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,Testbank !|and !|solution !|manual !|for !|multinational !|business !|finance !|16th !|edition !|by !|david !|k
!|eiteman
Multinational !|Business !|Finance, !|16e !|(Eiteman/Stonehill/Moffett)
Chapter !|1 Multinational !|Financial !|Management: !|Opportunities !|and !|Challenges
1.1 The !|Global !|Financial !|Marketplace
1) Financial !|globalization !|has !|NOT !|resulted !|in:
A) continuing !|imbalances !|of !|balance !|of !|payments.
B) an !|increase !|in !|quantity !|and !|speed !|in !|the !|flow !|of !|capital !|across !|the !|world.
C) capital !|markets !|less !|open !|and !|a !|decrease !|in !|the !|availability !|of !|capital !|for !|many !|organizations.
D) uniform !|ways !|of !|ownership, !|control, !|and !|governance !|across !|the
!|world. !|Answer: ! | D
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
2) Financial !|globalization !|has !|NOT !|resulted !|in:
A) continuing !|imbalances !|of !|balance !|of !|payments.
B) an !|increase !|in !|quantity !|and !|speed !|in !|the !|flow !|of !|capital !|across !|the !|world.
C) capital !|markets !|more !|open !|and !|an !|increase !|in !|the !|availability !|of !|capital !|for
!|many !|organizations.
D) an !|increase !|in !|the !|flow !|of !|capital !|into !|and !|out !|of !|industrialized
!|markets. !|Answer: ! | C
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
3) The !|institutions !|of !|global !|finance !|are:
A) central !|banks.
B) commercial !|banks.
C) investment !|banks.
D) All !|of !|the !|above !|are !|institutions !|of !|global
!|finance. !|Answer: ! | D
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
1
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
,4) A !|major !|cost !|avoided !|in !|the !|eurocurrency !|markets !|is !|the !|payment !|of !|deposit !|insurance
!|fees, !|such !|as:
A) Federal !|Deposit !|Insurance !|Corporation !|— !|FDIC.
B) Office !|of !|the !|Comptroller !|of !|the !|Currency !|— !|OCC.
C) International !|Monetary !|Fund !|— !|IMF.
D) World !|Bank !|— !|WB.
!|Answer: ! | A
Diff: !|2
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
5) The !|modern !|eurocurrency !|market !|was !|born !|shortly !|after:
A) World !|War !|II.
B) World !|War !|I.
C) Korean !|War.
D) Bosnian !|War.
!|Answer: ! | A
! | Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
6) The !|reference !|rate !|of !|interest !|in !|the !|eurocurrency !|market !|is !|the:
A) London !|Interbank !|Offered !|Rate.
B) Prima !|rate.
C) Federal !|funds !|rate.
D) Treasury !|rate.
!|Answer: ! | A
! | Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
7) Interest !|spreads !|in !|the !|eurocurrency !|market !|are !|small !|for !|many !|reasons !|EXCEPT:
A) Eurocurrency !|loans !|are !|secured !|loans.
B) Eurocurrency !|deposits !|and !|loans !|are !|made !|in !|amounts !|of !|$500,000 !|or !|more !|on !|an
!|unsecured !|basis.
C) The !|eurocurrency !|is !|a !|wholesale !|market.
D) Borrowers !|are !|usually !|large !|corporations !|or !|government !|entities.
!|Answer: ! | A
Diff: !|2
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
2
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
, 8) Multinational !|enterprises !|(MNEs) !|are !|firms, !|both !|for-profit !|companies !|and !|not-for-profit
!|organizations, !|that !|have !|operations !|in !|more !|than !|one !|country, !|and !|conduct !|their !|business
!|through !|foreign !|subsidiaries, !|branches, !|or !|joint !|ventures !|with !|host !|country !|firms.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
9) Ownership, !|control, !|and !|governance !|changes !|radically !|across !|the !|world. !|The !|publicly
!|traded !|company !|is !|not !|the !|dominant !|global !|business !|organization—the !|privately !|held !|or
!|family-owned !|business !|is !|the !|prevalent !|structure—and !|their !|goals !|and !|measures !|of
!|performance !|differ !|dramatically.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
10) The !|securities !|at !|the !|heart !|of !|the !|global !|capital !|markets !|are !|the !|Mortgage !|Backed
!|Securities !|(MBS). !|The !|health !|and !|security !|of !|the !|global !|financial !|system !|rely !|on !|the !|quality
!|of !|these !|securities.
Answer: ! | FALSE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
11) The !|U.S. !|dollar !|has !|been !|the !|focal !|point !|of !|currency !|trading !|since !|the !|1940s. !|As !|a
!|result, !|most !|of !|the !|world's !|currencies !|are !|quoted !|against !|the !|dollar.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
12) Several !|of !|the !|world's !|major !|currency !|exchange !|rates !|follow !|a !|specific !|quotation
!|convention !|that !|is !|the !|result !|of !|tradition !|and !|history. !|The !|exchange !|rate !|between !|the !|U.S. !|dollar
!|and !|the !|euro !|is !|always !|quoted !|as !|"dollars !|per !|euro."
