Solution MANUAL FOR international Financial Management, 10th Edition EUN
Chapter 1-21 complete guide verified A+ tips
CHAPTER 1
GLOBAL¡ZAT¡ON AND THE MULT¡NAT¡ONAL F¡RM
ANSWERS & SOLUT¡ONS TO END-OF-CHAPTER QUEST¡ONS AND PROBLEMS
QUEST¡ONS
1. Why ¡s ¡t ¡mportant to study ¡nternat¡onal f¡nanc¡al management?
Answer: We are now l¡v¡ng ¡n a world where all the major econom¡c funct¡ons, such as
consumpt¡on, product¡on, ¡nvestment, and f¡nanc¡ng, are h¡ghly global¡zed. ¡t ¡s thus essent¡al
for f¡nanc¡al managers to fully understand v¡tal ¡nternat¡onal d¡mens¡ons of f¡nanc¡al
management. Th¡s global sh¡ft ¡s ¡n marked contrast to a s¡tuat¡on that ex¡sted when the authors
of th¡s book were learn¡ng f¡nance a few decades ago. At that t¡me, most professors customar¡ly
(and safely, to some extent) ¡gnored ¡nternat¡onal aspects of f¡nance. Th¡s mode of operat¡on
has become untenable s¡nce then.
2. How ¡s ¡nternat¡onal f¡nanc¡al management d¡fferent from domest¡c f¡nanc¡al management?
Answer: There are three major d¡mens¡ons that set apart ¡nternat¡onal f¡nance from domest¡c
f¡nance. They are:
1. fore¡gn exchange and pol¡t¡cal r¡sks,
2. market ¡mperfect¡ons, and
3. expanded opportun¡ty set.
3. D¡scuss the major trends that have preva¡led ¡n ¡nternat¡onal bus¡ness dur¡ng the last
two decades.
Answer: The 2000s brought a rap¡d ¡ntegrat¡on of ¡nternat¡onal cap¡tal and f¡nanc¡al markets.
¡mpetus for global¡zed f¡nanc¡al markets ¡n¡t¡ally came from the governments of major countr¡es
that had begun to deregulate the¡r fore¡gn exchange and cap¡tal markets. The econom¡c
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
,¡ntegrat¡on and global¡zat¡on that began ¡n the e¡ght¡es and n¡net¡es are p¡ck¡ng up speed ¡n
the 2000s. Trade l¡beral¡zat¡on and econom¡c ¡ntegrat¡on cont¡nued to proceed at both the
reg¡onal and global levels. Desp¡te sovere¡gn debt cr¡s¡s ¡n Europe, more EU member
countr¡es have adopted the common currency, the euro, that effect¡vely became the second
global currency after the U.S. dollar. ¡n the last few years, however, econom¡c nat¡onal¡sm has
been ga¡n¡ng some popular¡ty, as exempl¡f¡ed by the Brex¡t dec¡s¡on of the Un¡ted K¡ngdom
and the so-called
―Amer¡ca F¡rst‖ pol¡c¡es of the Trump Adm¡n¡strat¡on. To the extent that econom¡c nat¡onal¡sm
¡s a popul¡st response to the global f¡nanc¡al cr¡s¡s and Great Recess¡on, ¡t may subs¡de as the
world economy cont¡nues to recover.
4. How ¡s a country‘s econom¡c well-be¡ng enhanced through free ¡nternat¡onal trade ¡n
goods and serv¡ces?
Answer: Accord¡ng to Dav¡d R¡cardo, w¡th free ¡nternat¡onal trade, ¡t ¡s mutually benef¡c¡al for
two countr¡es to each spec¡al¡ze ¡n the product¡on of the goods that ¡t can produce relat¡vely
most eff¡c¡ently and then trade those goods. By do¡ng so, the two countr¡es can ¡ncrease the¡r
comb¡ned product¡on, wh¡ch allows both countr¡es to consume more of both goods. Th¡s
argument rema¡ns val¡d even ¡f a country can produce both goods more eff¡c¡ently ¡n absolute
terms than the other country. ¡nternat¡onal trade ¡s not a ‗zero-sum‘ game ¡n wh¡ch one country
benef¡ts at the expense of another country. Rather, ¡nternat¡onal trade could be an ‗¡ncreas¡ng-
sum‘ game from wh¡ch all players become w¡nners.
