Test Bank for International Financial Management 9th Edition (2026) by Cheol S. Eun – ISBN 978-1260013870 | Exam Questions & Solutions Manual

TEST BANK FOR INTERNATIONAL FINANCIAL
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MANAGEMENT 9TH EDITION BY CHEOL EUN, BRUCE
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RESNICK AND TUUGI CHULUUN. ISBN-13: 9781260013870
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v FULL TESTBANK ALL CHAPTERS INCLUDED|| LATEST AND
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COMPLETE UPDATE GRADED A+
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MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
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answers the question.
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1) What major dimension sets apart international finance from domestic finance?
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A) Foreign exchange and political risks
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B) Market imperfections v


C) Expanded opportunity set v v


D) all of the options
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2) An example(s) of a political risk is
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A) expropriation of assets. v v


B) adverse change in tax rules. v v v v


C) the opposition party being elected.
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D) both the expropriation of assets and adverse changes in tax rules are correct.
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3) Production of goods and services has become globalized to a large extent as a result of
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A) natural resources being depleted in one country after another.
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B) skilled labor being highly mobile. v v v v


C) multinational corporations' efforts to source inputs and locate production
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anywhere where costs are lower and profits higher.
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D) common tastes worldwide for the same goods and services.
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4) Recently, financial markets have become highly integrated. This development
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A) allows investors to diversify their portfolios internationally.
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B) allows minority investors to buy and sell stocks.
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C) has increased the cost of capital for firms.
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D) none of the options v v v




5) Japan has experienced large trade surpluses. Japanese investors have responded to this by
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A) liquidating their positions in stocks to buy dollar-denominated bonds. v v v v v v v v


B) investing heavily in U.S. and other foreign financial markets.
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C) lobbying the U.S. government to depreciate its currency.
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D) lobbying the Japanese government to allow the yen to appreciate.
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6) Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is
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$1.25 = €1.00. One year later the exchange rate is the same, but the Italian government has
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expropriated your firm's assets paying only €80,000 in compensation. This is an example of
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A) exchange rate risk. v v


B) political risk. v


C) market imperfections. v


D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
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7) Suppose you start with $100 and buy stock for £50 when the exchange rate is £1 =
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$2. One year later, the stock rises to £60. You are happy with your 20 percent return on the
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stock, but when you sell the stock and exchange your £60 for dollars, you only get $45 since
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the pound has fallen to £1 = $0.75. This loss of value is an example of
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A) exchange rate risk. v v


B) political risk. v


C) market imperfections. v

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D) weakness in the dollar. v v v




8) Suppose that Great Britain is a major export market for your firm, a U.S.-based MNC.
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If the British pound depreciates against the U.S. dollar,
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A) your firm will be able to charge more in dollar terms while keeping pound prices
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stable.
B) your firm may be priced out of the U.K. market, to the extent that your dollar costs
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stay constant and your pound prices will rise.
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C) to protect U.K. market share, your firm may have to cut the dollar price of your
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goods to keep the pound price the same.
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D) your firm may be priced out of the U.K. market, to the extent that your dollar
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costs stay constant and your pound prices will rise, and to protect U.K. market share, your
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firm may have to cut the dollar price of your goods to keep the pound price the same.
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9) Suppose Mexico is a major export market for your U.S.-based company and the
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Mexican peso appreciates drastically against the U.S. dollar. This means
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A) your company's products can be priced out of the Mexican market, as the peso price of
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American imports will rise following the peso's fall.
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B) your firm will be able to charge more in dollar terms while keeping peso prices stable.
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C) your domestic competitors will enjoy a period of facing lessened price competition
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from Mexican imports.
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D) your firm will be able to charge more in dollar terms while keeping peso prices
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stable and your domestic competitors will enjoy a period of facing lessened price competition
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from Mexican imports.
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10) Suppose Mexico is a major export market for your U.S.-based company and the
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Mexican peso depreciates drastically against the U.S. dollar, as it did in December 1994. This
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means that
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A) your company's products can be priced out of the Mexican market, as the peso price of
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