SOLUTION MANUAL
International Financial Management, 9th Edition By Cheol Eun,
Bruce G. Resnick
, CHAPTER`1
GLOBALIZATION`AND`THE`MULTINATIONAL`FIRM
ANSWERS`&`SOLUTIONS`TO`END-OF-CHAPTER`QUESTIONS`AND`PROBLEMS
QUESTIONS
1. Why`is`it`important`to`study`international`financial`management?
Answer:` We`are`now`living`in`a`world`where`all`the`major`economic`functions,`such`as`consumpti
on,`production,`investment,`and`financing,`are`highly`globalized.` It`is`thus`essential` for`financial`
managers`to`fully`understand`vital`international`dimensions`of`financial`management.` This`global
`shift`is`in`marked`contrast`to`a`situation`that`existed`when`the`authors`of`this`book`were`learning`f
inance`a`few`decades`ago.` At`that`time,`most`professors`customarily`(and`safely,`to`some`extent)
`ignored`international`aspects`of`finance.` This`mode`of`operation`has`become`untenable`since`th
en.
2. How`is`international`financial`management`different`from`domestic`financial`management?
Answer:` There`are`three`major`dimensions`that`set`apart`international`finance`from`domestic`fin
ance.`They`are:
1. foreign`exchange`and`political`risks,
2. market`imperfections,`and
3. expanded`opportunity`set.
3. Discuss`the`major`trends`that`have`prevailed`in`international`business`during`the`last`two`
decades.
Answer:` The`2000s`brought`a`rapid`integration`of`international`capital`and`financial`markets.`Im
petus`for`globalized`financial`markets`initially`came`from`the`governments`of`major`countries`tha
t`had`begun`to`deregulate`their`foreign`exchange`and`capital`markets.` The`economic
International Financial Management, 9th Edition By Cheol Eun,
Bruce G. Resnick
, CHAPTER`1
GLOBALIZATION`AND`THE`MULTINATIONAL`FIRM
ANSWERS`&`SOLUTIONS`TO`END-OF-CHAPTER`QUESTIONS`AND`PROBLEMS
QUESTIONS
1. Why`is`it`important`to`study`international`financial`management?
Answer:` We`are`now`living`in`a`world`where`all`the`major`economic`functions,`such`as`consumpti
on,`production,`investment,`and`financing,`are`highly`globalized.` It`is`thus`essential` for`financial`
managers`to`fully`understand`vital`international`dimensions`of`financial`management.` This`global
`shift`is`in`marked`contrast`to`a`situation`that`existed`when`the`authors`of`this`book`were`learning`f
inance`a`few`decades`ago.` At`that`time,`most`professors`customarily`(and`safely,`to`some`extent)
`ignored`international`aspects`of`finance.` This`mode`of`operation`has`become`untenable`since`th
en.
2. How`is`international`financial`management`different`from`domestic`financial`management?
Answer:` There`are`three`major`dimensions`that`set`apart`international`finance`from`domestic`fin
ance.`They`are:
1. foreign`exchange`and`political`risks,
2. market`imperfections,`and
3. expanded`opportunity`set.
3. Discuss`the`major`trends`that`have`prevailed`in`international`business`during`the`last`two`
decades.
Answer:` The`2000s`brought`a`rapid`integration`of`international`capital`and`financial`markets.`Im
petus`for`globalized`financial`markets`initially`came`from`the`governments`of`major`countries`tha
t`had`begun`to`deregulate`their`foreign`exchange`and`capital`markets.` The`economic
