Test bank for international
financial management 9th
edition by cheol eun bruce
resnick
International Financial Management 9th Edition
,MULTIPLE CHOICE - Choose the one alternative that best
completes the statement or answers the question.
1) What major dimension sets apart international finance from domestic
finance?
A) Foreign exchange and political risks
B) Market imperfections
C) Expanded opportunity set
D) all of the options
2) An example(s) of a political risk is
A) expropriation of assets.
B) adverse change in tax rules.
C) the opposition party being elected.
D) both the expropriation of assets and adverse changes in tax rules are
correct.
3) Production of goods and services has become globalized to a large
extent as a result of
A) natural resources being depleted in one country after another.
B) skilled labor being highly mobile.
C) multinational corporations' efforts to source inputs and locate
production anywhere where costs are lower and profits higher.
D) common tastes worldwide for the same goods and services.
International Financial Management 9th Edition
,4) Recently, financial markets have become highly integrated. This
development
International Financial Management 9th Edition
, A) allows investors to diversify their portfolios internationally.
B) allows minority investors to buy and sell stocks.
C) has increased the cost of capital for firms.
D) none of the options
5) Japan has experienced large trade surpluses. Japanese investors have
responded to this by
A) liquidating their positions in stocks to buy dollar-denominated bonds.
B) investing heavily in U.S. and other foreign financial markets.
C) lobbying the U.S. government to depreciate its currency.
D) lobbying the Japanese government to allow the yen to appreciate.
6) Suppose your firm invests $100,000 in a project in Italy. At the time the
exchange rate is
$1.25 = €1.00. One year later the exchange rate is the same, but the
Italian government has expropriated your firm's assets paying only
€80,000 in compensation. This is an example of
A) exchange rate risk.
B) political risk.
C) market imperfections.
D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
International Financial Management 9th Edition
financial management 9th
edition by cheol eun bruce
resnick
International Financial Management 9th Edition
,MULTIPLE CHOICE - Choose the one alternative that best
completes the statement or answers the question.
1) What major dimension sets apart international finance from domestic
finance?
A) Foreign exchange and political risks
B) Market imperfections
C) Expanded opportunity set
D) all of the options
2) An example(s) of a political risk is
A) expropriation of assets.
B) adverse change in tax rules.
C) the opposition party being elected.
D) both the expropriation of assets and adverse changes in tax rules are
correct.
3) Production of goods and services has become globalized to a large
extent as a result of
A) natural resources being depleted in one country after another.
B) skilled labor being highly mobile.
C) multinational corporations' efforts to source inputs and locate
production anywhere where costs are lower and profits higher.
D) common tastes worldwide for the same goods and services.
International Financial Management 9th Edition
,4) Recently, financial markets have become highly integrated. This
development
International Financial Management 9th Edition
, A) allows investors to diversify their portfolios internationally.
B) allows minority investors to buy and sell stocks.
C) has increased the cost of capital for firms.
D) none of the options
5) Japan has experienced large trade surpluses. Japanese investors have
responded to this by
A) liquidating their positions in stocks to buy dollar-denominated bonds.
B) investing heavily in U.S. and other foreign financial markets.
C) lobbying the U.S. government to depreciate its currency.
D) lobbying the Japanese government to allow the yen to appreciate.
6) Suppose your firm invests $100,000 in a project in Italy. At the time the
exchange rate is
$1.25 = €1.00. One year later the exchange rate is the same, but the
Italian government has expropriated your firm's assets paying only
€80,000 in compensation. This is an example of
A) exchange rate risk.
B) political risk.
C) market imperfections.
D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
International Financial Management 9th Edition
