,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.
4) Recently, ,.financial ,.markets ,.have ,.become ,.highly ,.integrated. ,.This ,.development
, 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.
, 7) Suppose ,.you ,.start ,.with ,.$100 ,.and ,.buy ,.stock ,.for ,.£50 ,.when ,.the ,.exchange ,.rate ,.is ,.£1 ,.= ,.$2.
,. One ,.year ,.later, ,.the ,.stock ,.rises ,.to ,.£60. ,.You ,.are ,.happy ,.with ,.your ,.20 ,.percent ,.return ,.on ,.the
,. stock, ,.but ,.when ,.you ,.sell ,.the ,.stock ,.and ,.exchange ,.your ,.£60 ,.for ,.dollars, ,.you ,.only ,.get ,.$45 ,.since
the ,.pound ,.has ,.fallen ,.to ,.£1 ,.= ,.$0.75. ,.This ,.loss ,.of ,.value ,.is ,.an ,.example ,.of
,.
A) exchange ,.rate ,.risk.
B) political ,.risk.
C) market ,.imperfections.
D) weakness ,.in ,.the ,.dollar.
8) Suppose ,.that ,.Great ,.Britain ,.is ,.a ,.major ,.export ,.market ,.for ,.your ,.firm, ,.a ,.U.S.-based ,.MNC.
,. If ,.the ,.British ,.pound ,.depreciates ,.against ,.the ,.U.S. ,.dollar,
A) your ,.firm ,.will ,.be ,.able ,.to ,.charge ,.more ,.in ,.dollar ,.terms ,.while ,.keeping ,.pound ,.prices
stable.
B) your ,.firm ,.may ,.be ,.priced ,.out ,.of ,.the ,.U.K. ,.market, ,.to ,.the ,.extent ,.that ,.your ,.dollar ,.costs
stay ,.constant ,.and ,.your ,.pound ,.prices ,.will ,.rise.
C) to ,.protect ,.U.K. ,.market ,.share, ,.your ,.firm ,.may ,.have ,.to ,.cut ,.the ,.dollar ,.price ,.of ,.your
,. goods ,.to ,.keep ,.the ,.pound ,.price ,.the ,.same.
D) your ,.firm ,.may ,.be ,.priced ,.out ,.of ,.the ,.U.K. ,.market, ,.to ,.the ,.extent ,.that ,.your ,.dollar
,. costs ,.stay ,.constant ,.and ,.your ,.pound ,.prices ,.will ,.rise, ,.and ,.to ,.protect ,.U.K. ,.market ,.share, ,.your
,. firm ,.may ,.have ,.to ,.cut ,.the ,.dollar ,.price ,.of ,.your ,.goods ,.to ,.keep ,.the ,.pound ,.price ,.the ,.same.
9) Suppose ,.Mexico ,.is ,.a ,.major ,.export ,.market ,.for ,.your ,.U.S.-based ,.company ,.and ,.the
Mexican ,.peso ,.appreciates ,.drastically ,.against ,.the ,.U.S. ,.dollar. ,.This ,.means
,.
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.
4) Recently, ,.financial ,.markets ,.have ,.become ,.highly ,.integrated. ,.This ,.development
, 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.
, 7) Suppose ,.you ,.start ,.with ,.$100 ,.and ,.buy ,.stock ,.for ,.£50 ,.when ,.the ,.exchange ,.rate ,.is ,.£1 ,.= ,.$2.
,. One ,.year ,.later, ,.the ,.stock ,.rises ,.to ,.£60. ,.You ,.are ,.happy ,.with ,.your ,.20 ,.percent ,.return ,.on ,.the
,. stock, ,.but ,.when ,.you ,.sell ,.the ,.stock ,.and ,.exchange ,.your ,.£60 ,.for ,.dollars, ,.you ,.only ,.get ,.$45 ,.since
the ,.pound ,.has ,.fallen ,.to ,.£1 ,.= ,.$0.75. ,.This ,.loss ,.of ,.value ,.is ,.an ,.example ,.of
,.
A) exchange ,.rate ,.risk.
B) political ,.risk.
C) market ,.imperfections.
D) weakness ,.in ,.the ,.dollar.
8) Suppose ,.that ,.Great ,.Britain ,.is ,.a ,.major ,.export ,.market ,.for ,.your ,.firm, ,.a ,.U.S.-based ,.MNC.
,. If ,.the ,.British ,.pound ,.depreciates ,.against ,.the ,.U.S. ,.dollar,
A) your ,.firm ,.will ,.be ,.able ,.to ,.charge ,.more ,.in ,.dollar ,.terms ,.while ,.keeping ,.pound ,.prices
stable.
B) your ,.firm ,.may ,.be ,.priced ,.out ,.of ,.the ,.U.K. ,.market, ,.to ,.the ,.extent ,.that ,.your ,.dollar ,.costs
stay ,.constant ,.and ,.your ,.pound ,.prices ,.will ,.rise.
C) to ,.protect ,.U.K. ,.market ,.share, ,.your ,.firm ,.may ,.have ,.to ,.cut ,.the ,.dollar ,.price ,.of ,.your
,. goods ,.to ,.keep ,.the ,.pound ,.price ,.the ,.same.
D) your ,.firm ,.may ,.be ,.priced ,.out ,.of ,.the ,.U.K. ,.market, ,.to ,.the ,.extent ,.that ,.your ,.dollar
,. costs ,.stay ,.constant ,.and ,.your ,.pound ,.prices ,.will ,.rise, ,.and ,.to ,.protect ,.U.K. ,.market ,.share, ,.your
,. firm ,.may ,.have ,.to ,.cut ,.the ,.dollar ,.price ,.of ,.your ,.goods ,.to ,.keep ,.the ,.pound ,.price ,.the ,.same.
9) Suppose ,.Mexico ,.is ,.a ,.major ,.export ,.market ,.for ,.your ,.U.S.-based ,.company ,.and ,.the
Mexican ,.peso ,.appreciates ,.drastically ,.against ,.the ,.U.S. ,.dollar. ,.This ,.means
,.
