TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
TEST BANK for International Financial Management 9th
x x x x x x
x Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun.
x x x x x x x x
x ISBN-13: 9781260013870
x
Test Bank
x Page 1 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
x x x x x x x x x x x x
x answers the question.
x x
1) What major dimension sets apart international finance from domestic finance?
x x x x x x x x x
A) Foreign exchange and political risks x x x x
B) Market imperfections x
C) Expanded opportunity set x x
D) all of the options
x x x
2) An example(s) of a political risk is
x x x x x x
A) expropriation of assets. x x
B) adverse change in tax rules. x x x x
C) the opposition party being elected.
x x x x
D) both the expropriation of assets and adverse changes in tax rules are correct.
x x x x x x x x x x x x
3) Production of goods and services has become globalized to a large extent as a result of
x x x x x x x x x x x x x x x
A) natural resources being depleted in one country after another.
x x x x x x x x
B) skilled labor being highly mobile.
x x x x
C) multinational corporations' efforts to source inputs and locate production anywhere
x x x x x x x x x
x where costs are lower and profits higher.
x x x x x x
D) common tastes worldwide for the same goods and services.
x x x x x x x x
4) Recently, financial markets have become highly integrated. This development
x x x x x x x x
Test Bank
x Page 2 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
A) allows investors to diversify their portfolios internationally.
x x x x x x
B) allows minority investors to buy and sell stocks.
x x x x x x x
C) has increased the cost of capital for firms.
x x x x x x x
D) none of the options x x x
5) Japan has experienced large trade surpluses. Japanese investors have responded to this by
x x x x x x x x x x x x
A) liquidating their positions in stocks to buy dollar-denominated bonds.
x x x x x x x x
B) investing heavily in U.S. and other foreign financial markets.
x x x x x x x x
C) lobbying the U.S. government to depreciate its currency.
x x x x x x x
D) lobbying the Japanese government to allow the yen to appreciate.
x x x x x x x x x
6) Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is
x x x x x x x x x x x x x x x x
$1.25 = €1.00. One year later the exchange rate is the same, but the Italian government has
x x x x x x x x x x x x x x x x
x expropriated your firm's assets paying only €80,000 in compensation. This is an example of
x x x x x x x x x x x x x
A) exchange rate risk. x x
B) political risk. x
C) market imperfections. x
D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
x x x x x x x x x
Test Bank
x Page 3 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
7) Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 = $2.
x x x x x x x x x x x x x x x x x
x One year later, the stock rises to £60. You are happy with your 20 percent return on the stock,
x x x x x x x x x x x x x x x x x x
x but when you sell the stock and exchange your £60 for dollars, you only get $45 since the pound
x x x x x x x x x x x x x x x x x x
x has fallen to £1 = $0.75. This loss of value is an example of
x x x x x x x x x x x x x
A) exchange rate risk. x x
B) political risk. x
C) market imperfections. x
D) weakness in the dollar. x x x
8) Suppose that Great Britain is a major export market for your firm, a U.S.-based MNC. If
x x x x x x x x x x x x x x x
x the British pound depreciates against the U.S. dollar,
x x x x x x x
A) your firm will be able to charge more in dollar terms while keeping pound prices
x x x x x x x x x x x x x x
stable.
B) your firm may be priced out of the U.K. market, to the extent that your dollar costs
x x x x x x x x x x x x x x x x
stay constant and your pound prices will rise.
x x x x x x x
C) to protect U.K. market share, your firm may have to cut the dollar price of your goods
x x x x x x x x x x x x x x x x
x to keep the pound price the same.
x x x x x x
D) your firm may be priced out of the U.K. market, to the extent that your dollar costs
x x x x x x x x x x x x x x x x
x stay constant and your pound prices will rise, and to protect U.K. market share, your firm may
x x x x x x x x x x x x x x x x
x have to cut the dollar price of your goods to keep the pound price the same.
x x x x x x x x x x x x x x x
9) Suppose Mexico is a major export market for your U.S.-based company and the Mexican
x x x x x x x x x x x x x
x peso appreciates drastically against the U.S. dollar. This means
x x x x x x x x
Test Bank x Page 4 x
x x x x x x x x x x x x x x
Chuluun.
