Test Bank for Multinational Business Finance 15th Edition | Global Financial Management

TestBank j




Multinational Business Finance, Fifteenth Edition
j j j j




Global Edition j




Authors: David K. Eiteman, Arthur I. Stonehill & Michael
j j j j j j j j j



H. Moffett
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ThunderbirdjSchooljofjGlobaljManagementj
atjArizonajStatejUniversity
MultinationaljBusinessjFinance,j15e,jGlobaljEdition

1.1 FinancialjGlobalizationjandjRisk

1) Financialjglobalizationjhasjnotjresultedjin:
A) continuingjimbalancesjofjbalancejofjpayments.
B) anjincreasejinjquantityjandjspeedjinjthejflowjofjcapitaljacrossjthejworld.
C) capitaljmarketsjlessjopenjandjajdecreasejinjthejavailabilityjofjcapitaljforjmanyjorganizations.
D) uniformjwaysjofjownership,jcontrol,jandjgovernancejacrossjthejworld.jA
nswer:j D
Diff:j1
L.O.:j 1.1jFinancialjGlobalizationjandjRiskjSkill:
j Recognition
AACSB:j Applicationjofjknowledge

2) BRICsjisjajtermjusedjinjinternationaljfinancejtojrepresentjassetsjthatjarejconsideredjtojbejine
xpensivejandjsturdy,jbutjfundamentallyjunsoundjandjandjincapablejofjcopingjwithjthejupheav
alsjnowjapparentjinjinternationaljfinancialjmarkets.
Answer:j FALSEjDi
ff:j1
L.O.:j 1.1jFinancialjGlobalizationjandjRiskjSkill:
j Recognition
AACSB:j Applicationjofjknowledge

3) Multinationaljenterprisesj(MNEs)jarejfirms,jbothjforjprofitjcompaniesjandjnot-for-
profitjorganizations,jthatjhavejoperationsjinjmorejthanjonejcountry,jandjconductjtheirjbusinessjthro
ughjforeignjsubsidiaries,jbranches,jorjjointjventuresjwithjhostjcountryjfirms.

,Answer:j TRUEjDif
f:j1
L.O.:j 1.1jFinancialjGlobalizationjandjRiskjSkill:
j Recognition
AACSB:j Applicationjofjknowledge

4) Ownership,jcontrol,jandjgovernancejchangesjradicallyjacrossjthejworld.jThejpubliclyjtradedjco
mpanyjisjnotjthejdominantjglobaljbusinessjorganization—thejprivatelyjheldjorjfamily-
ownedjbusinessjisjthejprevalentjstructure—
andjtheirjgoalsjandjmeasuresjofjperformancejdifferjdramatically.
Answer:j TRUEjDif
f:j1
L.O.:j 1.1jFinancialjGlobalizationjandjRiskjSkill:
j Recognition
AACSB:j Applicationjofjknowledge

