TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
TEST BANK for International Financial Management 9th
i i i i i i
i Edition by Cheol Eun, Bruce Resnick and Tuugi
i i i i i i i
i Chuluun. ISBN-13: 9781260013870
i i
Test iBank Page i1
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
MULTIPLE iCHOICE i- iChoose ithe ione ialternative ithat ibest icompletes ithe istatement ior
i answers ithe iquestion.
1) What imajor idimension isets iapart iinternational ifinance ifrom idomestic ifinance?
A) Foreign iexchange iand ipolitical irisks
B) Market iimperfections
C) Expanded iopportunity iset
D) all iof ithe ioptions
2) An iexample(s) iof ia ipolitical irisk iis
A) expropriation iof iassets.
B) adverse ichange iin itax irules.
C) the iopposition iparty ibeing ielected.
D) both ithe iexpropriation iof iassets iand iadverse ichanges iin itax irules iare icorrect.
3) Production iof igoods iand iservices ihas ibecome iglobalized ito ia ilarge iextent ias ia iresult iof
A) natural iresources ibeing idepleted iin ione icountry iafter ianother.
B) skilled ilabor ibeing ihighly imobile.
C) multinational icorporations' iefforts ito isource iinputs iand ilocate iproduction
anywhere iwhere icosts iare ilower iand iprofits ihigher.
i
D) common itastes iworldwide ifor ithe isame igoods iand iservices.
4) Recently, ifinancial imarkets ihave ibecome ihighly iintegrated. iThis idevelopment
Test iBank Page i2
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
A) allows iinvestors ito idiversify itheir iportfolios iinternationally.
B) allows iminority iinvestors ito ibuy iand isell istocks.
C) has iincreased ithe icost iof icapital ifor ifirms.
D) none iof ithe ioptions
5) Japan ihas iexperienced ilarge itrade isurpluses. iJapanese iinvestors ihave iresponded ito ithis iby
A) liquidating itheir ipositions iin istocks ito ibuy idollar-denominated ibonds.
B) investing iheavily iin iU.S. iand iother iforeign ifinancial imarkets.
C) lobbying ithe iU.S. igovernment ito idepreciate iits icurrency.
D) lobbying ithe iJapanese igovernment ito iallow ithe iyen ito iappreciate.
6) Suppose iyour ifirm iinvests i$100,000 iin ia iproject iin iItaly. iAt ithe itime ithe iexchange irate iis
$1.25 i= i€1.00. iOne iyear ilater ithe iexchange irate iis ithe isame, ibut ithe iItalian igovernment ihas
i expropriated iyour ifirm's iassets ipaying ionly i€80,000 iin icompensation. iThis iis ian iexample iof
A) exchange irate irisk.
B) political irisk.
C) market iimperfections.
D) none iof ithe ioptions, isince i$100,000 i= i€80,000 i× i$1.25/€1.00.
Test iBank Page i3
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
7) Suppose iyou istart iwith i$100 iand ibuy istock ifor i£50 iwhen ithe iexchange irate iis i£1 i=
i $2. iOne iyear ilater, ithe istock irises ito i£60. iYou iare ihappy iwith iyour i20 ipercent ireturn ion ithe
i stock, ibut iwhen iyou isell ithe istock iand iexchange iyour i£60 ifor idollars, iyou ionly iget i$45 isince
the ipound ihas ifallen ito i£1 i= i$0.75. iThis iloss iof ivalue iis ian iexample iof
i
A) exchange irate irisk.
B) political irisk.
C) market iimperfections.
D) weakness iin ithe idollar.
8) Suppose ithat iGreat iBritain iis ia imajor iexport imarket ifor iyour ifirm, ia iU.S.-based iMNC.
i If ithe iBritish ipound idepreciates iagainst ithe iU.S. idollar,
A) your ifirm iwill ibe iable ito icharge imore iin idollar iterms iwhile ikeeping ipound iprices
stable.
B) your ifirm imay ibe ipriced iout iof ithe iU.K. imarket, ito ithe iextent ithat iyour idollar icosts
stay iconstant iand iyour ipound iprices iwill irise.
C) to iprotect iU.K. imarket ishare, iyour ifirm imay ihave ito icut ithe idollar iprice iof iyour
i goods ito ikeep ithe ipound iprice ithe isame.
D) your ifirm imay ibe ipriced iout iof ithe iU.K. imarket, ito ithe iextent ithat iyour idollar
i costs istay iconstant iand iyour ipound iprices iwill irise, iand ito iprotect iU.K. imarket ishare, iyour
i firm imay ihave ito icut ithe idollar iprice iof iyour igoods ito ikeep ithe ipound iprice ithe isame.
9) Suppose iMexico iis ia imajor iexport imarket ifor iyour iU.S.-based icompany iand ithe
Mexican ipeso iappreciates idrastically iagainst ithe iU.S. idollar. iThis imeans
i
Test iBank Page i4
iTuugi
Chuluun.