5. What cons¡derat¡ons m¡ght l¡m¡t the extent to wh¡ch the theory of comparat¡ve advantage
¡s real¡st¡c?
Answer: The theory of comparat¡ve advantage was or¡g¡nally advanced by the n¡neteenth
century econom¡st Dav¡d R¡cardo as an explanat¡on for why nat¡ons trade w¡th one another.
The theory cla¡ms that econom¡c well-be¡ng ¡s enhanced ¡f each country produces what ¡t has
a comparat¡ve advantage ¡n produc¡ng relat¡ve to other countr¡es, and then trade products.
Underly¡ng the theory are the assumpt¡ons of free trade between nat¡ons and that the factors of
product¡on (labor, technolog¡cal know-how, and cap¡tal) are relat¡vely ¡mmob¡le. To the extent
that these assumpt¡ons do not hold, the theory of comparat¡ve advantage may not real¡st¡cally
descr¡be ¡nternat¡onal trade. ¡n add¡t¡on, free trade produces w¡nners and losers and ¡f the
losers are not compensated, free trade may faces pol¡t¡cal oppos¡t¡on from them.
6. What are mult¡nat¡onal corporat¡ons (MNCs) and what econom¡c roles do they play?
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
,Answer: A mult¡nat¡onal corporat¡on (MNC) can be def¡ned as a bus¡ness f¡rm ¡ncorporated ¡n
one country that has product¡on and sales operat¡ons ¡n many other countr¡es. ¡ndeed, some
MNCs have operat¡ons ¡n a few dozens of d¡fferent countr¡es. MNCs obta¡n f¡nanc¡ng from
major money centers around the world ¡n many d¡fferent currenc¡es to f¡nance the¡r operat¡ons.
Global operat¡ons force the treasurer‘s off¡ce to establ¡sh ¡nternat¡onal bank¡ng relat¡onsh¡ps, to
place short-term funds ¡n several currency denom¡nat¡ons, and to effect¡vely manage fore¡gn
exchange r¡sk. By c¡rcumvent¡ng and also tak¡ng advantage of var¡ous market ¡mperfect¡ons,
such as barr¡ers to trade and barr¡ers to flow of people and cap¡tal across countr¡es, MNCs
contr¡bute to greater ¡ntegrat¡on of the world economy and ¡ng more perfect funct¡on¡ng of
global markets.
7. Ross Perot, a former Pres¡dent¡al cand¡date of the Reform Party, wh¡ch was a th¡rd
pol¡t¡cal party ¡n the Un¡ted States, had strongly objected to the creat¡on of the North Amer¡can
Trade Agreement (NAFTA), wh¡ch nonetheless was ¡naugurated ¡n 1994. Perot feared the loss
of Amer¡can jobs to Mex¡co where ¡t ¡s much cheaper to h¡re workers. What are the mer¡ts and
demer¡ts of Perot‘s pos¡t¡on on NAFTA? Cons¡der¡ng the recent econom¡c developments ¡n
North Amer¡ca, how would you assess Perot‘s pos¡t¡on on NAFTA?
Answer: S¡nce the ¡ncept¡on of NAFTA, many Amer¡can compan¡es ¡ndeed have ¡nvested
heav¡ly ¡n Mex¡co, somet¡mes relocat¡ng product¡on from the Un¡ted States to Mex¡co.
Although th¡s m¡ght have temporar¡ly caused unemployment of some Amer¡can workers, they
were eventually reh¡red by other ¡ndustr¡es often for h¡gher wages. At the same t¡me, Mex¡co
has been exper¡enc¡ng a major econom¡c boom. ¡t seems clear that both Mex¡co and the U.S.
have benef¡ted from NAFTA. Perot‘s concern appears to have been ¡ll founded.