,5) Thejthemejdominatingjglobaljfinancialjmarketsjtodayjisjthejcomplexityjofjrisksjassociatedjwit
hjfinancialjglobalization.jListjandjexplainjexamplesjofjthejcomplexityjofjrisksjaffectingjthejleadi
ngjandjmanagingjofjmultinationaljfirmsjinjthejrapidlyjmovingjmarketplace.
Answer:j Thejfollowingjisjajsamplingjofjthisjcomplexityjofjrisks:j1)jThejinternationaljmonetaryjsyst
emjisjunderjconstantjscrutiny.jThejrisejofjthejChinesejrenminbijisjchangingjmuchjofjthejworld'sjoutl
ookjonjcurrencyjexchange,jreservejcurrencies,jandjthejrolesjofjthejdollarjandjthejeuro.j2)jLargejfisca
ljdeficits,jincludingjthejcurrentjeurozonejcrisis,jplaguejmostjofjthejmajorjtradingjcountriesjofjthejwo
rld,jcomplicatingjfiscaljandjmonetaryjpolicies,jandjultimately,jinterestjratesjandjexchangejrates.j3)j
Manyjcountriesjexperiencejcontinuingjbalancejofjpaymentsjimbalances,jandjinjsomejcases,jdanger
ouslyjlargejdeficitsjandjsurpluses.j4)jOwnership,jcontrol,jandjgovernancejvaryjradicallyjacrossjthej
world.j5)jGlobaljcapitaljmarketsjthatjnormallyjprovidejthejmeansjtojlowerjajfirm'sjcostjofjcapital,jan
djevenjmorejcritically,jincreasejthejavailabilityjofjcapital,jhavejinjmanyjwaysjshrunkjinjsizejandjhav
ejbecomejlessjopenjandjaccessiblejtojmanyjofjthejworld'sjorganizations.j6)jFinancialjglobalizationjh
asjresultedjinjthejebbjandjflowjofjcapitaljinjandjoutjofjbothjindustrialjandjemergingjmarkets,jgreatlyj
complicatingjfinancialjmanagement.
Diff:j1
L.O.:j 1.1jFinancialjGlobalizationjandjRiskjSkill:
j Conceptual
AACSB:j Applicationjofjknowledge

1.2 ThejGlobaljFinancialjMarketplace

1) Ajwell-established,jlargejU.S.-
basedjMNEjwilljprobablyjNOTjbejablejtojovercomejwhichjofjthejfollowingjobstaclesjtojmaximizi
ngjfirmjvalue?
A) anjopenjmarketjplace
B) highjqualityjstrategicjmanagement
C) accessjtojcapital
D) nonejofjthejabovej
Answer:j D
Diff:j1
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Conceptual
AACSB:j Applicationjofjknowledge

2) Ajwell-established,jlargejChina-
basedjMNEjwilljprobablyjbejmostjadverselyjaffectedjbyjwhichjofjthejfollowingjelementsjofjfir
mjvalue?
A) anjopenjmarketplace
B) high-qualityjstrategicjmanagement
C) accessjtojcapital
D) accessjtojqualifiedjlaborjpoolj
Answer:j A
Diff:j2
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Conceptual
AACSB:j Applicationjofjknowledge

, 3) Ajwell-established,jlarge,jBrazil-
basedjMNEjwilljprobablyjbejmostjadverselyjaffectedjbyjwhichjofjthejfollowingjelementsjofjfir
mjvalue?
A) anjopenjmarketplace
B) high-qualityjstrategicjmanagement
C) accessjtojcapital
D) accessjtojqualifiedjlaborjpoolj
Answer:j C
Diff:j2
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Conceptual
AACSB:j Applicationjofjknowledge

4) Ajmajorjcostjavoidedjinjthejeurocurrencyjmarketsjisjthejpaymentjofjdepositjinsurancejfees,jsu
chjas:
A) FederaljDepositjInsurancejCorporationj-jFDIC
B) OfficejofjthejComptrollerjofjthejCurrencyj-jOCC
C) InternationaljMonetaryjFundj-jIMF
D) WorldjBankj-
jWBjAnswer:j A
Diff:j2
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Recognition
AACSB:j Applicationjofjknowledge

5) Thejmodernjeurocurrencyjmarketjwasjbornjshortlyjafter:
A) WorldjWarjII
B) WorldjWarjI
C) KoreanjWar
D) BosnianjWar
jAnswer:j Aj Dif
f:j1
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Recognition
AACSB:j Applicationjofjknowledge

6) Thejreferencejratejofjinterestjinjthejeurocurrencyjmarketjisjthe:
A) LondonjInterbankjOfferedjRate
B) Primajrate
C) Federaljfundsjrate
D) Treasuryjratej
Answer:j Aj Diff
:j1
L.O.:j 1.2jThejGlobaljFinancialjMarketplacejSkil
l:j Recognition
AACSB:j Applicationjofjknowledge