https://browsegrades.net/singlePaper/416756/testbank-an
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
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.A
., ., ., ., ., ., ., ., ., .,
nswer: D .,
Diff: 1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
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 manyor
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ganizations.
D) an increase in the flow of capital into and out of industrialized markets.A
., ., ., ., ., ., ., ., ., ., ., ., .,
nswer: C .,
Diff: 1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge
. , ., .,
1
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
4) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees,su
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ch 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 MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
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 unsecuredba ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
sis.
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 MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
2
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
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 thro
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ughforeign subsidiaries, branches, or joint ventures with host country firms.
., ., ., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
9) Ownership, control, and governance changes radically across the world. The publicly tradedco
., ., ., ., ., ., ., ., ., ., ., .,
mpany is not the dominant global business organization—the privately held or family-
., ., ., ., ., ., ., ., ., ., .,
ownedbusiness is the prevalent structure—
., ., ., ., .,
and their goals and measures of performance differ dramatically.
., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
10) The securities at the heart of the global capital markets are the Mortgage Backed Securities(M
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
BS). The health and security of the global financial system rely on the quality of these securities.
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
Answer: FALSEDi ., .,
ff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
11) The U.S. dollar has been the focal point of currency trading since the 1940s. As a result,mo
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
st of the world's currencies are quoted against the dollar.
., ., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
12) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the eurois alw
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ays quoted as "dollars per euro."
., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
3
Copyright © 2023 Pearson Education, Inc.
., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
13) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the British po
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
und is always quoted as "dollars per pound."
., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
14) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the Japanese
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
yen is always quoted as "dollars per Japanese yen."
., ., ., ., ., ., ., .,
Answer: FALSEDi ., .,
ff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
15) Your authors suggest that one way to characterize the global financial marketplace is throughits
., ., ., ., ., ., ., ., ., ., ., ., ., ., .
assets, institutions, and linkages.
, ., ., .,
Answer: TRUEDiff ., .,
:1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
16) Eurocurrencies are domestic currencies of one country on deposit in a second country.A ., ., ., ., ., ., ., ., ., ., ., ., .,
nswer: TRUE .,
Diff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
17) A eurodollar deposit is a demand deposit.
., ., ., ., ., ., .,
Answer: FALSE .,
Diff: 2 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
4
Copyright © 2023 Pearson Education, Inc.
., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
18) Eurocurrency markets serve two valuable purposes: 1) Eurocurrency deposits are an efficientan ., ., ., ., ., ., ., ., ., ., ., .,
d convenient money market device for holding excess corporate liquidity; and 2) the Eurocurrency
., ., ., ., ., ., ., ., ., ., ., ., ., .,
market is a major source of short- ., ., ., ., ., .,
term bank loans to finance corporate working capital needs, including the financing of imports and
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
exports.
Answer: TRUEDiff ., .,
:2
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
19) The key factor attracting both depositors and borrowers to the Eurocurrency loan market isth
., ., ., ., ., ., ., ., ., ., ., ., ., .,
e narrow interest rate spread within that market.
., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
20) The Eurocurrency market continues to thrive because it is a large international money marketrel
., ., ., ., ., ., ., ., ., ., ., ., ., .,
atively free from governmental regulation and interference. Recent events may lead to greater regul
., ., ., ., ., ., ., ., ., ., ., ., .,
ation.
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
21) The theme dominating global financial markets today is the complexity of risks associatedwi
., ., ., ., ., ., ., ., ., ., ., ., .,
th financial globalization. List and explain examples of the complexity of risks affecting theleadi
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ng and managing of multinational firms in the rapidly moving marketplace.