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
3
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
,Testbank !|and !|solution !|manual !|for !|multinational !|business !|finance !|16th !|edition !|by !|david !|k
!|eiteman
Multinational !|Business !|Finance, !|16e !|(Eiteman/Stonehill/Moffett)
Chapter !|1 Multinational !|Financial !|Management: !|Opportunities !|and !|Challenges
1.1 The !|Global !|Financial !|Marketplace
1) Financial !|globalization !|has !|NOT !|resulted !|in:
A) continuing !|imbalances !|of !|balance !|of !|payments.
B) an !|increase !|in !|quantity !|and !|speed !|in !|the !|flow !|of !|capital !|across !|the !|world.
C) capital !|markets !|less !|open !|and !|a !|decrease !|in !|the !|availability !|of !|capital !|for !|many !|organizations.
D) uniform !|ways !|of !|ownership, !|control, !|and !|governance !|across !|the
!|world. !|Answer: ! | D
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
2) Financial !|globalization !|has !|NOT !|resulted !|in:
A) continuing !|imbalances !|of !|balance !|of !|payments.
B) an !|increase !|in !|quantity !|and !|speed !|in !|the !|flow !|of !|capital !|across !|the !|world.
C) capital !|markets !|more !|open !|and !|an !|increase !|in !|the !|availability !|of !|capital !|for
!|many !|organizations.
D) an !|increase !|in !|the !|flow !|of !|capital !|into !|and !|out !|of !|industrialized
!|markets. !|Answer: ! | C
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
3) The !|institutions !|of !|global !|finance !|are:
A) central !|banks.
B) commercial !|banks.
C) investment !|banks.
D) All !|of !|the !|above !|are !|institutions !|of !|global
!|finance. !|Answer: ! | D
Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
1
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
,4) A !|major !|cost !|avoided !|in !|the !|eurocurrency !|markets !|is !|the !|payment !|of !|deposit !|insurance
!|fees, !|such !|as:
A) Federal !|Deposit !|Insurance !|Corporation !|— !|FDIC.
B) Office !|of !|the !|Comptroller !|of !|the !|Currency !|— !|OCC.
C) International !|Monetary !|Fund !|— !|IMF.
D) World !|Bank !|— !|WB.
!|Answer: ! | A
Diff: !|2
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
5) The !|modern !|eurocurrency !|market !|was !|born !|shortly !|after:
A) World !|War !|II.
B) World !|War !|I.
C) Korean !|War.
D) Bosnian !|War.
!|Answer: ! | A
! | Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
6) The !|reference !|rate !|of !|interest !|in !|the !|eurocurrency !|market !|is !|the:
A) London !|Interbank !|Offered !|Rate.
B) Prima !|rate.
C) Federal !|funds !|rate.
D) Treasury !|rate.
!|Answer: ! | A
! | Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
7) Interest !|spreads !|in !|the !|eurocurrency !|market !|are !|small !|for !|many !|reasons !|EXCEPT:
A) Eurocurrency !|loans !|are !|secured !|loans.
B) Eurocurrency !|deposits !|and !|loans !|are !|made !|in !|amounts !|of !|$500,000 !|or !|more !|on !|an
!|unsecured !|basis.
C) The !|eurocurrency !|is !|a !|wholesale !|market.
D) Borrowers !|are !|usually !|large !|corporations !|or !|government !|entities.
!|Answer: ! | A
Diff: !|2
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
2
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
, 8) Multinational !|enterprises !|(MNEs) !|are !|firms, !|both !|for-profit !|companies !|and !|not-for-profit
!|organizations, !|that !|have !|operations !|in !|more !|than !|one !|country, !|and !|conduct !|their !|business
!|through !|foreign !|subsidiaries, !|branches, !|or !|joint !|ventures !|with !|host !|country !|firms.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
9) Ownership, !|control, !|and !|governance !|changes !|radically !|across !|the !|world. !|The !|publicly
!|traded !|company !|is !|not !|the !|dominant !|global !|business !|organization—the !|privately !|held !|or
!|family-owned !|business !|is !|the !|prevalent !|structure—and !|their !|goals !|and !|measures !|of
!|performance !|differ !|dramatically.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
10) The !|securities !|at !|the !|heart !|of !|the !|global !|capital !|markets !|are !|the !|Mortgage !|Backed
!|Securities !|(MBS). !|The !|health !|and !|security !|of !|the !|global !|financial !|system !|rely !|on !|the !|quality
!|of !|these !|securities.
Answer: ! | FALSE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
11) The !|U.S. !|dollar !|has !|been !|the !|focal !|point !|of !|currency !|trading !|since !|the !|1940s. !|As !|a
!|result, !|most !|of !|the !|world's !|currencies !|are !|quoted !|against !|the !|dollar.
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
12) Several !|of !|the !|world's !|major !|currency !|exchange !|rates !|follow !|a !|specific !|quotation
!|convention !|that !|is !|the !|result !|of !|tradition !|and !|history. !|The !|exchange !|rate !|between !|the !|U.S. !|dollar
!|and !|the !|euro !|is !|always !|quoted !|as !|"dollars !|per !|euro."
Answer: ! | TRUE
!|Diff: !|1
L.O.: ! | 1.1 !|The !|Global !|Financial !|Marketplace
!|Skill: ! | Recognition
AACSB: ! | ! | Application !|of !|knowledge
3
Copyright !|© !|2023 !|Pearson !|Education,
!|Inc.
