 Question 1

1.25 out of 1.25 points

Good cash management boils down to

Correct
Answer: investing excess funds at the most favorable interest rate and borrowing at the
lowest rate when there is a temporary cash shortage.
 Question 2
1.25 out of 1.25 points

The formula for the standard deviation of cash held by the centralized depository for N affiliates
is

Correct
Answer: The formula assumes that inter-affiliate cash flows have a correlation
coefficient of 0.
 Question 3
1.25 out of 1.25 points

On blocked funds strategy is

Correct Answer:
all of the options
 Question 4
1.25 out of 1.25 points

Bilateral netting can reduce the number of foreign exchange transactions among an MNC with N
affiliates to

Correct Answer:

 Question 5
1.25 out of 1.25 points

Find the net exposure of the U.S. MNC with the following intra-affiliate transactions shown.

Correct Answer:
$55
 Question 6
1.25 out of 1.25 points
 Which will reduce the number of foreign exchange transactions the most for an MNC?

Correct Answer:
Multilateral netting
 Question 7
1.25 out of 1.25 points

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A
€2,000 when the exchange rate is $1.10 = €1.00. The net payment between A and B should be

Correct Answer:
€1,091 from B to A.
 Question 8
0 out of 1.25 points

For a recent month, the following payments matrix of inter-affiliate cash flows was forecasted:

Disbursement From:

Receipts by: France Britain U.S.

France € 500 € 800

Britain £ 480 £ 300

U.S. $ 600 $ 960

The spot exchange rates are $1.20 = €1.00 and $2.00 = £1.00; affiliates get paid in home
currency. Use multilateral netting to find the net payments to and from all parties.

Which of the following is an accurate chart of their current situation?

Correct Answer:
none of the options