., ., ., ., ., ., ., ., ., .,
Answer: The following is a sampling of this complexity of risks: 1) The international monetary sy
.,.,. , ., ., ., ., ., ., ., ., ., .,.,. , ., ., ., .,
stem is under constant scrutiny. The rise of the Chinese renminbi is changing much of the world's o
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
utlook on currency exchange, reserve currencies, and the roles of the dollar and the euro. 2) Large fi
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
scal deficits, including the current eurozone crisis, plague most of the major trading countries of the
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
world, complicating fiscal and monetary policies, and ultimately, interestrates and exchange rates.
., ., ., ., ., ., ., ., ., ., ., ., .,
3) Many countries experience continuing balance of payments imbalances, and in some cases, dang
., ., ., ., ., ., ., ., ., ., ., ., .,
erously large deficits and surpluses. 4) Ownership, control, and governance vary radically across th
., ., ., ., ., ., ., ., ., ., ., ., .,
e world. 5) Global capital markets that normally provide the means to lower a firm's cost of capital,
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
and even more critically, increase the availability of capital, have in many ways shrunk in size and h
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ave become less open and accessible to many of the world's organizations. 6) Financial globalizatio
., ., ., ., ., ., ., ., ., ., ., ., ., .,
n has resulted in the ebb and flow of capital inand out of both industrial and emerging markets, great
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ly complicating financial management.
., ., .,
Diff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
5
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
22) Business involves the interaction of individuals and individual organizations for the exchange ., ., ., ., ., ., ., ., ., ., ., .,
of products, services, and capital through markets. The global capital markets are critical for the co
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
nduct of this exchange. The authors suggest that one way to characterize the global financial marke
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
tplace is through its assets, institutions, and linkages. Explain how each ofthe three dimensions char
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
acterize the global financial marketplace. ., ., ., .,
Answer: 1) The financial assets at the heart of the global capital markets are the debt securities issu
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ed by governments. These low-risk or risk-
., ., ., ., ., .,
free assets (e.g., U.S. Treasury Bonds) form the foundation for the creation, trading, and pricing of
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
other financial assets like bank loans, corporate bonds, and equities (stock). In recent years, a numb
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
er of additional securities have been created from existing securities-
., ., ., ., ., ., ., ., .,
derivatives, whose value is based on market value changesof the underlying securities. The health a
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
nd security of the global financial system relies on the quality of these assets. 2) The institutions of
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
global finance are the central banks, which create and control each country's money supply; the co
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
mmercial banks, which take deposits and extendloans to businesses, both local and global; and the
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
multitude of other financial institutions created to trade securities and derivatives. These institution
., ., ., ., ., ., ., ., ., ., ., .,
s take many shapes and are subject tomany different regulatory frameworks. The health and securit
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
y of the global financial system relies on the stability of these financial institutions. 3) The links bet
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ween the financial institutions, the actual fluid or medium for exchange, are the interbank networks
., ., ., ., ., ., ., ., ., ., ., ., ., ., .
using currency.The ready exchange of currencies in the global marketplace is the first and foremos
, ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
t necessary element for the conduct of financial trading, and the global currency markets are the lar
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
gest markets in the world. The exchange of currencies, and the subsequent exchange of all other sec
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
urities globally via currency, is the international interbank network.
., ., ., ., ., ., ., .,
Diff: 2 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
1.2 The Theory of Comparative Advantage ., ., ., .,
1) The theory that suggests specialization by country can increase worldwide production is:
., ., ., ., ., ., ., ., ., ., .,
A) the theory of comparative advantage. ., ., ., .,
B) the theory of foreign direct investment. ., ., ., ., .,
C) the international Fisher effect. ., ., .,
D) the theory of working capital management. ., ., ., ., ., .,
Answer: A .,
Diff: 1 .,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
6
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
, https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
2) Which of the following is NOT a reason governments interfere with comparative advantage?
., ., ., ., ., ., ., ., ., ., ., .,
A) Governments attempt to achieve full employment. ., ., ., ., .,
B) Governments promote economic development. ., ., .,
C) national self-sufficiency in defense-related industries
., ., ., .,
D) All are reasons governments interfere with comparative advantage.
