??
ED
OV
PR
AP
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IA
UV
ST
, Test Bank
International Financial Management
Jeff Madura · Chad Zipfel
15TH EDITION
ST
TABLE OF CONTENTS
UV
PART 1 — THE INTERNATIONAL FINANCIAL ENVIRONMENT
Ch. 01 Multinational Financial Management: An Overview
Ch. 02 International Flow of Funds
Ch. 03 International Financial Markets
IA
Ch. 04 Exchange Rate Determination
Ch. 05 Currency Derivatives
PART 2 — EXCHANGE RATE BEHAVIOR
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Ch. 06 Government Influence on Exchange Rates
Ch. 07 International Arbitrage and Interest Rate Parity
Ch. 08 Relationships Among Inflation, Interest Rates, and Exchange Rates
AP
PART 3 — EXCHANGE RATE RISK MANAGEMENT
Ch. 09 Forecasting Exchange Rates
Ch. 10 Measuring Exposure to Exchange Rate Fluctuations
PR
Ch. 11 Managing Transaction Exposure
Ch. 12 Managing Economic Exposure and Translation Exposure
PART 4 — LONG-TERM ASSET AND LIABILITY MANAGEMENT
OV
Ch. 13 Direct Foreign Investment
Ch. 14 Multinational Capital Budgeting
Ch. 15 Corporate Governance: International Acquisitions and Divestitures
Ch. 16 Country Risk Analysis
Ch. 17 Multinational Capital Structure and Cost of Capital
ED
Ch. 18 Long-Term Debt Financing
PART 5 — SHORT-TERM ASSET AND LIABILITY MANAGEMENT
Ch. 19 Financing International Trade
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Ch. 20 Short-Term Financing
Ch. 21 International Cash Management
Ch. 22 Fintech in Financial Markets
, Name: Class: Date:
Chapter 1 Multinational Financial Management An Overview
ST
True / False
1. A product cycle is the process by which a firm provides a specialized sales or service strategy, support assistance, and
possibly an initial investment in a franchise in exchange for periodic fees.
a. True
UV
b. False
ANSWER: False
2. Licensing is the process by which a firm provides its technology (copyrights, patents, trademarks, or trade names) in
exchange for fees or some other specified benefits.
IA
a. True
b. False
ANSWER: True
?_
3. Franchising is the process by which national governments sell state-owned operations to corporations and other
investors.
a. True
AP
b. False
ANSWER: False
4. The parent of an MNC can implement compensation plans that directly reward the subsidiary managers for enhancing
the value of the MNC.
PR
a. True
b. False
ANSWER: True
5. If a publicly traded MNC's managers make poor decisions that reduce its value, that may encourage other firms to
OV
acquire the MNC.
a. True
b. False
ANSWER: True
ED
6. Institutional investors such as mutual funds or pension funds that have large holdings of an MNC's stock do not
normally want to take control of it and therefore have no influence over management of the MNC.
a. True
b. False
??
ANSWER: False
7. Imperfect markets reflect conditions under which factors of production are immobile.
a. True
b. False
ANSWER: True
, Name: Class: Date:
Chapter 1 Multinational Financial Management An Overview
ST
8. The Sarbanes-Oxley Act (SOX), enacted in 2002, required MNCs and other firms to implement an internal reporting
process that could be easily monitored by executives and the board of directors.
a. True
b. False
UV
ANSWER: True
9. If markets were perfect, then labor and other costs of production would be perfectly stable (no movement across
borders).
a. True
IA
b. False
ANSWER: False
10. The valuation of an MNC is reduced if the required rate of return on its investments in foreign countries is reduced.
?_
a. True
b. False
ANSWER: False
AP
11. The goal of a multinational corporation (MNC) is the maximization of shareholder wealth.
a. True
b. False
ANSWER: True
PR
12. A centralized management style, where major decisions about a foreign subsidiary are made by the parent company,
results in an increase in agency costs.
a. True
b. False
OV
ANSWER: False
13. If a U.S. firm sets up a plant in Mexico to benefit from low-cost labor, it will likely have a comparative advantage
over other firms in Mexico that sell the same product.
a. True
ED
b. False
ANSWER: False
14. Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as exchange
rates are stable over time.