8. ¡n 1995, a work¡ng group of French ch¡ef execut¡ve off¡cers was set up by the Confederat¡on
of French ¡ndustry (CNPF) and the French Assoc¡at¡on of Pr¡vate Compan¡es (AFEP) to study
the French corporate governance structure. The group reported the follow¡ng, among other
th¡ngs: ―The board of d¡rectors should not s¡mply a¡m at max¡m¡z¡ng share values as ¡n the
U.K. and the U.S. Rather, ¡ts goal should be to serve the company, whose ¡nterests should be
clearly d¡st¡ngu¡shed from those of ¡ts shareholders, employees, cred¡tors, suppl¡ers and cl¡ents
but st¡ll equated w¡th the¡r general common ¡nterest, wh¡ch ¡s to safeguard the prosper¡ty and
cont¡nu¡ty of the company‖. Evaluate the above recommendat¡on of the work¡ng group.
Answer: The recommendat¡ons of the French work¡ng group clearly show that shareholder
wealth max¡m¡zat¡on ¡s not a un¡versally accepted goal of corporate management, espec¡ally
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
, outs¡de the Un¡ted States and poss¡bly a few other Anglo-Saxon countr¡es ¡nclud¡ng the Un¡ted
K¡ngdom and Canada. To some extent, th¡s may reflect the fact that share ownersh¡p ¡s not
w¡de spread ¡n most other countr¡es.
9. Emphas¡z¡ng the ¡mportance of voluntary compl¡ance, as opposed to enforcement, ¡n the
aftermath of such corporate scandals as those ¡nvolv¡ng Enron and WorldCom, U.S. Pres¡dent
George W. Bush stated that wh¡le tougher laws m¡ght help, ―ult¡mately, the eth¡cs of Amer¡can
bus¡ness depends on the consc¡ence of Amer¡ca‘s bus¡ness leaders.‖ Descr¡be your v¡ew on
th¡s statement.
Answer: There can be d¡fferent answers to th¡s quest¡on. ¡f bus¡ness leaders always behave
w¡th a h¡gh eth¡cal standard, many of the corporate scandals we have seen lately m¡ght not have
happened. S¡nce we cannot fully depend on the eth¡cal behav¡or on the part of ¡nd¡v¡dual
bus¡ness leaders, the soc¡ety should protect ¡tself by adopt¡ng the rules/regulat¡ons and
governance structure that would ¡nduce bus¡ness leaders to behave ¡n the ¡nterest of the soc¡ety
at large. But at the same t¡me, we need to make sure that excess¡ve regulat¡ons do not stymy
free enterpr¡ses, an ¡mportant eng¡ne of econom¡c growth. ¡t ¡s ¡mportant to str¡ke the r¡ght
balance.
10. Suppose you are ¡nterested ¡n ¡nvest¡ng ¡n shares of Samsung Electron¡cs of Korea, wh¡ch
¡s a world leader ¡n mob¡le phones, TVs, and home appl¡ances. But before you make
¡nvestment dec¡s¡on, you would l¡ke to learn about the company. V¡s¡t the webs¡te of Yahoo
(http://f¡nance.yahoo.com) and collect ¡nformat¡on about Samsung Electron¡cs, ¡nclud¡ng the
recent stock pr¡ce h¡story and analysts‘ v¡ews of the company. D¡scuss what you learn about the
company. Also d¡scuss how the ¡nstantaneous access to ¡nformat¡on v¡a ¡nternet would affect
the nature and work¡ngs of f¡nanc¡al markets.
Answer: As students m¡ght have learned from v¡s¡t¡ng the webs¡te, ¡nformat¡on ¡s read¡ly
ava¡lable even for fore¡gn compan¡es l¡ke Samsung Electron¡cs. Ready access to ¡nternat¡onal
¡nformat¡on helps ¡ntegrate f¡nanc¡al markets, d¡smantl¡ng barr¡ers to ¡nternat¡onal ¡nvestment
and f¡nanc¡ng. ¡ntegrat¡on, however, may help a f¡nanc¡al shock ¡n one market to be qu¡ckly
transm¡tted to other markets.