., ., ., ., ., ., ., .,
Answer: D .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
3) Which of the following factors of production DO NOT flow freely between countries?
., ., ., ., ., ., ., ., ., ., ., .,
A) raw materials .,
B) financial capital .,
C) (non-military) technology .,
D) All of the above factors of production flow freely among countries.A
., ., ., ., ., ., ., ., ., ., .,
nswer: A .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
4) Which of the following would NOT be a way to implement comparative advantage?
., ., ., ., ., ., ., ., ., ., ., .,
A) IBM exports computers to Egypt.
., ., ., .,
B) Computer hardware is designed in the United States but manufactured and assembled inK
., ., ., ., ., ., ., ., ., ., ., ., .,
orea.
C) Water of the greatest purity is obtained from wells in Oregon, bottled, and exportedw
., ., ., ., ., ., ., ., ., ., ., ., ., .,
orldwide.
D) All of the above are examples of ways to implement comparative advantage.A
., ., ., ., ., ., ., ., ., ., ., .,
nswer: D .,
Diff: 2
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Conceptual
,
AACSB: Application of knowledge . , ., .,
5) Of the following, which would NOT be considered a way that government interferes withco
., ., ., ., ., ., ., ., ., ., ., ., ., .,
mparative advantage? .,
A) tariffs
B) managerial skills .,
C) quotas
D) other non- .,
tariff restrictionsAnswer: B
., ., .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
7
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
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.A
., ., ., ., ., ., ., ., ., .,
nswer: D .,
Diff: 1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
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 manyor
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ganizations.
D) an increase in the flow of capital into and out of industrialized markets.A
., ., ., ., ., ., ., ., ., ., ., ., .,
nswer: C .,
Diff: 1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge
. , ., .,
1
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
4) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees,su
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ch 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 MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
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 MarketplaceSkill:
., ., ., ., ., ., .,
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 unsecuredba ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
sis.
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 MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
2
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
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 thro
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ughforeign subsidiaries, branches, or joint ventures with host country firms.
., ., ., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
9) Ownership, control, and governance changes radically across the world. The publicly tradedco
., ., ., ., ., ., ., ., ., ., ., .,
mpany is not the dominant global business organization—the privately held or family-
., ., ., ., ., ., ., ., ., ., .,
ownedbusiness is the prevalent structure—
., ., ., ., .,
and their goals and measures of performance differ dramatically.
., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
10) The securities at the heart of the global capital markets are the Mortgage Backed Securities(M
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
BS). The health and security of the global financial system rely on the quality of these securities.
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
Answer: FALSEDi ., .,
ff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
11) The U.S. dollar has been the focal point of currency trading since the 1940s. As a result,mo
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
st of the world's currencies are quoted against the dollar.
., ., ., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
12) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the eurois alw
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ays quoted as "dollars per euro."
., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
3
Copyright © 2023 Pearson Education, Inc.
., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
13) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the British po
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
und is always quoted as "dollars per pound."
., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
14) Several of the world's major currency exchange rates follow a specific quotation conventionth
., ., ., ., ., ., ., ., ., ., ., ., .,
at is the result of tradition and history. The exchange rate between the U.S. dollar and the Japanese
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
yen is always quoted as "dollars per Japanese yen."
., ., ., ., ., ., ., .,
Answer: FALSEDi ., .,
ff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
15) Your authors suggest that one way to characterize the global financial marketplace is throughits
., ., ., ., ., ., ., ., ., ., ., ., ., ., .
assets, institutions, and linkages.
, ., ., .,
Answer: TRUEDiff ., .,
:1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
16) Eurocurrencies are domestic currencies of one country on deposit in a second country.A ., ., ., ., ., ., ., ., ., ., ., ., .,
nswer: TRUE .,
Diff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
17) A eurodollar deposit is a demand deposit.
