Complete Test Bank for Multinational Business Finance, 15th Edition Global Edition – David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

Test Bank
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Multinational Business Finance, Fifteenth Editio
V V V V


n
GlobalVEdition
Authors: David K. Eiteman, Arthur I. Stonehill & Mic
V V V V V V V V


hael H. Moffett
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ThunderbirdVSchoolVofVGlobalVManagemen
tVatVArizonaVStateVUniversity
MultinationalVBusinessVFinance,V15e,VGlobalVEdition

1.1 FinancialVGlobalizationVandVRisk

1) FinancialVglobalizationVhasVnotVresultedVin:
A) continuingVimbalancesVofVbalanceVofVpayments.
B) anVincreaseVinVquantityVandVspeedVinVtheVflowVofVcapitalVacrossVtheVworld.
C) capitalVmarketsVlessVopenVandVaVdecreaseVinVtheVavailabilityVofVcapitalVforVmanyVorganizatio
ns.
D) uniformVwaysVofVownership,Vcontrol,VandVgovernanceVacrossVtheV
world.VAnswer:V D
Diff:V1
L.O.:V 1.1VFinancialVGlobalizationVandVRiskV
Skill:V Recognition
AACSB:V ApplicationVofVknowledge

2) BRICsVisVaVtermVusedVinVinternationalVfinanceVtoVrepresentVassetsVthatVareVconsider
edVtoVbeVinexpensiveVandVsturdy,VbutVfundamentallyVunsoundVandVandVincapableVofVc
opingVwithVtheVupheavalsVnowVapparentVinVinternationalVfinancialVmarkets.
Answer:V FALSEV
Diff:V1
L.O.:V 1.1VFinancialVGlobalizationVandVRiskV
Skill:V Recognition
AACSB:V ApplicationVofVknowledge

3) MultinationalVenterprisesV(MNEs)VareVfirms,VbothVforVprofitVcompaniesVandVnot-for-
profitVorganizations,VthatVhaveVoperationsVinVmoreVthanVoneVcountry,VandVconductVtheirVbus
inessVthroughVforeignVsubsidiaries,Vbranches,VorVjointVventuresVwithVhostVcountryVfirms.

,Answer:V TRUEVD
iff:V1
L.O.:V 1.1VFinancialVGlobalizationVandVRiskV
Skill:V Recognition
AACSB:V ApplicationVofVknowledge

4) Ownership,Vcontrol,VandVgovernanceVchangesVradicallyVacrossVtheVworld.VTheVpubliclyV
tradedVcompanyVisVnotVtheVdominantVglobalVbusinessVorganization—
theVprivatelyVheldVorVfamily-ownedVbusinessVisVtheVprevalentVstructure—
andVtheirVgoalsVandVmeasuresVofVperformanceVdifferVdramatically.
Answer:V TRUEVD
iff:V1
L.O.:V 1.1VFinancialVGlobalizationVandVRiskV
Skill:V Recognition
AACSB:V ApplicationVofVknowledge