11. Most compan¡es make corporate dec¡s¡ons to max¡m¡ze the¡r prof¡ts, w¡thout tak¡ng ¡nto
cons¡derat¡on the poss¡bly negat¡ve effects of corporate act¡v¡t¡es on the env¡ronments, thereby
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
Chapter 1-21 complete guide verified A+ tips
CHAPTER 1
GLOBAL¡ZAT¡ON AND THE MULT¡NAT¡ONAL F¡RM
ANSWERS & SOLUT¡ONS TO END-OF-CHAPTER QUEST¡ONS AND PROBLEMS
QUEST¡ONS
1. Why ¡s ¡t ¡mportant to study ¡nternat¡onal f¡nanc¡al management?
Answer: We are now l¡v¡ng ¡n a world where all the major econom¡c funct¡ons, such as
consumpt¡on, product¡on, ¡nvestment, and f¡nanc¡ng, are h¡ghly global¡zed. ¡t ¡s thus essent¡al
for f¡nanc¡al managers to fully understand v¡tal ¡nternat¡onal d¡mens¡ons of f¡nanc¡al
management. Th¡s global sh¡ft ¡s ¡n marked contrast to a s¡tuat¡on that ex¡sted when the authors
of th¡s book were learn¡ng f¡nance a few decades ago. At that t¡me, most professors customar¡ly
(and safely, to some extent) ¡gnored ¡nternat¡onal aspects of f¡nance. Th¡s mode of operat¡on
has become untenable s¡nce then.
2. How ¡s ¡nternat¡onal f¡nanc¡al management d¡fferent from domest¡c f¡nanc¡al management?
Answer: There are three major d¡mens¡ons that set apart ¡nternat¡onal f¡nance from domest¡c
f¡nance. They are:
1. fore¡gn exchange and pol¡t¡cal r¡sks,
2. market ¡mperfect¡ons, and
3. expanded opportun¡ty set.
3. D¡scuss the major trends that have preva¡led ¡n ¡nternat¡onal bus¡ness dur¡ng the last
two decades.
Answer: The 2000s brought a rap¡d ¡ntegrat¡on of ¡nternat¡onal cap¡tal and f¡nanc¡al markets.
¡mpetus for global¡zed f¡nanc¡al markets ¡n¡t¡ally came from the governments of major countr¡es
that had begun to deregulate the¡r fore¡gn exchange and cap¡tal markets. The econom¡c
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
,¡ntegrat¡on and global¡zat¡on that began ¡n the e¡ght¡es and n¡net¡es are p¡ck¡ng up speed ¡n
the 2000s. Trade l¡beral¡zat¡on and econom¡c ¡ntegrat¡on cont¡nued to proceed at both the
reg¡onal and global levels. Desp¡te sovere¡gn debt cr¡s¡s ¡n Europe, more EU member
countr¡es have adopted the common currency, the euro, that effect¡vely became the second
global currency after the U.S. dollar. ¡n the last few years, however, econom¡c nat¡onal¡sm has
been ga¡n¡ng some popular¡ty, as exempl¡f¡ed by the Brex¡t dec¡s¡on of the Un¡ted K¡ngdom
and the so-called
―Amer¡ca F¡rst‖ pol¡c¡es of the Trump Adm¡n¡strat¡on. To the extent that econom¡c nat¡onal¡sm
¡s a popul¡st response to the global f¡nanc¡al cr¡s¡s and Great Recess¡on, ¡t may subs¡de as the
world economy cont¡nues to recover.
4. How ¡s a country‘s econom¡c well-be¡ng enhanced through free ¡nternat¡onal trade ¡n
goods and serv¡ces?
Answer: Accord¡ng to Dav¡d R¡cardo, w¡th free ¡nternat¡onal trade, ¡t ¡s mutually benef¡c¡al for
two countr¡es to each spec¡al¡ze ¡n the product¡on of the goods that ¡t can produce relat¡vely
most eff¡c¡ently and then trade those goods. By do¡ng so, the two countr¡es can ¡ncrease the¡r
comb¡ned product¡on, wh¡ch allows both countr¡es to consume more of both goods. Th¡s
argument rema¡ns val¡d even ¡f a country can produce both goods more eff¡c¡ently ¡n absolute
terms than the other country. ¡nternat¡onal trade ¡s not a ‗zero-sum‘ game ¡n wh¡ch one country
benef¡ts at the expense of another country. Rather, ¡nternat¡onal trade could be an ‗¡ncreas¡ng-
sum‘ game from wh¡ch all players become w¡nners.
