Test Bank for International Financial Management 9th Edition By Cheol Eun, Bruce Resnick All Chapters fully covered and updated

International Financial Management 9th Edition
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,MULTIPLE CHOICE - tc tc




Choose the one alternative that best completes the statement oranswers 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 tc tc tc tc




B) Market imperfections tc




C) Expanded opportunity set tc tc




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. tc tc




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




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.
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C) multinational corporations' efforts to source inputs and locate production anyw
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herewhere costs are lower and profits higher.
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D) common tastes worldwide for the same goods and services.
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International Financial Management 9th Edition tc tc tc tc

,4) Recently, financial markets have become highly integrated. This development
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International Financial Management 9th Edition
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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
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5) Japan has experienced large trade surpluses. Japanese investors have responded to this
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by


A) liquidating their positions in stocks to buy dollar-denominated bonds.
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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 i
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s
$1.25 = €1.00. One year later the exchange rate is the same, but the Italian government
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c has expropriated your firm's assets paying only €80,000 in compensation. This is an ex
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ample of tc




A) exchange rate risk. tc tc




B) political risk. tc




C) market imperfections. tc




D) none of the options, since $100,000 = €80,000 × $1.25/€1.00.
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International Financial Management 9th Edition tc tc tc tc