@PROFDOCDIGITALLIBRARIES
TEST BANK
International Financial Management
Jeff Madura
14th Edition
Chapters 1-21 (Questions with Verified Answers)
PR
O
FD
O
C
,@PROFDOCDIGITALLIBRARIES
Table of Contents
Part I: The International Financial Environment
1. Multinational Financial Management: An Overview
2. International Flow of Funds
3. International Financial Markets
4. Exchange Rate Determination
5. Currency Derivatives
Part II: Exchange Rate Behavior
6. Government Influence on Exchange Rates
7. International Arbitrage and Interest Rate Parity
8. Relationships among Inflation, Interest Rates, and Exchange Rates
Part III: Exchange Rate Risk Management
9. Forecasting Exchange Rates
10. Measuring Exposure to Exchange Rate Fluctuations
11. Managing Transaction Exposure
12. Managing Economic Exposure and Translation Exposure
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Part IV: Long-Term Asset and Liability Management
13. Direct Foreign Investment
14. Multinational Capital Budgeting
15. International Corporate Governance and Control
16. Country Risk Analysis
17. Multinational Capital Structure and Cost of Capital
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18. Long-Term Debt Financing
Part V: Short-Term Asset and Liability Management
19. Financing International Trade
20. Short-Term Financing
FD
21. International Cash Management
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C
,@PROFDOCDIGITALLIBRARIES
Chapter 1—Multinational Financial Management
1. The commonly accepted goal of the MNC is to:
a. maximize short-term earnings.
b. maximize shareholder wealth.
c. minimize risk.
d. A and C.
e. maximize international sales.
ANS: B PTS: 1
2. With regard to corporate goals, an MNC is mostly concerned with maximizing , and a purely domestic firm is mostly
concerned with maximizing .
a. shareholder wealth; short-term earnings
b. shareholder wealth; shareholder wealth
c. short-term earnings; sales volume
d. short-term earnings; shareholder wealth
PR
ANS: B PTS: 1
3. For the MNC, agency costs are typically:
a. non-existent.
b. larger than agency costs of a small purely domestic firm.
c. smaller than agency costs of a small purely domestic firm.
O
d. the same as agency costs of a small purely domestic firm.
ANS: B PTS: 1
FD
4. Which of the following could reduce agency problems for an MNC?
a. stock options as managerial compensation.
b. hostile takeover threat.
c. investor monitoring.
d. all of the above are forms of corporate control that could reduce agency problems for an
O
MNC.
C
,@PROFDOCDIGITALLIBRARIES
ANS: D PTS: 1
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign to and when foreign
currencies denominating these cash flows are expected to .
a. decrease; appreciate
b. increase; appreciate
c. decrease; depreciate
d. increase; depreciate
ANS: B PTS: 1
PR
O
FD
O
C
TEST BANK
International Financial Management
Jeff Madura
14th Edition
Chapters 1-21 (Questions with Verified Answers)
PR
O
FD
O
C
,@PROFDOCDIGITALLIBRARIES
Table of Contents
Part I: The International Financial Environment
1. Multinational Financial Management: An Overview
2. International Flow of Funds
3. International Financial Markets
4. Exchange Rate Determination
5. Currency Derivatives
Part II: Exchange Rate Behavior
6. Government Influence on Exchange Rates
7. International Arbitrage and Interest Rate Parity
8. Relationships among Inflation, Interest Rates, and Exchange Rates
Part III: Exchange Rate Risk Management
9. Forecasting Exchange Rates
10. Measuring Exposure to Exchange Rate Fluctuations
11. Managing Transaction Exposure
12. Managing Economic Exposure and Translation Exposure
PR
Part IV: Long-Term Asset and Liability Management
13. Direct Foreign Investment
14. Multinational Capital Budgeting
15. International Corporate Governance and Control
16. Country Risk Analysis
17. Multinational Capital Structure and Cost of Capital
O
18. Long-Term Debt Financing
Part V: Short-Term Asset and Liability Management
19. Financing International Trade
20. Short-Term Financing
FD
21. International Cash Management
O
C
,@PROFDOCDIGITALLIBRARIES
Chapter 1—Multinational Financial Management
1. The commonly accepted goal of the MNC is to:
a. maximize short-term earnings.
b. maximize shareholder wealth.
c. minimize risk.
d. A and C.
e. maximize international sales.
ANS: B PTS: 1
2. With regard to corporate goals, an MNC is mostly concerned with maximizing , and a purely domestic firm is mostly
concerned with maximizing .
a. shareholder wealth; short-term earnings
b. shareholder wealth; shareholder wealth
c. short-term earnings; sales volume
d. short-term earnings; shareholder wealth
PR
ANS: B PTS: 1
3. For the MNC, agency costs are typically:
a. non-existent.
b. larger than agency costs of a small purely domestic firm.
c. smaller than agency costs of a small purely domestic firm.
O
d. the same as agency costs of a small purely domestic firm.
ANS: B PTS: 1
FD
4. Which of the following could reduce agency problems for an MNC?
a. stock options as managerial compensation.
b. hostile takeover threat.
c. investor monitoring.
d. all of the above are forms of corporate control that could reduce agency problems for an
O
MNC.
C
,@PROFDOCDIGITALLIBRARIES
ANS: D PTS: 1
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign to and when foreign
currencies denominating these cash flows are expected to .
a. decrease; appreciate
b. increase; appreciate
c. decrease; depreciate
d. increase; depreciate
ANS: B PTS: 1
PR
O
FD
O
C
