TEST BANK and SOLUTION MANUAL For International
Business 3rd Edition by Michael Geringer, Jeanne
McNett
a capital market brings together those who want to invest money and those who
want to borrow money - ANSWER: true
an investor purchases the right to receive a specified fixed stream of income from
the corporation when he purchases a share of stock - ANSWER: false
debt loans include cash loans from banks and funds raised from the sale of corporate
bonds to investors - ANSWER: true
the cost of capital is the different between cost of inputs and outputs - ANSWER:
false
by using the global capital market, investors have a much wider range of investment
opportunities than in a purely domestic capital market - ANSWER: true
investors can reduce the level of risk. by diversifying a portfolio internationally -
ANSWER: true
the relatively low correlation between the movements of stock markets in different
countries indicates that countries face different economic conditions - ANSWER: true
using floating exchange rates will help countries reduce the risk of investing in
foreign assets - ANSWER: false
financial services is an information intensive industry - ANSWER: true
global capital markets often lack info about the fundamental quality of foreign
investments - ANSWER: true
economist Martin Feldstein has coined the term "hot money" to pertain to long term
capital flows - ANSWER: false
Eurocurrency can be created anywhere in the world - ANSWER: true
banks charge borrowers a lower interest rate on Eurocurrency borrowings than for
borrowings in the home currency - ANSWER: true
, the spread between the Eurocurrency deposit rate and the Eurocurrency lending
rate is more than the spread between the domestic deposit and lending rates -
ANSWER: false
governments give banks less freedom when they deal in foreign currencies -
ANSWER: false
depositors are not protected against bank failures in the Eurocurrency market -
ANSWER: true
foreign bonds are sold within the borrowers country and are denominated in the
currency of the country in which they are issued - ANSWER: false
eurobonds are usually offered to residents of the country in whose currency they are
denominated - ANSWER: false
government. limitations are more severe for securities denominated in foreign
currencies than for domestic securities - ANSWER: false
eurobonds fall within the regulatory domain of European economic community -
ANSWER: false
historically, substantial regulatory barriers separated national equity markets from
each other - ANSWER: true
a Chinese firm borrows 1 million US dollars from an American bank. the cost of this
loan will be less if US dollar appreciates against the Chinese currency - ANSWER:
false
the forward exchange market does not provide adequate coverage for Long term
borrowings - ANSWER: true
Market makers are the financial service companies that connect investors and
borrowers. Those who want to borrow money typically include - ANSWER:
governments
_____ perform a direct. connection function in capital markets - ANSWER:
investment banks
A _____ requires a corporation to repay a predetermined portion of the loan amount
at regular intervals regardless of how much profit it is making - ANSWER: debt loan
the liquidity of the market is ______ in a purely domestic capital market - ANSWER:
limited
the cost of capital is - ANSWER: higher in purely domestic capital market than in a
global market
Business 3rd Edition by Michael Geringer, Jeanne
McNett
a capital market brings together those who want to invest money and those who
want to borrow money - ANSWER: true
an investor purchases the right to receive a specified fixed stream of income from
the corporation when he purchases a share of stock - ANSWER: false
debt loans include cash loans from banks and funds raised from the sale of corporate
bonds to investors - ANSWER: true
the cost of capital is the different between cost of inputs and outputs - ANSWER:
false
by using the global capital market, investors have a much wider range of investment
opportunities than in a purely domestic capital market - ANSWER: true
investors can reduce the level of risk. by diversifying a portfolio internationally -
ANSWER: true
the relatively low correlation between the movements of stock markets in different
countries indicates that countries face different economic conditions - ANSWER: true
using floating exchange rates will help countries reduce the risk of investing in
foreign assets - ANSWER: false
financial services is an information intensive industry - ANSWER: true
global capital markets often lack info about the fundamental quality of foreign
investments - ANSWER: true
economist Martin Feldstein has coined the term "hot money" to pertain to long term
capital flows - ANSWER: false
Eurocurrency can be created anywhere in the world - ANSWER: true
banks charge borrowers a lower interest rate on Eurocurrency borrowings than for
borrowings in the home currency - ANSWER: true
, the spread between the Eurocurrency deposit rate and the Eurocurrency lending
rate is more than the spread between the domestic deposit and lending rates -
ANSWER: false
governments give banks less freedom when they deal in foreign currencies -
ANSWER: false
depositors are not protected against bank failures in the Eurocurrency market -
ANSWER: true
foreign bonds are sold within the borrowers country and are denominated in the
currency of the country in which they are issued - ANSWER: false
eurobonds are usually offered to residents of the country in whose currency they are
denominated - ANSWER: false
government. limitations are more severe for securities denominated in foreign
currencies than for domestic securities - ANSWER: false
eurobonds fall within the regulatory domain of European economic community -
ANSWER: false
historically, substantial regulatory barriers separated national equity markets from
each other - ANSWER: true
a Chinese firm borrows 1 million US dollars from an American bank. the cost of this
loan will be less if US dollar appreciates against the Chinese currency - ANSWER:
false
the forward exchange market does not provide adequate coverage for Long term
borrowings - ANSWER: true
Market makers are the financial service companies that connect investors and
borrowers. Those who want to borrow money typically include - ANSWER:
governments
_____ perform a direct. connection function in capital markets - ANSWER:
investment banks
A _____ requires a corporation to repay a predetermined portion of the loan amount
at regular intervals regardless of how much profit it is making - ANSWER: debt loan
the liquidity of the market is ______ in a purely domestic capital market - ANSWER:
limited
the cost of capital is - ANSWER: higher in purely domestic capital market than in a
global market
