TestBank t
For
MultinationalBusinessFinance
FourteenthEdition GlobalEditio j
n
RodrigoJ.Hernandez
RadfordUniversity
DavidK.Eiteman
UniversityofCalifornia,LosAngeles
j j j
ArthurI.Stonehill
OregonStateUniversityandUniversityofHawaiiat Manoa t
MichaelH.Moffett
Copyrightj 2016tPearsontEducation,j Ltd.
,iij Contents
ThunderbirdSchoolofGlobalManagement at
j j j j j j
ArizonaStateUniversity
j j
MultinationaljBusinessjFinance,j14e,jGlobaljEditionj(Eiteman)
Chapterj1j MultinationaljFinancialjManagement:jOpportunitiesjandjChallenges
1.1 FinancialjGlobalizationtandjRisk
1) Financialjglobalizationhasnotresultedin:
A) tcontinuingtimbalancestofj balanceofpayments.
B) anj j increaseinquantityandspeedintheflowofcapitalacrosstthetworld.
C) capitalmarketslessopenandtadecreaseinttheavailabilityofcapitaljformanyorganizations.j D
)tuniformtwaystofjownership,jcontrol,jandgovernanceacrosstthetworld.
Answer:jDj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandjRiskjS
kill:jRecognition
AACSB:jApplicationofknowledge
2) BRICsisatermtusedininternationaltfinancetorepresentassetsthatareconsideredtobeinexpensivejanjdstu
rdy,jbutfundamentallyunsoundandandincapabletofcopingwithjtheupheavalsnowapparentjinjinterjnation
altfinancialmarkets.
Answer:jFALSEj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandjRiskjS
kill:jRecognition
AACSB:jApplicationofknowledge
3) Multinationalenterprises(MNEs)jarejfirms,jbothforprofitcompaniesandnot-for-
j profittorganizations,jthathaveoperationsinmorethantonecountry,jandconducttheirbusinessthroughtforj e
ignsubsidiaries,jbranches,jorjointventurestwithhostcountryfirms.
Answer:jTRUEj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandtRiskj
Skill:jRecognition
AACSB:jApplicationofknowledge
4) Ownership,jcontrol,jandgovernancechangesjradicallyacrosstthetworld.jThepubliclytradedcompanyijst
nottthetdominantjglobalbusinessorganization—thetprivatelyheldtorfamily-
ownedbusinessisttheprevalentstructure—
andtheirgoalsandmeasuresjofperformancetdifferdramatically.jAnsw
er:jTRUE
Diff:j1
L.O.:j1.1jFinancialjGlobalizationjandtRisk
,Skill:jRecognition
AACSB:jApplicationofknowledge
Copyrightj 2016tPearsontEducation,j Ltd.
, ivtj Contents
5) Thethemedominatingglobalfinancialmarketsj todayisthetcomplexityofrisksj associatedwithfinanciaj lj
globalization.jListjandexplainexamplesofthecomplexityofrisksaffectingtheleadingtandtmanagingofjmul
tinationaljfirmsintthetrapidlymovingmarketplace.
Answer:j Thefollowingistasamplingtofthiscomplexityofrisks:j1)jThetinternationaljmonetarysystemisujnd
erconstantscrutiny.jTherisetofthejChineserenminbiischangingtmuchoftheworld'soutlookoncurrenjcyexc
hange,jreservecurrencies,jandtthetrolesjofthetdollarandtheeuro.j2)jLargefiscaldeficits,jincludingtjhecurre
ntteurozonecrisis,jplaguemostjofthetmajortradingcountriesoftheworld,jcomplicatingfiscalandtj monetary
policies,jandtultimately,jinterestjratesjandjexchangerates.j3)jManycountriesexperiencetcontinujingtbalance
oftpaymentsjimbalances,jandinsomecases,jdangerouslylargedeficitstandsurpluses.j4)jOwnejrship,jcontrol
,jandgovernancetvaryradicallyacrosstheworld.j5)jGlobaljcapitalmarketsthatnormallyprojvidetthemeanst
otlowerafirm'stcosttofcapital,jandevenmorecritically,jincreasetheavailabilityofcapital,jhavetinmanyways
shrunktintsizetandhavebecomelessopenandtaccessiblettomanyoftheworld'sorganizjations.j6)jFinancialglob
alizationjhastresultedjintheebbandflowofcapitaljinandouttofbothindustrialjandjemergingtmarkets,jgreatly
complicatingtfinancialmanagement.
Diff:j1
L.O.:j1.1jFinancialjGlobalizationjandtRiskjS
kill:jConceptual
AACSB:jApplicationofknowledge
1.2 ThejGlobaljFinancialjMarketplace
1) Awell-established,jlargejU.S.-
basedjMNEwillprobablyjNOTjbeablettoovercomewhichtofthefollowingobstaclesttomaximizingfirmvj
alue?
A) tanjopenmarketplace
B) hightqualitystrategicmanagement
C) accesstocapital
D) tnonejoftheabovej
Answer:jD
Diff:j1
L.O.:j1.2jThejGlobaljFinancialjMarketplacejS
kill:jConceptual
AACSB:jApplicationofknowledge
2) Awell-established,jlargejChina-
basedj MNEwillprobablybemost j adverselyaffectedtbywhichofthefollowingelementsoffirmtvalue?
