Created By: Solution Stuvia
SOLUTION MANUAL FOR
International Financial Management, 10th
Edition Eun Chapter 1-21 A+
Latest Update
1
,Created By: Solution Stuvia
SOLUTION MANUAL FOR
INTERNATIONAL FINANCIAL
MANAGEMENT, 10TH EDITION EUN A+
CHAPTER 1
GLOBALIZATION AND THE MULTINATIONAL FIRM
ANSWERS & SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS
QUESTIONS
1. WHY IS IT IMPORTANT TO STUDY INTERNATIONAL FINANCIAL
MANAGEMENT?
ANSWER: WE ARE NOW LIVING IN A WORLD WHERE ALL THE MAJOR ECONOMIC
FUNCTIONS, SUCH AS CONSUMPTION, PRODUCTION, INVESTMENT, AND
FINANCING, ARE HIGHLY GLOBALIZED. IT IS THUS ESSENTIAL FOR FINANCIAL
MANAGERS TO FULLY UNDERSTAND VITAL INTERNATIONAL DIMENSIONS OF
FINANCIAL MANAGEMENT.
THIS GLOBAL SHIFT IS IN MARKED CONTRAST TO A SITUATION THAT EXISTED
WHEN THE AUTHORS OF THIS BOOK WERE LEARNING FINANCE A FEW DECADES
2
,Created By: Solution Stuvia
AGO. AT THAT TIME, MOST PROFESSORS CUSTOMARILY (AND SAFELY, TO SOME
EXTENT) IGNORED INTERNATIONAL ASPECTS OF FINANCE. THIS MODE OF
OPERATION HAS BECOME UNTENABLE SINCE THEN.
2. HOW IS INTERNATIONAL FINANCIAL MANAGEMENT DIFFERENT
FROM DOMESTIC FINANCIAL MANAGEMENT?
3
, Created By: Solution Stuvia
ANSWER: THERE ARE THREE MAJOR DIMENSIONS THAT SET APART
INTERNATIONAL FINANCE FROM DOMESTIC FINANCE. THEY ARE:
1. FOREIGN EXCHANGE AND POLITICAL RISKS,
2. MARKET IMPERFECTIONS, AND
3. EXPANDED OPPORTUNITY SET.
3. DISCUSS THE MAJOR TRENDS THAT HAVE PREVAILED IN INTERNATIONAL
BUSINESS DURING THE LAST TWO DECADES.
ANSWER: THE 2000S BROUGHT A RAPID INTEGRATION OF INTERNATIONAL
CAPITAL AND FINANCIAL MARKETS. IMPETUS FOR GLOBALIZED FINANCIAL
MARKETS INITIALLY CAME FROM THE GOVERNMENTS OF MAJOR COUNTRIES
THAT HAD BEGUN TO DEREGULATE THEIR FOREIGN EXCHANGE AND CAPITAL
MARKETS. THE ECONOMIC
INTEGRATION AND GLOBALIZATION THAT BEGAN IN THE EIGHTIES AND
NINETIES ARE PICKING UP SPEED IN THE 2000S. TRADE LIBERALIZATION AND
ECONOMIC INTEGRATION CONTINUED TO PROCEED AT BOTH THE REGIONAL
AND GLOBAL LEVELS. DESPITE SOVEREIGN DEBT CRISIS IN EUROPE, MORE EU
MEMBER COUNTRIES HAVE ADOPTED THE COMMON CURRENCY, THE EURO,
THAT EFFECTIVELY BECAME THE SECOND GLOBAL CURRENCY AFTER THE U.S.
DOLLAR. IN THE LAST FEW YEARS, HOWEVER, ECONOMIC NATIONALISM HAS
BEEN GAINING SOME POPULARITY, AS EXEMPLIFIED BY THE BREXIT DECISION
OF THE UNITED KINGDOM AND THE SO-CALLED
4
SOLUTION MANUAL FOR
International Financial Management, 10th
Edition Eun Chapter 1-21 A+
Latest Update
1
,Created By: Solution Stuvia
SOLUTION MANUAL FOR
INTERNATIONAL FINANCIAL
MANAGEMENT, 10TH EDITION EUN A+
CHAPTER 1
GLOBALIZATION AND THE MULTINATIONAL FIRM
ANSWERS & SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS
QUESTIONS
1. WHY IS IT IMPORTANT TO STUDY INTERNATIONAL FINANCIAL
MANAGEMENT?
ANSWER: WE ARE NOW LIVING IN A WORLD WHERE ALL THE MAJOR ECONOMIC
FUNCTIONS, SUCH AS CONSUMPTION, PRODUCTION, INVESTMENT, AND
FINANCING, ARE HIGHLY GLOBALIZED. IT IS THUS ESSENTIAL FOR FINANCIAL
MANAGERS TO FULLY UNDERSTAND VITAL INTERNATIONAL DIMENSIONS OF
FINANCIAL MANAGEMENT.
THIS GLOBAL SHIFT IS IN MARKED CONTRAST TO A SITUATION THAT EXISTED
WHEN THE AUTHORS OF THIS BOOK WERE LEARNING FINANCE A FEW DECADES
2
,Created By: Solution Stuvia
AGO. AT THAT TIME, MOST PROFESSORS CUSTOMARILY (AND SAFELY, TO SOME
EXTENT) IGNORED INTERNATIONAL ASPECTS OF FINANCE. THIS MODE OF
OPERATION HAS BECOME UNTENABLE SINCE THEN.
2. HOW IS INTERNATIONAL FINANCIAL MANAGEMENT DIFFERENT
FROM DOMESTIC FINANCIAL MANAGEMENT?
3
, Created By: Solution Stuvia
ANSWER: THERE ARE THREE MAJOR DIMENSIONS THAT SET APART
INTERNATIONAL FINANCE FROM DOMESTIC FINANCE. THEY ARE:
1. FOREIGN EXCHANGE AND POLITICAL RISKS,
2. MARKET IMPERFECTIONS, AND
3. EXPANDED OPPORTUNITY SET.
3. DISCUSS THE MAJOR TRENDS THAT HAVE PREVAILED IN INTERNATIONAL
BUSINESS DURING THE LAST TWO DECADES.
ANSWER: THE 2000S BROUGHT A RAPID INTEGRATION OF INTERNATIONAL
CAPITAL AND FINANCIAL MARKETS. IMPETUS FOR GLOBALIZED FINANCIAL
MARKETS INITIALLY CAME FROM THE GOVERNMENTS OF MAJOR COUNTRIES
THAT HAD BEGUN TO DEREGULATE THEIR FOREIGN EXCHANGE AND CAPITAL
MARKETS. THE ECONOMIC
INTEGRATION AND GLOBALIZATION THAT BEGAN IN THE EIGHTIES AND
NINETIES ARE PICKING UP SPEED IN THE 2000S. TRADE LIBERALIZATION AND
ECONOMIC INTEGRATION CONTINUED TO PROCEED AT BOTH THE REGIONAL
AND GLOBAL LEVELS. DESPITE SOVEREIGN DEBT CRISIS IN EUROPE, MORE EU
MEMBER COUNTRIES HAVE ADOPTED THE COMMON CURRENCY, THE EURO,
THAT EFFECTIVELY BECAME THE SECOND GLOBAL CURRENCY AFTER THE U.S.
DOLLAR. IN THE LAST FEW YEARS, HOWEVER, ECONOMIC NATIONALISM HAS
BEEN GAINING SOME POPULARITY, AS EXEMPLIFIED BY THE BREXIT DECISION
OF THE UNITED KINGDOM AND THE SO-CALLED
4