., ., ., ., ., ., .,
Answer: FALSE .,
Diff: 2 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
4
Copyright © 2023 Pearson Education, Inc.
., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
18) Eurocurrency markets serve two valuable purposes: 1) Eurocurrency deposits are an efficientan ., ., ., ., ., ., ., ., ., ., ., .,
d convenient money market device for holding excess corporate liquidity; and 2) the Eurocurrency
., ., ., ., ., ., ., ., ., ., ., ., ., .,
market is a major source of short- ., ., ., ., ., .,
term bank loans to finance corporate working capital needs, including the financing of imports and
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
exports.
Answer: TRUEDiff ., .,
:2
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
19) The key factor attracting both depositors and borrowers to the Eurocurrency loan market isth
., ., ., ., ., ., ., ., ., ., ., ., ., .,
e narrow interest rate spread within that market.
., ., ., ., ., ., .,
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
20) The Eurocurrency market continues to thrive because it is a large international money marketrel
., ., ., ., ., ., ., ., ., ., ., ., ., .,
atively free from governmental regulation and interference. Recent events may lead to greater regul
., ., ., ., ., ., ., ., ., ., ., ., .,
ation.
Answer: TRUEDiff ., .,
:1
.,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Recognition
AACSB: Application of knowledge . , ., .,
21) The theme dominating global financial markets today is the complexity of risks associatedwi
., ., ., ., ., ., ., ., ., ., ., ., .,
th financial globalization. List and explain examples of the complexity of risks affecting theleadi
., ., ., ., ., ., ., ., ., ., ., ., ., .,
ng and managing of multinational firms in the rapidly moving marketplace.
., ., ., ., ., ., ., ., ., .,
Answer: The following is a sampling of this complexity of risks: 1) The international monetary sy
.,.,. , ., ., ., ., ., ., ., ., ., .,.,. , ., ., ., .,
stem is under constant scrutiny. The rise of the Chinese renminbi is changing much of the world's o
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
utlook on currency exchange, reserve currencies, and the roles of the dollar and the euro. 2) Large fi
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
scal deficits, including the current eurozone crisis, plague most of the major trading countries of the
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
world, complicating fiscal and monetary policies, and ultimately, interestrates and exchange rates.
., ., ., ., ., ., ., ., ., ., ., ., .,
3) Many countries experience continuing balance of payments imbalances, and in some cases, dang
., ., ., ., ., ., ., ., ., ., ., ., .,
erously large deficits and surpluses. 4) Ownership, control, and governance vary radically across th
., ., ., ., ., ., ., ., ., ., ., ., .,
e world. 5) Global capital markets that normally provide the means to lower a firm's cost of capital,
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
and even more critically, increase the availability of capital, have in many ways shrunk in size and h
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ave become less open and accessible to many of the world's organizations. 6) Financial globalizatio
., ., ., ., ., ., ., ., ., ., ., ., ., .,
n has resulted in the ebb and flow of capital inand out of both industrial and emerging markets, great
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ly complicating financial management.
., ., .,
Diff: 1 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
5
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
,https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
22) Business involves the interaction of individuals and individual organizations for the exchange ., ., ., ., ., ., ., ., ., ., ., .,
of products, services, and capital through markets. The global capital markets are critical for the co
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
nduct of this exchange. The authors suggest that one way to characterize the global financial marke
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
tplace is through its assets, institutions, and linkages. Explain how each ofthe three dimensions char
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
acterize the global financial marketplace. ., ., ., .,
Answer: 1) The financial assets at the heart of the global capital markets are the debt securities issu
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ed by governments. These low-risk or risk-
., ., ., ., ., .,
free assets (e.g., U.S. Treasury Bonds) form the foundation for the creation, trading, and pricing of
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
other financial assets like bank loans, corporate bonds, and equities (stock). In recent years, a numb
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
er of additional securities have been created from existing securities-
., ., ., ., ., ., ., ., .,
derivatives, whose value is based on market value changesof the underlying securities. The health a
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
nd security of the global financial system relies on the quality of these assets. 2) The institutions of
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
global finance are the central banks, which create and control each country's money supply; the co
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
mmercial banks, which take deposits and extendloans to businesses, both local and global; and the
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
multitude of other financial institutions created to trade securities and derivatives. These institution
., ., ., ., ., ., ., ., ., ., ., .,
s take many shapes and are subject tomany different regulatory frameworks. The health and securit
., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
y of the global financial system relies on the stability of these financial institutions. 3) The links bet
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
ween the financial institutions, the actual fluid or medium for exchange, are the interbank networks
., ., ., ., ., ., ., ., ., ., ., ., ., ., .
