Test Bank for Multinational Business Finance 16th Edition By (Eiteman/Stonehill/Moffett), ISBN: 9780137496013, All 18 Chapters Covered, Verified Latest Edition

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Multinational Business Finance, 16e (Eiteman/Stonehill/Moffett)
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Chapter 1 Multinational Financial Management: Opportunities and Challenges
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1.1 The Global Financial Marketplace
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1) Financial globalization has NOT resulted in:
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A) continuing imbalances of balance of payments.gi gi gi gi gi


B) an increase in quantity and speed in the flow of capital across the world.
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C) capital markets less open and a decrease in the availability of capital for many organizations.
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D) uniform ways of ownership, control, and governance across the world.
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Answer: D gi


Diff: 1
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L.O.: 1.1 The Global Financial MarketplaceSkill
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: Recognition
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AACSB: Application of knowledge
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2) Financial globalization has NOT resulted in:
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A) continuing imbalances of balance of payments.gi gi gi gi gi


B) an increase in quantity and speed in the flow of capital across the world.
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C) capital markets more open and an increase in the availability of capital for many
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organizations.
D) an increase in the flow of capital into and out of industrialized markets
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.Answer: C
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Diff: 1
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L.O.: 1.1 The Global Financial MarketplaceSkill
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: Recognition
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AACSB: Application of knowledge
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3) The institutions of global finance are:
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A) central banks. gi


B) commercial banks. gi


C) investment banks. gi


D) All of the above are institutions of global finance
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.Answer: D
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Diff: 1
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L.O.: 1.1 The Global Financial MarketplaceSkill
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: Recognition
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AACSB: Application of knowledge
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1
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4) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees
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,such as:
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A) Federal Deposit Insurance Corporation — FDIC.
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B) Office of the Comptroller of the Currency — OCC.
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C) International Monetary Fund — IMF. gi gi gi gi


D) World Bank — gi gi


WB.Answer: A
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Diff: 2 gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




5) The modern eurocurrency market was born shortly after:
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A) World War II. gi gi


B) World War I. gi gi


C) Korean War. gi


D) Bosnian War. gi gi


Answer: A Dif gigig i gi


f: 1 gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




6) The reference rate of interest in the eurocurrency market is the:
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A) London Interbank Offered Rate. gi gi gi


B) Prima rate. gi


C) Federal funds rate. gi gi


D) Treasury rate gi


.Answer: A Dif
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f: 1 gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




7) Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
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A) Eurocurrency loans are secured loans. gi gi gi gi


B) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecure
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dbasis.
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C) The eurocurrency is a wholesale market.
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D) Borrowers are usually large corporations or government entities.
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Answer: A gi


Diff: 2 gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




2
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8) Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-
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profit organizations, that have operations in more than one country, and conduct their business t
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hroughforeign subsidiaries, branches, or joint ventures with host country firms.
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Answer: TRUEDiff gi gi


:1
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L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




9) Ownership, control, and governance changes radically across the world. The publicly traded
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company is not the dominant global business organization—the privately held or family-
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ownedbusiness is the prevalent structure—
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and their goals and measures of performance differ dramatically.
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Answer: TRUEDiff gi gi


:1
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L.O.: 1.1 The Global Financial MarketplaceSkill
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: Recognition
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AACSB: Application of knowledge g i gi gi




10) The securities at the heart of the global capital markets are the Mortgage Backed Securitie
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s(MBS). The health and security of the global financial system rely on the quality of these sec
i
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urities.
Answer: FALSEDi gi gi


ff: 1 gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




11) The U.S. dollar has been the focal point of currency trading since the 1940s. As a result
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,most of the world's currencies are quoted against the dollar.
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Answer: TRUEDiff gi gi


:1
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L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
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AACSB: Application of knowledge g i gi gi




12) Several of the world's major currency exchange rates follow a specific quotation conventio
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nthat is the result of tradition and history. The exchange rate between the U.S. dollar and the eu
i
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rois always quoted as "dollars per euro."
i
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Answer: TRUEDiff gi gi


:1
gi


L.O.: 1.1 The Global Financial MarketplaceSkill
gi gi gi gi gi i
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: Recognition
gi


AACSB: Application of knowledge g i gi gi




3
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