Which of the Following Statements Is TRUE of the Global

question 21

Multiple Choice

Which of the following statements is TRUE of the global financial system?

• A) It consists of the institutional frameworks, rules, and procedures that govern how national currencies are exchanged for one another.
• B) It includes key players such as finance ministries and national stock exchanges but excludes commercial banks and central banks.
• C) It is built on the activities of firms, banks, and financial institutions engaged in ongoing international financial activity.
• D) Since the 1960s, the volume and structure of the global financial system has been reducing.

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Pre-Merger Market

The financial and economic conditions affecting companies and their stock prices before they undergo a merger.

External Growth

Expansion of a business through acquiring or merging with other companies, as opposed to internal growth through increasing sales, product lines, or efficiencies.

Diversification

In finance, selecting a portfolio of different (diverse) investments to limit the overall risk borne by the investor.