TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
TEST BANK for International Financial Management
10th Edition by Cheol Eun, Bruce Resnick and Tuugi
Chuluun. ISBN-13: 9781260013870
Test51Ban Page511
k
, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
MULTIPLE51CHOICE51-
51Choose51the51one51alternative51that51best51completes51the51statement51or51answers51the51qu
estion.
1) What51major51dimension51sets51apart51international51finance51from51domestic51finance?
A) Foreign51exchange51and51political51risks
B) Market51imperfections
C) Expanded51opportunity51set
D) all51of51the51options
2) An51example(s)51of51a51political51risk51is
A) expropriation51of51assets.
B) adverse51change51in51tax51rules.
C) the51opposition51party51being51elected.
D) both51the51expropriation51of51assets51and51adverse51changes51in51tax51rules51are51correct.
3) Production51of51goods51and51services51has51become51globalized51to51a51large51extent51as51a51r
esult51of
A) natural51resources51being51depleted51in51one51country51after51another.
B) skilled51labor51being51highly51mobile.
C) multinational51corporations'51efforts51to51source51inputs51and51locate51production51a
nywhere51where51costs51are51lower51and51profits51higher.
D) common51tastes51worldwide51for51the51same51goods51and51services.
Test51Ban Page512
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, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
4) Recently,51financial51markets51have51become51highly51integrated.51This51development
Test51Ban Page513
k
, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
A) allows51investors51to51diversify51their51portfolios51internationally.
B) allows51minority51investors51to51buy51and51sell51stocks.
C) has51increased51the51cost51of51capital51for51firms.
D) none51of51the51options
5) Japan51has51experienced51large51trade51surpluses.51Japanese51investors51have51responded51to5
1this51by
A) liquidating51their51positions51in51stocks51to51buy51dollar-denominated51bonds.
B) investing51heavily51in51U.S.51and51other51foreign51financial51markets.
C) lobbying51the51U.S.51government51to51depreciate51its51currency.
D) lobbying51the51Japanese51government51to51allow51the51yen51to51appreciate.
6) Suppose51your51firm51invests51$100,00051in51a51project51in51Italy.51At51the51time51the51excha
nge51rate51is
$1.2551=51€1.00.51One51year51later51the51exchange51rate51is51the51same,51but51the51Italian51governme
nt51has51expropriated51your51firm's51assets51paying51only51€80,00051in51compensation.51This51is51an51
example51of
A) exchange51rate51risk.
B) political51risk.
C) market51imperfections.
D) none51of51the51options,51since51$100,00051=51€80,00051×51$1.25/€1.00.
Test51Ban Page514
k
nick51and51Tuugi
Chuluun.
TEST BANK for International Financial Management
10th Edition by Cheol Eun, Bruce Resnick and Tuugi
Chuluun. ISBN-13: 9781260013870
Test51Ban Page511
k
, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
MULTIPLE51CHOICE51-
51Choose51the51one51alternative51that51best51completes51the51statement51or51answers51the51qu
estion.
1) What51major51dimension51sets51apart51international51finance51from51domestic51finance?
A) Foreign51exchange51and51political51risks
B) Market51imperfections
C) Expanded51opportunity51set
D) all51of51the51options
2) An51example(s)51of51a51political51risk51is
A) expropriation51of51assets.
B) adverse51change51in51tax51rules.
C) the51opposition51party51being51elected.
D) both51the51expropriation51of51assets51and51adverse51changes51in51tax51rules51are51correct.
3) Production51of51goods51and51services51has51become51globalized51to51a51large51extent51as51a51r
esult51of
A) natural51resources51being51depleted51in51one51country51after51another.
B) skilled51labor51being51highly51mobile.
C) multinational51corporations'51efforts51to51source51inputs51and51locate51production51a
nywhere51where51costs51are51lower51and51profits51higher.
D) common51tastes51worldwide51for51the51same51goods51and51services.
Test51Ban Page512
k
, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
4) Recently,51financial51markets51have51become51highly51integrated.51This51development
Test51Ban Page513
k
, TEST51BANK51for51International51Financial51Management519th51Edition51by51Cheol51Eun,51Bruce51Res
nick51and51Tuugi
Chuluun.
A) allows51investors51to51diversify51their51portfolios51internationally.
B) allows51minority51investors51to51buy51and51sell51stocks.
C) has51increased51the51cost51of51capital51for51firms.
D) none51of51the51options
5) Japan51has51experienced51large51trade51surpluses.51Japanese51investors51have51responded51to5
1this51by
A) liquidating51their51positions51in51stocks51to51buy51dollar-denominated51bonds.
B) investing51heavily51in51U.S.51and51other51foreign51financial51markets.
C) lobbying51the51U.S.51government51to51depreciate51its51currency.
D) lobbying51the51Japanese51government51to51allow51the51yen51to51appreciate.
6) Suppose51your51firm51invests51$100,00051in51a51project51in51Italy.51At51the51time51the51excha
nge51rate51is
$1.2551=51€1.00.51One51year51later51the51exchange51rate51is51the51same,51but51the51Italian51governme
nt51has51expropriated51your51firm's51assets51paying51only51€80,00051in51compensation.51This51is51an51
example51of
A) exchange51rate51risk.
B) political51risk.
C) market51imperfections.
D) none51of51the51options,51since51$100,00051=51€80,00051×51$1.25/€1.00.
Test51Ban Page514
k
