Solutions Manual with Test Bank Multinational Business Finance 15th Edition By David Eiteman, Arthur Stonehill, Michael Moffett

Multinational Business Finance, 15e (Eiteman/Stonehill/Moffett)
Chapter 1 Multinational Financial Management: Opportunities and Challenges

1.1 The Global Financial Marketplace

1) Financial globalization has NOT resulted in:
A) continuing imbalances of balance of payments.
B) an increase in quantity and speed in the flow of capital across the world.
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
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

2) Financial globalization has NOT resulted in:
A) continuing imbalances of balance of payments.
B) an increase in quantity and speed in the flow of capital across the world.
C) capital markets more open and an increase in the availability of capital for many
organizations.
D) an increase in the flow of capital into and out of industrialized markets.
Answer: C
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

3) The institutions of global finance are:
A) central banks.
B) commercial banks.
C) investment banks.
D) All of the above are institutions of global finance.
Answer: D
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

,4) 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 marketplace
B) high-quality strategic management
C) access to capital
D) none of the above
Answer: D
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Conceptual
AACSB: Application of knowledge

5) 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
L.O.: 1.1 The Global Financial Marketplace
Skill: Conceptual
AACSB: Application of knowledge

6) 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
L.O.: 1.1 The Global Financial Marketplace
Skill: Conceptual
AACSB: Application of knowledge

7) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees,
such as:
A) Federal Deposit Insurance Corporation — FDIC.
B) Office of the Comptroller of the Currency — OCC.
C) International Monetary Fund — IMF.
D) World Bank — WB.
Answer: A
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

,8) The modern eurocurrency market was born shortly after:
A) World War II.
B) World War I.
C) Korean War.
D) Bosnian War.
Answer: A
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

9) The reference rate of interest in the eurocurrency market is the:
A) London Interbank Offered Rate.
B) Prima rate.
C) Federal funds rate.
D) Treasury rate.
Answer: A
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

10) Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
A) Eurocurrency loans are secured loans.
B) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecured
basis.
C) The eurocurrency is a wholesale market.
D) Borrowers are usually large corporations or government entities.
Answer: A
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

11) 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
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

, 12) 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: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

13) The securities at the heart of the global capital markets are the Mortgage Backed Securities
(MBS). The health and security of the global financial system rely on the quality of these
securities.
Answer: FALSE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

14) The U.S. dollar has been the focal point of currency trading since the 1940s. As a result,
most of the world's currencies are quoted against the dollar.
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

15) Several of the world's major currency exchange rates follow a specific quotation convention
that is the result of tradition and history. The exchange rate between the U.S. dollar and the euro
is always quoted as "dollars per euro."
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge

16) Several of the world's major currency exchange rates follow a specific quotation convention
that is the result of tradition and history. The exchange rate between the U.S. dollar and the
British pound is always quoted as "dollars per pound."
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge