Multinational Business Finance 15th Edition Test Bank | Eiteman, Stonehill & Moffett – 2025 International Finance & FX Risk Q&A

Test Bank g




Multinational Business Finance, Fifteenth Edition
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Global Edition
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Authors: David K. Eiteman, Arthur I. Stonehill & Micha
g g g g g g g g



el H. Moffett
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ThunderbirdgSchoolgofgGlobalgManagementg
atgArizonagStategUniversity
MultinationalgBusinessgFinance,g15e,gGlobalgEdition

1.1 FinancialgGlobalizationgandgRisk

1) Financialgglobalizationghasgnotgresultedgin:
A) continuinggimbalancesgofgbalancegofgpayments.
B) angincreasegingquantitygandgspeedgingthegflowgofgcapitalgacrossgthegworld.
C) capitalgmarketsglessgopengandgagdecreasegingthegavailabilitygofgcapitalgforgmanygorganizations.
D) uniformgwaysgofgownership,gcontrol,gandggovernancegacrossgthegworld
.gAnswer:g D
Diff:g1
L.O.:g 1.1gFinancialgGlobalizationgandgRiskgSki
ll:g Recognition
AACSB:g Applicationgofgknowledge

2) BRICsgisgagtermgusedginginternationalgfinancegtogrepresentgassetsgthatgaregconsideredgtogb
eginexpensivegandgsturdy,gbutgfundamentallygunsoundgandgandgincapablegofgcopinggwithgth
egupheavalsgnowgapparentginginternationalgfinancialgmarkets.
Answer:g FALSEgD
iff:g1
L.O.:g 1.1gFinancialgGlobalizationgandgRiskgSki
ll:g Recognition
AACSB:g Applicationgofgknowledge

3) Multinationalgenterprisesg(MNEs)garegfirms,gbothgforgprofitgcompaniesgandgnot-for-
profitgorganizations,gthatghavegoperationsgingmoregthangonegcountry,gandgconductgtheirgbusinessg
throughgforeigngsubsidiaries,gbranches,gorgjointgventuresgwithghostgcountrygfirms.

,Answer:g TRUEgDi
ff:g1
L.O.:g 1.1gFinancialgGlobalizationgandgRiskgSki
ll:g Recognition
AACSB:g Applicationgofgknowledge

4) Ownership,gcontrol,gandggovernancegchangesgradicallygacrossgthegworld.gThegpubliclygtrade
dgcompanygisgnotgthegdominantgglobalgbusinessgorganization—thegprivatelygheldgorgfamily-
ownedgbusinessgisgthegprevalentgstructure—
andgtheirggoalsgandgmeasuresgofgperformancegdiffergdramatically.
Answer:g TRUEgDi
ff:g1
L.O.:g 1.1gFinancialgGlobalizationgandgRiskgSki
ll:g Recognition
AACSB:g Applicationgofgknowledge

,5) Thegthemegdominatinggglobalgfinancialgmarketsgtodaygisgthegcomplexitygofgrisksgassociated
gwithgfinancialgglobalization.gListgandgexplaingexamplesgofgthegcomplexitygofgrisksgaffectinggt
hegleadinggandgmanaginggofgmultinationalgfirmsgingthegrapidlygmovinggmarketplace.
Answer:g Thegfollowinggisgagsamplinggofgthisgcomplexitygofgrisks:g1)gTheginternationalgmonetar
ygsystemgisgundergconstantgscrutiny.gThegrisegofgthegChinesegrenminbigisgchanginggmuchgofgtheg
world'sgoutlookgongcurrencygexchange,greservegcurrencies,gandgthegrolesgofgthegdollargandgthegeu
ro.g2)gLargegfiscalgdeficits,gincludinggthegcurrentgeurozonegcrisis,gplaguegmostgofgthegmajorgtradi
nggcountriesgofgthegworld,gcomplicatinggfiscalgandgmonetarygpolicies,gandgultimately,ginterestgrat
esgandgexchangegrates.g3)gManygcountriesgexperiencegcontinuinggbalancegofgpaymentsgimbalanc
es,gandgingsomegcases,gdangerouslyglargegdeficitsgandgsurpluses.g4)gOwnership,gcontrol,gandggov
ernancegvarygradicallygacrossgthegworld.g5)gGlobalgcapitalgmarketsgthatgnormallygprovidegthegme
ansgtoglowergagfirm'sgcostgofgcapital,gandgevengmoregcritically,gincreasegthegavailabilitygofgcapita
l,ghavegingmanygwaysgshrunkgingsizegandghavegbecomeglessgopengandgaccessiblegtogmanygofgtheg
world'sgorganizations.g6)gFinancialgglobalizationghasgresultedgingthegebbgandgflowgofgcapitalginga
ndgoutgofgbothgindustrialgandgemerginggmarkets,ggreatlygcomplicatinggfinancialgmanagement.
Diff:g1
L.O.:g 1.1gFinancialgGlobalizationgandgRiskgSki
ll:g Conceptual
AACSB:g Applicationgofgknowledge

1.2 ThegGlobalgFinancialgMarketplace

1) Agwell-established,glargegU.S.-
basedgMNEgwillgprobablygNOTgbegablegtogovercomegwhichgofgthegfollowinggobstaclesgtogmaxi
mizinggfirmgvalue?
A) angopengmarketgplace
B) highgqualitygstrategicgmanagement
C) accessgtogcapital
D) nonegofgthegabove
gAnswer:g D
Diff:g1
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Conceptual
AACSB:g Applicationgofgknowledge

2) Agwell-established,glargegChina-
basedgMNEgwillgprobablygbegmostgadverselygaffectedgbygwhichgofgthegfollowinggelementsg
ofgfirmgvalue?
A) angopengmarketplace
B) high-qualitygstrategicgmanagement
C) accessgtogcapital
D) accessgtogqualifiedglaborgpool
gAnswer:g A
Diff:g2
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Conceptual
AACSB:g Applicationgofgknowledge

, 3) Agwell-established,glarge,gBrazil-
basedgMNEgwillgprobablygbegmostgadverselygaffectedgbygwhichgofgthegfollowinggelementsg
ofgfirmgvalue?
A) angopengmarketplace
B) high-qualitygstrategicgmanagement
C) accessgtogcapital
D) accessgtogqualifiedglaborgpool
gAnswer:g C
Diff:g2
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Conceptual
AACSB:g Applicationgofgknowledge

4) Agmajorgcostgavoidedgingthegeurocurrencygmarketsgisgthegpaymentgofgdepositginsurancegfee
s,gsuchgas:
A) FederalgDepositgInsurancegCorporationg-gFDIC
B) OfficegofgthegComptrollergofgthegCurrencyg-gOCC
C) InternationalgMonetarygFundg-gIMF
D) WorldgBankg-
gWBgAnswer:g A
Diff:g2
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Recognition
AACSB:g Applicationgofgknowledge

5) Thegmoderngeurocurrencygmarketgwasgborngshortlygafter:
A) WorldgWargII
B) WorldgWargI
C) KoreangWar
D) BosniangWar
gAnswer:g Ag Di
ff:g1
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Recognition
AACSB:g Applicationgofgknowledge

6) Thegreferencegrategofginterestgingthegeurocurrencygmarketgisgthe:
A) LondongInterbankgOfferedgRate
B) Primagrate
C) Federalgfundsgrate
D) Treasurygrate
gAnswer:g Ag Di
ff:g1
L.O.:g 1.2gThegGlobalgFinancialgMarketplacegS
kill:g Recognition
AACSB:g Applicationgofgknowledge