TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
TEST BANK for International Financial Management 9th
|| || || || || ||
|| Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun.
|| || || || || || || ||
|| ISBN-13: 9781260013870
||
Test ||Bank Page ||1
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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) ||o f ||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
Test ||Bank Page ||2
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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 ||t heir ||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 ||o f
||
A) exchange ||rate ||risk.
B) political ||risk.
C) market ||imperfections.
D) none ||of ||the ||options, ||since ||$100,000 ||= ||€80,000 ||× ||$1.25/€1.00.
Test ||Bank Page ||3
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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 ||t he ||stock ||and ||exchange ||your ||£60 ||for ||dollars, ||you ||o nly ||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 ||t o ||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 ||t he ||Mexican
peso ||appreciates ||drastically ||against ||the ||U.S. ||dollar. ||This ||means
||
Test ||Bank Page ||4
||and ||Tuugi
Chuluun.
TEST BANK for International Financial Management 9th
|| || || || || ||
|| Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun.
|| || || || || || || ||
|| ISBN-13: 9781260013870
||
Test ||Bank Page ||1
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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) ||o f ||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
Test ||Bank Page ||2
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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 ||t heir ||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 ||o f
||
A) exchange ||rate ||risk.
B) political ||risk.
C) market ||imperfections.
D) none ||of ||the ||options, ||since ||$100,000 ||= ||€80,000 ||× ||$1.25/€1.00.
Test ||Bank Page ||3
, TEST ||BANK ||for ||International ||Financial ||Management ||9th ||Edition ||by ||Cheol ||Eun, ||Bruce ||Resnick
||and ||Tuugi
Chuluun.
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 ||t he ||stock ||and ||exchange ||your ||£60 ||for ||dollars, ||you ||o nly ||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 ||t o ||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 ||t he ||Mexican
peso ||appreciates ||drastically ||against ||the ||U.S. ||dollar. ||This ||means
||
Test ||Bank Page ||4