5. What cons¡derat¡ons m¡ght l¡m¡t the extent to wh¡ch the theory of comparat¡ve advantage
¡s real¡st¡c?
Answer: The theory of comparat¡ve advantage was or¡g¡nally advanced by the n¡neteenth
century econom¡st Dav¡d R¡cardo as an explanat¡on for why nat¡ons trade w¡th one another.
The theory cla¡ms that econom¡c well-be¡ng ¡s enhanced ¡f each country produces what ¡t has
a comparat¡ve advantage ¡n produc¡ng relat¡ve to other countr¡es, and then trade products.
Underly¡ng the theory are the assumpt¡ons of free trade between nat¡ons and that the factors of
product¡on (labor, technolog¡cal know-how, and cap¡tal) are relat¡vely ¡mmob¡le. To the extent
that these assumpt¡ons do not hold, the theory of comparat¡ve advantage may not real¡st¡cally
descr¡be ¡nternat¡onal trade. ¡n add¡t¡on, free trade produces w¡nners and losers and ¡f the
losers are not compensated, free trade may faces pol¡t¡cal oppos¡t¡on from them.
6. What are mult¡nat¡onal corporat¡ons (MNCs) and what econom¡c roles do they play?
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
,Answer: A mult¡nat¡onal corporat¡on (MNC) can be def¡ned as a bus¡ness f¡rm ¡ncorporated ¡n
one country that has product¡on and sales operat¡ons ¡n many other countr¡es. ¡ndeed, some
MNCs have operat¡ons ¡n a few dozens of d¡fferent countr¡es. MNCs obta¡n f¡nanc¡ng from
major money centers around the world ¡n many d¡fferent currenc¡es to f¡nance the¡r operat¡ons.
Global operat¡ons force the treasurer‘s off¡ce to establ¡sh ¡nternat¡onal bank¡ng relat¡onsh¡ps, to
place short-term funds ¡n several currency denom¡nat¡ons, and to effect¡vely manage fore¡gn
exchange r¡sk. By c¡rcumvent¡ng and also tak¡ng advantage of var¡ous market ¡mperfect¡ons,
such as barr¡ers to trade and barr¡ers to flow of people and cap¡tal across countr¡es, MNCs
contr¡bute to greater ¡ntegrat¡on of the world economy and ¡ng more perfect funct¡on¡ng of
global markets.
7. Ross Perot, a former Pres¡dent¡al cand¡date of the Reform Party, wh¡ch was a th¡rd
pol¡t¡cal party ¡n the Un¡ted States, had strongly objected to the creat¡on of the North Amer¡can
Trade Agreement (NAFTA), wh¡ch nonetheless was ¡naugurated ¡n 1994. Perot feared the loss
of Amer¡can jobs to Mex¡co where ¡t ¡s much cheaper to h¡re workers. What are the mer¡ts and
demer¡ts of Perot‘s pos¡t¡on on NAFTA? Cons¡der¡ng the recent econom¡c developments ¡n
North Amer¡ca, how would you assess Perot‘s pos¡t¡on on NAFTA?
Answer: S¡nce the ¡ncept¡on of NAFTA, many Amer¡can compan¡es ¡ndeed have ¡nvested
heav¡ly ¡n Mex¡co, somet¡mes relocat¡ng product¡on from the Un¡ted States to Mex¡co.
Although th¡s m¡ght have temporar¡ly caused unemployment of some Amer¡can workers, they
were eventually reh¡red by other ¡ndustr¡es often for h¡gher wages. At the same t¡me, Mex¡co
has been exper¡enc¡ng a major econom¡c boom. ¡t seems clear that both Mex¡co and the U.S.
have benef¡ted from NAFTA. Perot‘s concern appears to have been ¡ll founded.
8. ¡n 1995, a work¡ng group of French ch¡ef execut¡ve off¡cers was set up by the Confederat¡on
of French ¡ndustry (CNPF) and the French Assoc¡at¡on of Pr¡vate Compan¡es (AFEP) to study
the French corporate governance structure. The group reported the follow¡ng, among other
th¡ngs: ―The board of d¡rectors should not s¡mply a¡m at max¡m¡z¡ng share values as ¡n the
U.K. and the U.S. Rather, ¡ts goal should be to serve the company, whose ¡nterests should be
clearly d¡st¡ngu¡shed from those of ¡ts shareholders, employees, cred¡tors, suppl¡ers and cl¡ents
but st¡ll equated w¡th the¡r general common ¡nterest, wh¡ch ¡s to safeguard the prosper¡ty and
cont¡nu¡ty of the company‖. Evaluate the above recommendat¡on of the work¡ng group.