TEST BANK for International Financial Management 9th
x x x x x x
x Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun.
x x x x x x x x
x ISBN-13: 9781260013870
x
Test Bank
x Page 1 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
x x x x x x x x x x x x
x answers the question.
x x
1) What major dimension sets apart international finance from domestic finance?
x x x x x x x x x
A) Foreign exchange and political risks x x x x
B) Market imperfections x
C) Expanded opportunity set x x
D) all of the options
x x x
2) An example(s) of a political risk is
x x x x x x
A) expropriation of assets. x x
B) adverse change in tax rules. x x x x
C) the opposition party being elected.
x x x x
D) both the expropriation of assets and adverse changes in tax rules are correct.
x x x x x x x x x x x x
3) Production of goods and services has become globalized to a large extent as a result of
x x x x x x x x x x x x x x x
A) natural resources being depleted in one country after another.
x x x x x x x x
B) skilled labor being highly mobile.
x x x x
C) multinational corporations' efforts to source inputs and locate production anywhere
x x x x x x x x x
x where costs are lower and profits higher.
x x x x x x
D) common tastes worldwide for the same goods and services.
x x x x x x x x
4) Recently, financial markets have become highly integrated. This development
x x x x x x x x
Test Bank
x Page 2 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
A) allows investors to diversify their portfolios internationally.
x x x x x x
B) allows minority investors to buy and sell stocks.
x x x x x x x
C) has increased the cost of capital for firms.
x x x x x x x
D) none of the options x x x
5) Japan has experienced large trade surpluses. Japanese investors have responded to this by
x x x x x x x x x x x x
A) liquidating their positions in stocks to buy dollar-denominated bonds.
x x x x x x x x
B) investing heavily in U.S. and other foreign financial markets.
x x x x x x x x
C) lobbying the U.S. government to depreciate its currency.
x x x x x x x
D) lobbying the Japanese government to allow the yen to appreciate.
x x x x x x x x x
6) Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is
x x x x x x x x x x x x x x x x
$1.25 = €1.00. One year later the exchange rate is the same, but the Italian government has
x x x x x x x x x x x x x x x x
x expropriated your firm's assets paying only €80,000 in compensation. This is an example of
x x x x x x x x x x x x x
A) exchange rate risk. x x
B) political risk. x
C) market imperfections. x
D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
x x x x x x x x x
Test Bank
x Page 3 x
, TEST BANK for International Financial Management 9th Edition by Cheol Eun, Bruce Resnick and Tuugi
x x x x x x x x x x x x x x
Chuluun.
7) Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 = $2.
x x x x x x x x x x x x x x x x x
x One year later, the stock rises to £60. You are happy with your 20 percent return on the stock,
x x x x x x x x x x x x x x x x x x
x but when you sell the stock and exchange your £60 for dollars, you only get $45 since the pound
x x x x x x x x x x x x x x x x x x
x has fallen to £1 = $0.75. This loss of value is an example of
x x x x x x x x x x x x x
A) exchange rate risk. x x
B) political risk. x
C) market imperfections. x
D) weakness in the dollar. x x x
8) Suppose that Great Britain is a major export market for your firm, a U.S.-based MNC. If
x x x x x x x x x x x x x x x
x the British pound depreciates against the U.S. dollar,
x x x x x x x
A) your firm will be able to charge more in dollar terms while keeping pound prices
x x x x x x x x x x x x x x
stable.
B) your firm may be priced out of the U.K. market, to the extent that your dollar costs
x x x x x x x x x x x x x x x x
stay constant and your pound prices will rise.
x x x x x x x
C) to protect U.K. market share, your firm may have to cut the dollar price of your goods
x x x x x x x x x x x x x x x x
x to keep the pound price the same.
x x x x x x
D) your firm may be priced out of the U.K. market, to the extent that your dollar costs
x x x x x x x x x x x x x x x x
x stay constant and your pound prices will rise, and to protect U.K. market share, your firm may
x x x x x x x x x x x x x x x x
x have to cut the dollar price of your goods to keep the pound price the same.
x x x x x x x x x x x x x x x
9) Suppose Mexico is a major export market for your U.S.-based company and the Mexican
x x x x x x x x x x x x x
x peso appreciates drastically against the U.S. dollar. This means
x x x x x x x x
Test Bank x Page 4 x
