Multinational Business Finance 15th Edition Eiteman Solutions Manual.pdf

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Multinationalm Businessm Finance,m 16em (Eiteman/Stonehill/Moffett)
Chapterm1 MultinationalmFinancialmManagement:mOpportunitiesmandmChallenges

1.1 ThemGlobalmFinancialmMarketplace

1) FinancialmglobalizationmhasmNOTmresulted min:
A) continuingmimbalancesmof mbalancemof mpayments.
B) anmincreaseminmquantitymand mspeed minmthemflow mof mcapitalmacrossmthemworld.
C) capitalmmarketsmlessmopenmand mamdecreaseminmthemavailabilitymof mcapitalmformmanymorganizations.
D) uniformmwaysmof mownership,mcontrol,mand mgovernancemacrossmthemworl
d.mAnswer:m D
Diff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

2) FinancialmglobalizationmhasmNOTmresulted min:
A) continuingmimbalancesmof mbalancemof mpayments.
B) anmincreaseminmquantitymand mspeed minmthemflow mof mcapitalmacrossmthemworld.
C) capitalmmarketsmmoremopenmand manmincreaseminmthemavailabilitymof mcapitalmformma
nymorganizations.
D) anmincreaseminmthemflow mof mcapitalmintomand mout mof mindustrialized mmarke
ts.mAnswer:m C
Diff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

3) Theminstitutionsmof mglobalmfinancemare:
A) centralmbanks.
B) commercialmbanks.
C) investment mbanks.
D) Allmof mthemabovemareminstitutionsmof mglobalmfinanc
e.mAnswer:m D
Diff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge




1
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4) A mmajormcost mavoided minmthemeurocurrencymmarketsmismthempayment mof mdeposit minsurancemfe
es,msuchmas:
A) FederalmDeposit mInsurancemCorporationm—mFDIC.
B) Officemof mthemComptrollermof mthemCurrencym—mOCC.
C) InternationalmMonetarymFund m—mIMF.
D) World mBankm—
mWB.mAnswer:m A

Diff:m2
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

5) Themmodernmeurocurrencymmarket mwasmbornmshortlymafter:
A) World mWarmII.
B) World mWarmI.
C) KoreanmWar.
D) BosnianmWar
.mAnswer:m A m D
iff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

6) Themreferencemratemof minterest minmthemeurocurrencymmarket mismthe:
A) LondonmInterbankmOffered mRate.
B) Primamrate.
C) Federalmfundsmrate.
D) Treasurymrate.
mAnswer:m A m Di

ff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

7) Interest mspreadsminmthemeurocurrencymmarket maremsmallmformmanymreasonsmEXCEPT:
A) Eurocurrencymloansmaremsecured mloans.
B) Eurocurrencymdepositsmand mloansmaremmademinmamountsmof m$500,000mormmoremonmanmunsecur
ed mbasis.
C) Themeurocurrencymismamwholesalemmarket.
D) Borrowersmaremusuallymlargemcorporationsmormgovernment mentitie
s.mAnswer:m A
Diff:m2
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge



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8) Multinationalmenterprisesm(MNEs)maremfirms,mbothmfor-profit mcompaniesmand mnot-for-
profit morganizations,mthat mhavemoperationsminmmoremthanmonemcountry,mand mconduct mtheirmbusiness
mthroughmforeignmsubsidiaries,mbranches,mormjoint mventuresmwithmhost mcountrymfirms.

Answer:m TRUEmD
iff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

9) Ownership,mcontrol,mand mgovernancemchangesmradicallymacrossmthemworld.mThempubliclymtrad
ed mcompanymismnot mthemdominant mglobalmbusinessmorganization—themprivatelymheld mormfamily-
owned mbusinessmismthemprevalent mstructure—
and mtheirmgoalsmand mmeasuresmof mperformancemdiffermdramatically.
Answer:m TRUEmD
iff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

10) Themsecuritiesmat mthemheart mof mthemglobalmcapitalmmarketsmaremthemMortgagemBacked mSecurit
iesm(MBS).mThemhealthmand msecuritymof mthemglobalmfinancialmsystemm rely monmthemqualitymof mthes
emsecurities.
Answer:m FALSEm
Diff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

11) ThemU.S.mdollarmhasmbeenmthemfocalmpoint mof mcurrencymtradingmsincemthem1940s.mAsmamres
ult,mmost mof mthemworld'smcurrenciesmaremquoted magainst mthemdollar.
Answer:m TRUEmD
iff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge

12) Severalmof mthemworld'smmajormcurrencymexchangemratesmfollow mamspecificmquotationmconventi
onmthat mismthemresult mof mtraditionmand mhistory.mThemexchangemratembetweenmthemU.S.mdollarmand mth
emeuromismalwaysmquoted masm"dollarsmpermeuro."
Answer:m TRUEmD
iff:m1
L.O.:m 1.1mThemGlobalmFinancialmMarketplacemSki
ll:m Recognition
AACSB:m m Applicationmof mknowledge




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c.