??
a. True
b. False
ANSWER: False
ED
OV
PR
AP
?_
IA
UV
ST
, Test Bank
International Financial Management
Jeff Madura · Chad Zipfel
15TH EDITION
ST
TABLE OF CONTENTS
UV
PART 1 — THE INTERNATIONAL FINANCIAL ENVIRONMENT
Ch. 01 Multinational Financial Management: An Overview
Ch. 02 International Flow of Funds
Ch. 03 International Financial Markets
IA
Ch. 04 Exchange Rate Determination
Ch. 05 Currency Derivatives
PART 2 — EXCHANGE RATE BEHAVIOR
?_
Ch. 06 Government Influence on Exchange Rates
Ch. 07 International Arbitrage and Interest Rate Parity
Ch. 08 Relationships Among Inflation, Interest Rates, and Exchange Rates
AP
PART 3 — EXCHANGE RATE RISK MANAGEMENT
Ch. 09 Forecasting Exchange Rates
Ch. 10 Measuring Exposure to Exchange Rate Fluctuations
PR
Ch. 11 Managing Transaction Exposure
Ch. 12 Managing Economic Exposure and Translation Exposure
PART 4 — LONG-TERM ASSET AND LIABILITY MANAGEMENT
OV
Ch. 13 Direct Foreign Investment
Ch. 14 Multinational Capital Budgeting
Ch. 15 Corporate Governance: International Acquisitions and Divestitures
Ch. 16 Country Risk Analysis
Ch. 17 Multinational Capital Structure and Cost of Capital
ED
Ch. 18 Long-Term Debt Financing
PART 5 — SHORT-TERM ASSET AND LIABILITY MANAGEMENT
Ch. 19 Financing International Trade
??
Ch. 20 Short-Term Financing
Ch. 21 International Cash Management
Ch. 22 Fintech in Financial Markets
, Name: Class: Date:
Chapter 1 Multinational Financial Management An Overview
ST
True / False
1. A product cycle is the process by which a firm provides a specialized sales or service strategy, support assistance, and
possibly an initial investment in a franchise in exchange for periodic fees.
a. True
UV
b. False
ANSWER: False
2. Licensing is the process by which a firm provides its technology (copyrights, patents, trademarks, or trade names) in
exchange for fees or some other specified benefits.
IA
a. True
b. False
ANSWER: True
?_
3. Franchising is the process by which national governments sell state-owned operations to corporations and other
investors.
a. True
AP
b. False
ANSWER: False
4. The parent of an MNC can implement compensation plans that directly reward the subsidiary managers for enhancing
the value of the MNC.
PR
a. True
b. False
ANSWER: True
5. If a publicly traded MNC's managers make poor decisions that reduce its value, that may encourage other firms to
OV
acquire the MNC.
a. True
b. False
ANSWER: True
ED
6. Institutional investors such as mutual funds or pension funds that have large holdings of an MNC's stock do not
normally want to take control of it and therefore have no influence over management of the MNC.
a. True
b. False
??
ANSWER: False
7. Imperfect markets reflect conditions under which factors of production are immobile.
a. True
b. False
ANSWER: True
, Name: Class: Date:
Chapter 1 Multinational Financial Management An Overview
ST
8. The Sarbanes-Oxley Act (SOX), enacted in 2002, required MNCs and other firms to implement an internal reporting
process that could be easily monitored by executives and the board of directors.
a. True
b. False
UV
ANSWER: True
9. If markets were perfect, then labor and other costs of production would be perfectly stable (no movement across
borders).
a. True
IA
b. False
ANSWER: False
10. The valuation of an MNC is reduced if the required rate of return on its investments in foreign countries is reduced.
?_
a. True
b. False
ANSWER: False
AP
11. The goal of a multinational corporation (MNC) is the maximization of shareholder wealth.
a. True
b. False
ANSWER: True
PR
12. A centralized management style, where major decisions about a foreign subsidiary are made by the parent company,
results in an increase in agency costs.
a. True
b. False
OV
ANSWER: False
13. If a U.S. firm sets up a plant in Mexico to benefit from low-cost labor, it will likely have a comparative advantage
over other firms in Mexico that sell the same product.
a. True
ED
b. False
ANSWER: False
14. Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as exchange
rates are stable over time.
??
a. True
b. False
ANSWER: False