A) tanjopenmarketplace
B) high-qualitystrategicmanagement
C) accesstocapital
D) taccessttojqualifiedjlaborpoolj
Answer:jA
Diff:j2
L.O.:j1.2jThejGlobaljFinancialjMarketplacejS
kill:jConceptual
AACSB:jApplicationofknowledge
For
MultinationalBusinessFinance
FourteenthEdition GlobalEditio j
n
RodrigoJ.Hernandez
RadfordUniversity
DavidK.Eiteman
UniversityofCalifornia,LosAngeles
j j j
ArthurI.Stonehill
OregonStateUniversityandUniversityofHawaiiat Manoa t
MichaelH.Moffett
Copyrightj 2016tPearsontEducation,j Ltd.
,iij Contents
ThunderbirdSchoolofGlobalManagement at
j j j j j j
ArizonaStateUniversity
j j
MultinationaljBusinessjFinance,j14e,jGlobaljEditionj(Eiteman)
Chapterj1j MultinationaljFinancialjManagement:jOpportunitiesjandjChallenges
1.1 FinancialjGlobalizationtandjRisk
1) Financialjglobalizationhasnotresultedin:
A) tcontinuingtimbalancestofj balanceofpayments.
B) anj j increaseinquantityandspeedintheflowofcapitalacrosstthetworld.
C) capitalmarketslessopenandtadecreaseinttheavailabilityofcapitaljformanyorganizations.j D
)tuniformtwaystofjownership,jcontrol,jandgovernanceacrosstthetworld.
Answer:jDj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandjRiskjS
kill:jRecognition
AACSB:jApplicationofknowledge
2) BRICsisatermtusedininternationaltfinancetorepresentassetsthatareconsideredtobeinexpensivejanjdstu
rdy,jbutfundamentallyunsoundandandincapabletofcopingwithjtheupheavalsnowapparentjinjinterjnation
altfinancialmarkets.
Answer:jFALSEj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandjRiskjS
kill:jRecognition
AACSB:jApplicationofknowledge
3) Multinationalenterprises(MNEs)jarejfirms,jbothforprofitcompaniesandnot-for-
j profittorganizations,jthathaveoperationsinmorethantonecountry,jandconducttheirbusinessthroughtforj e
ignsubsidiaries,jbranches,jorjointventurestwithhostcountryfirms.
Answer:jTRUEj
Diff:1j
L.O.:j1.1jFinancialjGlobalizationjandtRiskj
Skill:jRecognition
AACSB:jApplicationofknowledge
4) Ownership,jcontrol,jandgovernancechangesjradicallyacrosstthetworld.jThepubliclytradedcompanyijst
nottthetdominantjglobalbusinessorganization—thetprivatelyheldtorfamily-
ownedbusinessisttheprevalentstructure—
andtheirgoalsandmeasuresjofperformancetdifferdramatically.jAnsw
er:jTRUE
Diff:j1
L.O.:j1.1jFinancialjGlobalizationjandtRisk
,Skill:jRecognition
AACSB:jApplicationofknowledge
Copyrightj 2016tPearsontEducation,j Ltd.
, ivtj Contents
5) Thethemedominatingglobalfinancialmarketsj todayisthetcomplexityofrisksj associatedwithfinanciaj lj
globalization.jListjandexplainexamplesofthecomplexityofrisksaffectingtheleadingtandtmanagingofjmul
tinationaljfirmsintthetrapidlymovingmarketplace.
Answer:j Thefollowingistasamplingtofthiscomplexityofrisks:j1)jThetinternationaljmonetarysystemisujnd
erconstantscrutiny.jTherisetofthejChineserenminbiischangingtmuchoftheworld'soutlookoncurrenjcyexc
hange,jreservecurrencies,jandtthetrolesjofthetdollarandtheeuro.j2)jLargefiscaldeficits,jincludingtjhecurre
ntteurozonecrisis,jplaguemostjofthetmajortradingcountriesoftheworld,jcomplicatingfiscalandtj monetary
policies,jandtultimately,jinterestjratesjandjexchangerates.j3)jManycountriesexperiencetcontinujingtbalance
oftpaymentsjimbalances,jandinsomecases,jdangerouslylargedeficitstandsurpluses.j4)jOwnejrship,jcontrol
,jandgovernancetvaryradicallyacrosstheworld.j5)jGlobaljcapitalmarketsthatnormallyprojvidetthemeanst
otlowerafirm'stcosttofcapital,jandevenmorecritically,jincreasetheavailabilityofcapital,jhavetinmanyways
shrunktintsizetandhavebecomelessopenandtaccessiblettomanyoftheworld'sorganizjations.j6)jFinancialglob
alizationjhastresultedjintheebbandflowofcapitaljinandouttofbothindustrialjandjemergingtmarkets,jgreatly
complicatingtfinancialmanagement.
Diff:j1
L.O.:j1.1jFinancialjGlobalizationjandtRiskjS
kill:jConceptual
AACSB:jApplicationofknowledge
1.2 ThejGlobaljFinancialjMarketplace
1) Awell-established,jlargejU.S.-
basedjMNEwillprobablyjNOTjbeablettoovercomewhichtofthefollowingobstaclesttomaximizingfirmvj
alue?
A) tanjopenmarketplace
B) hightqualitystrategicmanagement
C) accesstocapital
D) tnonejoftheabovej
Answer:jD
Diff:j1
L.O.:j1.2jThejGlobaljFinancialjMarketplacejS
kill:jConceptual
AACSB:jApplicationofknowledge
2) Awell-established,jlargejChina-
basedj MNEwillprobablybemost j adverselyaffectedtbywhichofthefollowingelementsoffirmtvalue?
A) tanjopenmarketplace
B) high-qualitystrategicmanagement
C) accesstocapital
D) taccessttojqualifiedjlaborpoolj
Answer:jA
Diff:j2
L.O.:j1.2jThejGlobaljFinancialjMarketplacejS
kill:jConceptual
AACSB:jApplicationofknowledge