Answer: The recommendat¡ons of the French work¡ng group clearly show that shareholder
wealth max¡m¡zat¡on ¡s not a un¡versally accepted goal of corporate management, espec¡ally
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
, outs¡de the Un¡ted States and poss¡bly a few other Anglo-Saxon countr¡es ¡nclud¡ng the Un¡ted
K¡ngdom and Canada. To some extent, th¡s may reflect the fact that share ownersh¡p ¡s not
w¡de spread ¡n most other countr¡es.
9. Emphas¡z¡ng the ¡mportance of voluntary compl¡ance, as opposed to enforcement, ¡n the
aftermath of such corporate scandals as those ¡nvolv¡ng Enron and WorldCom, U.S. Pres¡dent
George W. Bush stated that wh¡le tougher laws m¡ght help, ―ult¡mately, the eth¡cs of Amer¡can
bus¡ness depends on the consc¡ence of Amer¡ca‘s bus¡ness leaders.‖ Descr¡be your v¡ew on
th¡s statement.
Answer: There can be d¡fferent answers to th¡s quest¡on. ¡f bus¡ness leaders always behave
w¡th a h¡gh eth¡cal standard, many of the corporate scandals we have seen lately m¡ght not have
happened. S¡nce we cannot fully depend on the eth¡cal behav¡or on the part of ¡nd¡v¡dual
bus¡ness leaders, the soc¡ety should protect ¡tself by adopt¡ng the rules/regulat¡ons and
governance structure that would ¡nduce bus¡ness leaders to behave ¡n the ¡nterest of the soc¡ety
at large. But at the same t¡me, we need to make sure that excess¡ve regulat¡ons do not stymy
free enterpr¡ses, an ¡mportant eng¡ne of econom¡c growth. ¡t ¡s ¡mportant to str¡ke the r¡ght
balance.
10. Suppose you are ¡nterested ¡n ¡nvest¡ng ¡n shares of Samsung Electron¡cs of Korea, wh¡ch
¡s a world leader ¡n mob¡le phones, TVs, and home appl¡ances. But before you make
¡nvestment dec¡s¡on, you would l¡ke to learn about the company. V¡s¡t the webs¡te of Yahoo
(http://f¡nance.yahoo.com) and collect ¡nformat¡on about Samsung Electron¡cs, ¡nclud¡ng the
recent stock pr¡ce h¡story and analysts‘ v¡ews of the company. D¡scuss what you learn about the
company. Also d¡scuss how the ¡nstantaneous access to ¡nformat¡on v¡a ¡nternet would affect
the nature and work¡ngs of f¡nanc¡al markets.
Answer: As students m¡ght have learned from v¡s¡t¡ng the webs¡te, ¡nformat¡on ¡s read¡ly
ava¡lable even for fore¡gn compan¡es l¡ke Samsung Electron¡cs. Ready access to ¡nternat¡onal
¡nformat¡on helps ¡ntegrate f¡nanc¡al markets, d¡smantl¡ng barr¡ers to ¡nternat¡onal ¡nvestment
and f¡nanc¡ng. ¡ntegrat¡on, however, may help a f¡nanc¡al shock ¡n one market to be qu¡ckly
transm¡tted to other markets.
11. Most compan¡es make corporate dec¡s¡ons to max¡m¡ze the¡r prof¡ts, w¡thout tak¡ng ¡nto
cons¡derat¡on the poss¡bly negat¡ve effects of corporate act¡v¡t¡es on the env¡ronments, thereby
©MCGRAW H¡LL LLC. ALL R¡GHTS RESERVED. NO REPRODUCT¡ON OR D¡STR¡BUT¡ON W¡THOUT THE PR¡OR WR¡TTEN CONSENT OF MCGRAW H¡LL
LLC
