

Answer: B

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