TEST BANK for International Financial Management 9th
i i i i i i
i Edition by Cheol Eun, Bruce Resnick and Tuugi
i i i i i i i
i Chuluun. ISBN-13: 9781260013870
i i
Test iBank Page i1
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
MULTIPLE iCHOICE i- iChoose ithe ione ialternative ithat ibest icompletes ithe istatement ior
i answers ithe iquestion.
1) What imajor idimension isets iapart iinternational ifinance ifrom idomestic ifinance?
A) Foreign iexchange iand ipolitical irisks
B) Market iimperfections
C) Expanded iopportunity iset
D) all iof ithe ioptions
2) An iexample(s) iof ia ipolitical irisk iis
A) expropriation iof iassets.
B) adverse ichange iin itax irules.
C) the iopposition iparty ibeing ielected.
D) both ithe iexpropriation iof iassets iand iadverse ichanges iin itax irules iare icorrect.
3) Production iof igoods iand iservices ihas ibecome iglobalized ito ia ilarge iextent ias ia iresult iof
A) natural iresources ibeing idepleted iin ione icountry iafter ianother.
B) skilled ilabor ibeing ihighly imobile.
C) multinational icorporations' iefforts ito isource iinputs iand ilocate iproduction
anywhere iwhere icosts iare ilower iand iprofits ihigher.
i
D) common itastes iworldwide ifor ithe isame igoods iand iservices.
4) Recently, ifinancial imarkets ihave ibecome ihighly iintegrated. iThis idevelopment
Test iBank Page i2
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
A) allows iinvestors ito idiversify itheir iportfolios iinternationally.
B) allows iminority iinvestors ito ibuy iand isell istocks.
C) has iincreased ithe icost iof icapital ifor ifirms.
D) none iof ithe ioptions
5) Japan ihas iexperienced ilarge itrade isurpluses. iJapanese iinvestors ihave iresponded ito ithis iby
A) liquidating itheir ipositions iin istocks ito ibuy idollar-denominated ibonds.
B) investing iheavily iin iU.S. iand iother iforeign ifinancial imarkets.
C) lobbying ithe iU.S. igovernment ito idepreciate iits icurrency.
D) lobbying ithe iJapanese igovernment ito iallow ithe iyen ito iappreciate.
6) Suppose iyour ifirm iinvests i$100,000 iin ia iproject iin iItaly. iAt ithe itime ithe iexchange irate iis
$1.25 i= i€1.00. iOne iyear ilater ithe iexchange irate iis ithe isame, ibut ithe iItalian igovernment ihas
i expropriated iyour ifirm's iassets ipaying ionly i€80,000 iin icompensation. iThis iis ian iexample iof
A) exchange irate irisk.
B) political irisk.
C) market iimperfections.
D) none iof ithe ioptions, isince i$100,000 i= i€80,000 i× i$1.25/€1.00.
Test iBank Page i3
, TEST iBANK ifor iInternational iFinancial iManagement i9th iEdition iby iCheol iEun, iBruce iResnick iand
iTuugi
Chuluun.
7) Suppose iyou istart iwith i$100 iand ibuy istock ifor i£50 iwhen ithe iexchange irate iis i£1 i=
i $2. iOne iyear ilater, ithe istock irises ito i£60. iYou iare ihappy iwith iyour i20 ipercent ireturn ion ithe
i stock, ibut iwhen iyou isell ithe istock iand iexchange iyour i£60 ifor idollars, iyou ionly iget i$45 isince
the ipound ihas ifallen ito i£1 i= i$0.75. iThis iloss iof ivalue iis ian iexample iof
i
A) exchange irate irisk.
B) political irisk.
C) market iimperfections.
D) weakness iin ithe idollar.
8) Suppose ithat iGreat iBritain iis ia imajor iexport imarket ifor iyour ifirm, ia iU.S.-based iMNC.
i If ithe iBritish ipound idepreciates iagainst ithe iU.S. idollar,
A) your ifirm iwill ibe iable ito icharge imore iin idollar iterms iwhile ikeeping ipound iprices
stable.
B) your ifirm imay ibe ipriced iout iof ithe iU.K. imarket, ito ithe iextent ithat iyour idollar icosts
stay iconstant iand iyour ipound iprices iwill irise.
C) to iprotect iU.K. imarket ishare, iyour ifirm imay ihave ito icut ithe idollar iprice iof iyour
i goods ito ikeep ithe ipound iprice ithe isame.
D) your ifirm imay ibe ipriced iout iof ithe iU.K. imarket, ito ithe iextent ithat iyour idollar
i costs istay iconstant iand iyour ipound iprices iwill irise, iand ito iprotect iU.K. imarket ishare, iyour
i firm imay ihave ito icut ithe idollar iprice iof iyour igoods ito ikeep ithe ipound iprice ithe isame.
9) Suppose iMexico iis ia imajor iexport imarket ifor iyour iU.S.-based icompany iand ithe
Mexican ipeso iappreciates idrastically iagainst ithe iU.S. idollar. iThis imeans
i
Test iBank Page i4
