Solution Manual For International Financial Management
14th Edition by Jeff Madura
True or False: 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
True or False: 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
The modern eurocurrency market was born shortly after: - ANSWER: World War II
Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
a) The Eurocurrency is a wholesale market.
b) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an
unsecured basis.
c)Borrowers are usually large corporations or government entities.
d) Eurocurrency loans are secured loans. - ANSWER: D. Eurocurrency loans are
secured loans
True or False: Comparative advantage shifts over time as less developed countries
become more developed and realize their latent opportunities. - ANSWER: True
Which of the following is NOT a reason governments interfere with comparative
advantage?
a. All are reasons governments interfere with comparative advantage.
b. national self-sufficiency in defense-related industries
c. Governments promote economic development.
d. Governments attempt to achieve full employment. - ANSWER: A. All are reasons
governments interfere with comparative advantage.
True or False: For firms competing in a world characterized by oligopolistic
competition, strategic motives can be subdivided into proactive and defensive
investments. - ANSWER: True
True or False: Today it is widely assumed that there are NO LIMITS to financial
globalization. - ANSWER: False
True or False: 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- BRIC is an acronym that refers to the countries of Brazil,
Russia, India and China
Financial globalization has not resulted in:
a. an increase in quantity and speed in the flow of capital across the world.
b. continuing imbalances of balance of payments.
c. capital markets less open and a decrease in the availability of capital for many
organizations.
d. uniform ways of ownership, control, and governance across the world. - ANSWER:
d. uniform ways of ownership, control, and governance across the world.
True or False: A eurodollar deposit is a demand deposit. - ANSWER: False
A well-established, large U.S.-based MNE will probably NOT be able to overcome
which of the following obstacles to maximizing firm value?
Select one:
a. an open market place
b. access to capital
c. high quality strategic management
d. None of these - ANSWER: d. None of these
True or False: The theory of comparative advantage owes it origins to Ben Bernanke
as described in his book The Wealth of Bankers. - ANSWER: False- The theory of
comparative advantage owes its origins to Adam Smith as described in his book The
Wealth of Nations
The concept of relative comparative advantage's origins lie in:
Select one:
a. Adam Smith's work of 1776.
b. The Wealth of Nations book, published in 1887.
c. David Ricardo's work of 1776.
d. On the Principles of Political Economy and Taxation book, published in 1817. -
ANSWER: d. On the Principles of Political Economy and Taxation book, published in
1817.
True or False: A number of financial instruments that are used in domestic financial
management have been modified for use in international financial management.
Examples are foreign currency options and futures, interest rate and currency swaps,
and letters of credit. - ANSWER: True
True or False: Domestic firms do not have foreign exchange risk. - ANSWER: False-
Domestic firms could have foreign exchange risks from imports and/or exports.
14th Edition by Jeff Madura
True or False: 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
True or False: 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
The modern eurocurrency market was born shortly after: - ANSWER: World War II
Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
a) The Eurocurrency is a wholesale market.
b) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an
unsecured basis.
c)Borrowers are usually large corporations or government entities.
d) Eurocurrency loans are secured loans. - ANSWER: D. Eurocurrency loans are
secured loans
True or False: Comparative advantage shifts over time as less developed countries
become more developed and realize their latent opportunities. - ANSWER: True
Which of the following is NOT a reason governments interfere with comparative
advantage?
a. All are reasons governments interfere with comparative advantage.
b. national self-sufficiency in defense-related industries
c. Governments promote economic development.
d. Governments attempt to achieve full employment. - ANSWER: A. All are reasons
governments interfere with comparative advantage.
True or False: For firms competing in a world characterized by oligopolistic
competition, strategic motives can be subdivided into proactive and defensive
investments. - ANSWER: True
True or False: Today it is widely assumed that there are NO LIMITS to financial
globalization. - ANSWER: False
True or False: 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- BRIC is an acronym that refers to the countries of Brazil,
Russia, India and China
Financial globalization has not resulted in:
a. an increase in quantity and speed in the flow of capital across the world.
b. continuing imbalances of balance of payments.
c. capital markets less open and a decrease in the availability of capital for many
organizations.
d. uniform ways of ownership, control, and governance across the world. - ANSWER:
d. uniform ways of ownership, control, and governance across the world.
True or False: A eurodollar deposit is a demand deposit. - ANSWER: False
A well-established, large U.S.-based MNE will probably NOT be able to overcome
which of the following obstacles to maximizing firm value?
Select one:
a. an open market place
b. access to capital
c. high quality strategic management
d. None of these - ANSWER: d. None of these
True or False: The theory of comparative advantage owes it origins to Ben Bernanke
as described in his book The Wealth of Bankers. - ANSWER: False- The theory of
comparative advantage owes its origins to Adam Smith as described in his book The
Wealth of Nations
The concept of relative comparative advantage's origins lie in:
Select one:
a. Adam Smith's work of 1776.
b. The Wealth of Nations book, published in 1887.
c. David Ricardo's work of 1776.
d. On the Principles of Political Economy and Taxation book, published in 1817. -
ANSWER: d. On the Principles of Political Economy and Taxation book, published in
1817.
True or False: A number of financial instruments that are used in domestic financial
management have been modified for use in international financial management.
Examples are foreign currency options and futures, interest rate and currency swaps,
and letters of credit. - ANSWER: True
True or False: Domestic firms do not have foreign exchange risk. - ANSWER: False-
Domestic firms could have foreign exchange risks from imports and/or exports.