using currency.The ready exchange of currencies in the global marketplace is the first and foremos
, ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
t necessary element for the conduct of financial trading, and the global currency markets are the lar
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
gest markets in the world. The exchange of currencies, and the subsequent exchange of all other sec
., ., ., ., ., ., ., ., ., ., ., ., ., ., ., .,
urities globally via currency, is the international interbank network.
., ., ., ., ., ., ., .,
Diff: 2 .,
L.O.: 1.1 The Global Financial MarketplaceSkill:
., ., ., ., ., ., .,
Conceptual
AACSB: Application of knowledge . , ., .,
1.2 The Theory of Comparative Advantage ., ., ., .,
1) The theory that suggests specialization by country can increase worldwide production is:
., ., ., ., ., ., ., ., ., ., .,
A) the theory of comparative advantage. ., ., ., .,
B) the theory of foreign direct investment. ., ., ., ., .,
C) the international Fisher effect. ., ., .,
D) the theory of working capital management. ., ., ., ., ., .,
Answer: A .,
Diff: 1 .,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
6
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
, https://browsegrades.net/singlePaper/416756/testbank-and-solution-manua-for-multinational-bu
2) Which of the following is NOT a reason governments interfere with comparative advantage?
., ., ., ., ., ., ., ., ., ., ., .,
A) Governments attempt to achieve full employment. ., ., ., ., .,
B) Governments promote economic development. ., ., .,
C) national self-sufficiency in defense-related industries
., ., ., .,
D) All are reasons governments interfere with comparative advantage.
., ., ., ., ., ., ., .,
Answer: D .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
3) Which of the following factors of production DO NOT flow freely between countries?
., ., ., ., ., ., ., ., ., ., ., .,
A) raw materials .,
B) financial capital .,
C) (non-military) technology .,
D) All of the above factors of production flow freely among countries.A
., ., ., ., ., ., ., ., ., ., .,
nswer: A .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
4) Which of the following would NOT be a way to implement comparative advantage?
., ., ., ., ., ., ., ., ., ., ., .,
A) IBM exports computers to Egypt.
., ., ., .,
B) Computer hardware is designed in the United States but manufactured and assembled inK
., ., ., ., ., ., ., ., ., ., ., ., .,
orea.
C) Water of the greatest purity is obtained from wells in Oregon, bottled, and exportedw
., ., ., ., ., ., ., ., ., ., ., ., ., .,
orldwide.
D) All of the above are examples of ways to implement comparative advantage.A
., ., ., ., ., ., ., ., ., ., ., .,
nswer: D .,
Diff: 2
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Conceptual
,
AACSB: Application of knowledge . , ., .,
5) Of the following, which would NOT be considered a way that government interferes withco
., ., ., ., ., ., ., ., ., ., ., ., ., .,
mparative advantage? .,
A) tariffs
B) managerial skills .,
C) quotas
D) other non- .,
tariff restrictionsAnswer: B
., ., .,
Diff: 1
.,
L.O.: 1.2 The Theory of Comparative AdvantageSkill:
., ., ., ., ., ., ., .
Recognition
,
AACSB: Application of knowledge . , ., .,
7
Copyright © 2023 Pearson Education, Inc. ., ., ., ., .,
