PERTEMUAN 7
1. The process by which one currency is changed into another is known as
a. Translation.
b. Conversion.
c. Restatement.
d. Mark-to-market.
2. The spot rate is
a. The rate quoted for delivery within two business days.
b. Usually higher than the forward rate.
c. A contract rate between the corporation and the foreign exchange trader at
the bank for future delivery.
d. Usually at a premium for sales and a discount for purchases.
3. The exchange rate which is a contract rate between the company and the foreign
exchange trader at the bank for delivery in the future is the
a. Spot rate
b. Forward rate.
c. Future spot rate.
d. Current rate.
4. The process by which one currency is expressed or restated in terms of another is
known as
a. Translation.
b. Conversion.
c. Mark-to-market.
d. Inversion.
5. From the standpoint of the parent company, a foreign currency is
a. The currency in which the parent company prepares its financial statements.
b. Any currency other than the parent currency.
c. The currency of the primary economic environment in which the firm
operates.
d. The currency in the country where the foreign firm is operating.
6. The currency of the primary economic environment in which the firm operates is the
a. Functional currency.
b. Reporting currency.
c. Historical currency.
d. Base currency.
7. The currency in which the parent company prepares its financial statements is the
a. Functional currency.
b. Reporting currency.
c. Historical currency.
d. Base currency.
8. The currency of the country where the foreign company is operating is the
a. Base currency.
b. Parent currency.
c. Local currency.
d. Third country currency.
9. If a U.S.-based company has a subsidiary in Germany, and the German subsidiary
imports components from Britain, the British pound would most likely be considered
(from the standpoint of the German subsidiary)
a. The local currency.
b. A foreign currency.
c. The functional currency.
d. The reporting currency.