Test Bank for International Financial Management 9th Edition By Cheol Eun, Bruce
Resnick All Chapters
,MULTIPLE mCHOICE m- mChoose mthe mone malternative mthat mbest mcompletes mthe mstatement
m or manswers mthe mquestion.
1) What mmajor mdimension msets mapart minternational mfinance mfrom mdomestic mfinance?
A) mForeign mexchange mand mpolitical mrisks
B) mMarket mimperfections
C) mExpanded mopportunity mset
D) mall mof mthe moptions
2) An mexample(s) mof ma mpolitical mrisk mis
A) mexpropriation mof massets.
B) madverse mchange min mtax mrules.
C) mthe mopposition mparty mbeing melected.
D) mboth mthe mexpropriation mof massets mand madverse mchanges min mtax mrules mare mcorrect.
3) Production mof mgoods mand mservices mhas mbecome mglobalized mto ma mlarge mextent mas ma
m result mof
A) mnatural mresources mbeing mdepleted min mone mcountry mafter manother.
B) mskilled mlabor mbeing mhighly mmobile.
C) mmultinational mcorporations' mefforts mto msource minputs mand mlocate mproduction
m anywhere mwhere mcosts mare mlower mand mprofits mhigher.
D) mcommon mtastes mworldwide mfor mthe msame mgoods mand mservices.
4) Recently, mfinancial mmarkets mhave mbecome mhighly mintegrated. mThis mdevelopment
, A) mallows minvestors mto mdiversify mtheir mportfolios minternationally.
B) mallows mminority minvestors mto mbuy mand msell mstocks.
C) mhas mincreased mthe mcost mof mcapital mfor mfirms.
D) mnone mof mthe moptions
5) Japan mhas mexperienced mlarge mtrade msurpluses. mJapanese minvestors mhave mresponded mto
m this mby
A) mliquidating mtheir mpositions min mstocks mto mbuy mdollar-denominated mbonds.
B) minvesting mheavily min mU.S. mand mother mforeign mfinancial mmarkets.
C) mlobbying mthe mU.S. mgovernment mto mdepreciate mits mcurrency.
D) mlobbying mthe mJapanese mgovernment mto mallow mthe myen mto mappreciate.
6) Suppose myour mfirm minvests m$100,000 min ma mproject min mItaly. mAt mthe mtime mthe mexchange
m rate mis m$1.25 m= m€1.00. mOne myear mlater mthe mexchange mrate mis mthe msame, mbut mthe mItalian
m government mhas mexpropriated myour mfirm's massets mpaying monly m€80,000 min mcompensation. mThis
m is man mexample mof
A) mexchange mrate mrisk.
B) mpolitical mrisk.
C) mmarket mimperfections.
D) mnone mof mthe moptions, msince m$100,000 m= m€80,000 m× m$1.25/€1.00.
, 7) Suppose myou mstart mwith m$100 mand mbuy mstock mfor m£50 mwhen mthe mexchange mrate mis m£1 m=
m $2. mOne myear mlater, mthe mstock mrises mto m£60. mYou mare mhappy mwith myour m20 mpercent mreturn mon
m the mstock, mbut mwhen myou msell mthe mstock mand mexchange myour m£60 mfor mdollars, myou monly mget
m $45 msince mthe mpound mhas mfallen mto m£1 m= m$0.75. mThis mloss mof mvalue mis man mexample mof
A) mexchange mrate mrisk.
B) mpolitical mrisk.
C) mmarket mimperfections.
D) mweakness min mthe mdollar.
8) Suppose mthat mGreat mBritain mis ma mmajor mexport mmarket mfor myour mfirm, ma mU.S.-based
m MNC. mIf mthe mBritish mpound mdepreciates magainst mthe mU.S. mdollar,
A) myour mfirm mwill mbe mable mto mcharge mmore min mdollar mterms mwhile mkeeping mpound
m prices mstable.
B) myour mfirm mmay mbe mpriced mout mof mthe mU.K. mmarket, mto mthe mextent mthat myour mdollar
m costs mstay mconstant mand myour mpound mprices mwill mrise.
C) mto mprotect mU.K. mmarket mshare, myour mfirm mmay mhave mto mcut mthe mdollar mprice mof myour
m goods mto mkeep mthe mpound mprice mthe msame.
D) myour mfirm mmay mbe mpriced mout mof mthe mU.K. mmarket, mto mthe mextent mthat myour mdollar
m costs mstay mconstant mand myour mpound mprices mwill mrise, mand mto mprotect mU.K. mmarket mshare,
m your mfirm mmay mhave mto mcut mthe mdollar mprice mof myour mgoods mto mkeep mthe mpound mprice mthe
m same.
