Multinational Business Finance 16e Test Bank & Solutions | 2025 Exam Prep (Chapters 1-8)

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MultinationallBusinesslFinance,l16el(Eiteman/Stonehill/Moffett)
Chapterl1 MultinationallFinanciallManagement:lOpportunitieslandlChallenges

1.1 ThelGloballFinanciallMarketplace

1) FinanciallglobalizationlhaslNOTlresultedlin:
A) continuinglimbalancesloflbalanceloflpayments.
B) anlincreaselinlquantitylandlspeedlinlthelflowloflcapitallacrosslthelworld.
C) capitallmarketsllesslopenlandlaldecreaselinlthelavailabilityloflcapitallforlmanylorganizations.
D) uniformlwaysloflownership,lcontrol,landlgovernancelacrosslthelworld. l b:


Answer:lD
Diff:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

2) FinanciallglobalizationlhaslNOTlresultedlin:
A) continuinglimbalancesloflbalanceloflpayments.
B) anlincreaselinlquantitylandlspeedlinlthelflowloflcapitallacrosslthelworld.
C) capitallmarketslmorelopenlandlanlincreaselinlthelavailabilityloflcapitallforlmanylor
ganizations.
D) anlincreaselinlthelflowloflcapitallintolandloutloflindustrializedlmarkets
. Answer:lCl
b:


Diff:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

3) Thelinstitutionsloflgloballfinancelare:
A) centrallbanks.
B) commerciallbanks.
C) investmentlbanks.
D) Allloflthelabovelarelinstitutionsloflgloballfinance
. Answer:lDl
b:


Diff:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge




1
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4) Almajorlcostlavoidedlinltheleurocurrencylmarketslislthelpaymentlofldepositlinsurancelfees
, suchl as:
b:


A) FederallDepositlInsurancelCorporationl—lFDIC.
B) OfficeloflthelComptrollerloflthelCurrencyl— OCC.
b:


C) InternationallMonetarylFundl—lIMF.
D) WorldlBankl—
lWB. Answer:lAlD
b:


iff:l2
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

5) Thelmodernleurocurrencylmarketlwaslbornlshortlylafter:
A) WorldlWarlII.
B) WorldlWarlI.
C) KoreanlWar.
D) BosnianlWar. b:


Answer:
AlDifl
f:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

6) Thelreferencelrateloflinterestlinltheleurocurrencylmarketlislthe:
A) LondonlInterbanklOfferedlRate.
B) Primalrate.
C) Federallfundslrate.
D) Treasurylrate
. Answer:
b:


AlDifl
f:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

7) InterestlspreadslinltheleurocurrencylmarketlarelsmalllforlmanylreasonslEXCEPT:
A) Eurocurrencylloanslarelsecuredlloans.
B) Eurocurrencyldepositslandlloanslarelmadelinlamountslofl$500,000lorlmorelonlanlunsecureld b b:


asis.
C) Theleurocurrencylislalwholesalelmarket.
D) Borrowerslarelusuallyllargelcorporationslorlgovernmentlentities. l b:


Answer:lA
Diff:l2
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

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8) Multinationallenterprisesl(MNEs)larelfirms,lbothlfor-profitlcompanieslandlnot-for-
profitlorganizations,lthatlhaveloperationslinlmorelthanlonelcountry,landlconductltheirlbusinessltlhroug
h foreignlsubsidiaries,lbranches,lorljointlventureslwithlhostlcountrylfirms.
b:


Answer:lTRUE Diff b:


:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

9) Ownership,lcontrol,landlgovernancelchangeslradicallylacrosslthelworld.lThelpubliclyltraded l c b:


ompanylislnotltheldominantlgloballbusinesslorganization—thelprivatelylheldlorlfamily-
lowned businesslislthelprevalentlstructure—
b:


andltheirlgoalslandlmeasuresloflperformanceldifferldramatically.lAns
wer:lTRUE Diff
b:


:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

10) ThelsecuritieslatlthelheartloflthelgloballcapitallmarketslarelthelMortgagelBackedlSecuritiels ( b:


MBS).lThelhealthlandlsecurityloflthelgloballfinanciallsystemlrelylonlthelqualitylofltheselsecluritie
s.
Answer:lFALSE Dil b:


ff:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

11) ThelU.S.ldollarlhaslbeenlthelfocallpointloflcurrencyltradinglsincelthel1940s.lAslalresult
, mostloflthelworld'slcurrencieslarelquotedlagainstltheldollar.lAnswer:l
b:


TRUE Diff
b:


:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge

12) Severalloflthelworld'slmajorlcurrencylexchangelrateslfollowlalspecificlquotationlconventioln t b:


hatlislthelresultlofltraditionlandlhistory.lThelexchangelratelbetweenlthelU.S.ldollarlandltheleulro isla
b:


lwayslquotedlasl"dollarslperleuro."
Answer:lTRUE Diff b:


:l1
L.O.:l1.1lThelGloballFinanciallMarketplace Skill
b:


:l Recognition
AACSB: Applicationloflknowledge




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