Multinational Business Finance, 13e (Eiteman/Stonehill/Moffett)
Chapter 1 Current Multinational Challenges and the Global Economy
1.1 Financial Globalization and Risk
True/False
1) BRICs is a term used in international finance to represent assets that are considered to be
inexpensive and sturdy, but fundamentally unsound and and incapable of coping with the
upheavals now apparent in international financial markets.
Answer: FALSE
Diff: 1
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
2) Multinational enterprises (MNEs) are firms, both for profit companies and not-for-profit
organizations, that have operations in more than one country, and conduct their business through
foreign subsidiaries,
branches, or joint ventures with host country firms.
Answer: TRUE
Diff: 1
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
3) Ownership, control, and governance changes radically across the world. The publicly traded
company is not the dominant global business organization—the privately held or family-owned
business is the prevalent structure—and their goals and measures of performance differ
dramatically.
Answer: TRUE
Diff: 2
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
1.2 The Global Financial Marketplace
Multiple Choice
1) A well-established, large U.S.-based MNE will probably NOT be able to overcome which of
the following obstacles to maximizing firm value?
A) an open market place
B) high quality strategic management
C) access to capital
D) none of the above
Answer: D
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
1
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, 2) A well-established, large China-based MNE will probably be most adversely affected by
which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
Answer: A
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Conceptual
3) A well-established, large, Brazil-based MNE will probably be most adversely affected by
which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
Answer: C
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Conceptual
True/False
1) Comparative advantage is one of the underlying principles driving the growth of global
business.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
2) Your authors suggest that one way to characterize the global financial marketplace is through
its assets, institutions, and linkages.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
3) Eurocurrencies are domestic currencies of one country on deposit in a second country.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
2
Copyright © 2013 Pearson Education, Inc.
Chapter 1 Current Multinational Challenges and the Global Economy
1.1 Financial Globalization and Risk
True/False
1) BRICs is a term used in international finance to represent assets that are considered to be
inexpensive and sturdy, but fundamentally unsound and and incapable of coping with the
upheavals now apparent in international financial markets.
Answer: FALSE
Diff: 1
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
2) Multinational enterprises (MNEs) are firms, both for profit companies and not-for-profit
organizations, that have operations in more than one country, and conduct their business through
foreign subsidiaries,
branches, or joint ventures with host country firms.
Answer: TRUE
Diff: 1
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
3) Ownership, control, and governance changes radically across the world. The publicly traded
company is not the dominant global business organization—the privately held or family-owned
business is the prevalent structure—and their goals and measures of performance differ
dramatically.
Answer: TRUE
Diff: 2
Topic: 1.1 Financial Globalization and Risk
Skill: Recognition
1.2 The Global Financial Marketplace
Multiple Choice
1) A well-established, large U.S.-based MNE will probably NOT be able to overcome which of
the following obstacles to maximizing firm value?
A) an open market place
B) high quality strategic management
C) access to capital
D) none of the above
Answer: D
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
1
Copyright © 2013 Pearson Education, Inc.
, 2) A well-established, large China-based MNE will probably be most adversely affected by
which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
Answer: A
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Conceptual
3) A well-established, large, Brazil-based MNE will probably be most adversely affected by
which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
Answer: C
Diff: 2
Topic: 1.2 The Global Financial Marketplace
Skill: Conceptual
True/False
1) Comparative advantage is one of the underlying principles driving the growth of global
business.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
2) Your authors suggest that one way to characterize the global financial marketplace is through
its assets, institutions, and linkages.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
3) Eurocurrencies are domestic currencies of one country on deposit in a second country.
Answer: TRUE
Diff: 1
Topic: 1.2 The Global Financial Marketplace
Skill: Recognition
2
Copyright © 2013 Pearson Education, Inc.