9) Suppose mMexico mis ma mmajor mexport mmarket mfor myour mU.S.-based mcompany mand mthe
m Mexican mpeso mappreciates mdrastically magainst mthe mU.S. mdollar. mThis mmeans
Resnick All Chapters
,MULTIPLE mCHOICE m- mChoose mthe mone malternative mthat mbest mcompletes mthe mstatement
m or manswers mthe mquestion.
1) What mmajor mdimension msets mapart minternational mfinance mfrom mdomestic mfinance?
A) mForeign mexchange mand mpolitical mrisks
B) mMarket mimperfections
C) mExpanded mopportunity mset
D) mall mof mthe moptions
2) An mexample(s) mof ma mpolitical mrisk mis
A) mexpropriation mof massets.
B) madverse mchange min mtax mrules.
C) mthe mopposition mparty mbeing melected.
D) mboth mthe mexpropriation mof massets mand madverse mchanges min mtax mrules mare mcorrect.
3) Production mof mgoods mand mservices mhas mbecome mglobalized mto ma mlarge mextent mas ma
m result mof
A) mnatural mresources mbeing mdepleted min mone mcountry mafter manother.
B) mskilled mlabor mbeing mhighly mmobile.
C) mmultinational mcorporations' mefforts mto msource minputs mand mlocate mproduction
m anywhere mwhere mcosts mare mlower mand mprofits mhigher.
D) mcommon mtastes mworldwide mfor mthe msame mgoods mand mservices.
4) Recently, mfinancial mmarkets mhave mbecome mhighly mintegrated. mThis mdevelopment
, A) mallows minvestors mto mdiversify mtheir mportfolios minternationally.
B) mallows mminority minvestors mto mbuy mand msell mstocks.
C) mhas mincreased mthe mcost mof mcapital mfor mfirms.
D) mnone mof mthe moptions
5) Japan mhas mexperienced mlarge mtrade msurpluses. mJapanese minvestors mhave mresponded mto
m this mby
A) mliquidating mtheir mpositions min mstocks mto mbuy mdollar-denominated mbonds.
B) minvesting mheavily min mU.S. mand mother mforeign mfinancial mmarkets.
C) mlobbying mthe mU.S. mgovernment mto mdepreciate mits mcurrency.
D) mlobbying mthe mJapanese mgovernment mto mallow mthe myen mto mappreciate.
6) Suppose myour mfirm minvests m$100,000 min ma mproject min mItaly. mAt mthe mtime mthe mexchange
m rate mis m$1.25 m= m€1.00. mOne myear mlater mthe mexchange mrate mis mthe msame, mbut mthe mItalian
m government mhas mexpropriated myour mfirm's massets mpaying monly m€80,000 min mcompensation. mThis
m is man mexample mof
A) mexchange mrate mrisk.
B) mpolitical mrisk.
C) mmarket mimperfections.
D) mnone mof mthe moptions, msince m$100,000 m= m€80,000 m× m$1.25/€1.00.
, 7) Suppose myou mstart mwith m$100 mand mbuy mstock mfor m£50 mwhen mthe mexchange mrate mis m£1 m=
m $2. mOne myear mlater, mthe mstock mrises mto m£60. mYou mare mhappy mwith myour m20 mpercent mreturn mon
m the mstock, mbut mwhen myou msell mthe mstock mand mexchange myour m£60 mfor mdollars, myou monly mget
m $45 msince mthe mpound mhas mfallen mto m£1 m= m$0.75. mThis mloss mof mvalue mis man mexample mof
A) mexchange mrate mrisk.
B) mpolitical mrisk.
C) mmarket mimperfections.
D) mweakness min mthe mdollar.
8) Suppose mthat mGreat mBritain mis ma mmajor mexport mmarket mfor myour mfirm, ma mU.S.-based
m MNC. mIf mthe mBritish mpound mdepreciates magainst mthe mU.S. mdollar,
A) myour mfirm mwill mbe mable mto mcharge mmore min mdollar mterms mwhile mkeeping mpound
m prices mstable.
B) myour mfirm mmay mbe mpriced mout mof mthe mU.K. mmarket, mto mthe mextent mthat myour mdollar
m costs mstay mconstant mand myour mpound mprices mwill mrise.
C) mto mprotect mU.K. mmarket mshare, myour mfirm mmay mhave mto mcut mthe mdollar mprice mof myour
m goods mto mkeep mthe mpound mprice mthe msame.
D) myour mfirm mmay mbe mpriced mout mof mthe mU.K. mmarket, mto mthe mextent mthat myour mdollar
m costs mstay mconstant mand myour mpound mprices mwill mrise, mand mto mprotect mU.K. mmarket mshare,
m your mfirm mmay mhave mto mcut mthe mdollar mprice mof myour mgoods mto mkeep mthe mpound mprice mthe
m same.
9) Suppose mMexico mis ma mmajor mexport mmarket mfor myour mU.S.-based mcompany mand mthe
m Mexican mpeso mappreciates mdrastically magainst mthe mU.S. mdollar. mThis mmeans