,5) TheVthemeVdominatingVglobalVfinancialVmarketsVtodayVisVtheVcomplexityVofVrisksVasso
ciatedVwithVfinancialVglobalization.VListVandVexplainVexamplesVofVtheVcomplexityVofVrisks
VaffectingVtheVleadingVandVmanagingVofVmultinationalVfirmsVinVtheVrapidlyVmovingVmark
etplace.
Answer:V TheVfollowingVisVaVsamplingVofVthisVcomplexityVofVrisks:V1)VTheVinternationalVm
onetaryVsystemVisVunderVconstantVscrutiny.VTheVriseVofVtheVChineseVrenminbiVisVchangingV
muchVofVtheVworld'sVoutlookVonVcurrencyVexchange,VreserveVcurrencies,VandVtheVrolesVofVt
heVdollarVandVtheVeuro.V2)VLargeVfiscalVdeficits,VincludingVtheVcurrentVeurozoneVcrisis,Vpla
gueVmostVofVtheVmajorVtradingVcountriesVofVtheVworld,VcomplicatingVfiscalVandVmonetaryVp
olicies,VandVultimately,VinterestVratesVandVexchangeVrates.V3)VManyVcountriesVexperienceVco
ntinuingVbalanceVofVpaymentsVimbalances,VandVinVsomeVcases,VdangerouslyVlargeVdeficitsVa
ndVsurpluses.V4)VOwnership,Vcontrol,VandVgovernanceVvaryVradicallyVacrossVtheVworld.V5)V
GlobalVcapitalVmarketsVthatVnormallyVprovideVtheVmeansVtoVlowerVaVfirm'sVcostVofVcapital,
VandVevenVmoreVcritically,VincreaseVtheVavailabilityVofVcapital,VhaveVinVmanyVwaysVshrunk
VinVsizeVandVhaveVbecomeVlessVopenVandVaccessibleVtoVmanyVofVtheVworld'sVorganizations.
V6)VFinancialVglobalizationVhasVresultedVinVtheVebbVandVflowVofVcapitalVinVandVoutVofVboth
VindustrialVandVemergingVmarkets,VgreatlyVcomplicatingVfinancialVmanagement.
Diff:V1
L.O.:V 1.1VFinancialVGlobalizationVandVRiskV
Skill:V Conceptual
AACSB:V ApplicationVofVknowledge

1.2 TheVGlobalVFinancialVMarketplace

1) AVwell-established,VlargeVU.S.-
basedVMNEVwillVprobablyVNOTVbeVableVtoVovercomeVwhichVofVtheVfollowingVobstaclesVt
oVmaximizingVfirmVvalue?
A) anVopenVmarketVplace
B) highVqualityVstrategicVmanagement
C) accessVtoVcapital
D) noneVofVtheVabo
veVAnswer:V D
Diff:V1
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Conceptual
AACSB:V ApplicationVofVknowledge

2) AVwell-established,VlargeVChina-
basedVMNEVwillVprobablyVbeVmostVadverselyVaffectedVbyVwhichVofVtheVfollowingVele
mentsVofVfirmVvalue?
A) anVopenVmarketplace
B) high-qualityVstrategicVmanagement
C) accessVtoVcapital
D) accessVtoVqualifiedVlaborVpo
olVAnswer:V A
Diff:V2
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Conceptual
AACSB:V ApplicationVofVknowledge

, 3) AVwell-established,Vlarge,VBrazil-
basedVMNEVwillVprobablyVbeVmostVadverselyVaffectedVbyVwhichVofVtheVfollowingVele
mentsVofVfirmVvalue?
A) anVopenVmarketplace
B) high-qualityVstrategicVmanagement
C) accessVtoVcapital
D) accessVtoVqualifiedVlaborVpo
olVAnswer:V C
Diff:V2
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Conceptual
AACSB:V ApplicationVofVknowledge

4) AVmajorVcostVavoidedVinVtheVeurocurrencyVmarketsVisVtheVpaymentVofVdepositVinsuran
ceVfees,VsuchVas:
A) FederalVDepositVInsuranceVCorporationV-VFDIC
B) OfficeVofVtheVComptrollerVofVtheVCurrencyV-VOCC
C) InternationalVMonetaryVFundV-VIMF
D) WorldVBankV-
VWBVAnswer:V A
Diff:V2
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Recognition
AACSB:V ApplicationVofVknowledge

5) TheVmodernVeurocurrencyVmarketVwasVbornVshortlyVafter:
A) WorldVWarVII
B) WorldVWarVI
C) KoreanVWar
D) BosnianVWa
rVAnswer:V AV
Diff:V1
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Recognition
AACSB:V ApplicationVofVknowledge

6) TheVreferenceVrateVofVinterestVinVtheVeurocurrencyVmarketVisVthe:
A) LondonVInterbankVOfferedVRate
B) PrimaVrate
C) FederalVfundsVrate
D) TreasuryVrat
eVAnswer:V AV
Diff:V1
L.O.:V 1.2VTheVGlobalVFinancialVMarketplace
VSkill:V Recognition
AACSB:V ApplicationVofVknowledge