TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
TEST BANK for International Financial Management 9th
x x x x x x x
Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun. I
x x x x x x x x x
SBN-13: 9781260013870
x
TestxBank Pagex1
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
MULTIPLExCHOICEx-
Choosexthexonexalternativexthatxbestxcompletesxthexstatementxorxanswersxthexquestion.
x
1) Whatxmajorxdimensionxsetsxapartxinternationalxfinancexfromxdomesticxfinance?
A) Foreignxexchangexandxpoliticalxrisks
B) Marketximperfections
C) Expandedxopportunityxset
D) allxofxthexoptions
2) Anxexample(s)xofxaxpoliticalxriskxis
A) expropriationxofxassets.
B) adversexchangexinxtaxxrules.
C) thexoppositionxpartyxbeingxelected.
D) bothxthexexpropriationxofxassetsxandxadversexchangesxinxtaxxrulesxarexcorrect.
3) Productionxofxgoodsxandxservicesxhasxbecomexglobalizedxtoxaxlargexextentxasxaxresultxof
A) naturalxresourcesxbeingxdepletedxinxonexcountryxafterxanother.
B) skilledxlaborxbeingxhighlyxmobile.
C) multinationalxcorporations'xeffortsxtoxsourcexinputsxandxlocatexproductionxanywherex
wherexcostsxarexlowerxandxprofitsxhigher.
D) commonxtastesxworldwidexforxthexsamexgoodsxandxservices.
4) Recently,xfinancialxmarketsxhavexbecomexhighlyxintegrated.xThisxdevelopment
TestxBank Pagex2
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
A) allowsxinvestorsxtoxdiversifyxtheirxportfoliosxinternationally.
B) allowsxminorityxinvestorsxtoxbuyxandxsellxstocks.
C) hasxincreasedxthexcostxofxcapitalxforxfirms.
D) nonexofxthexoptions
5) Japanxhasxexperiencedxlargextradexsurpluses.xJapanesexinvestorsxhavexrespondedxtoxthisxby
A) liquidatingxtheirxpositionsxinxstocksxtoxbuyxdollar-denominatedxbonds.
B) investingxheavilyxinxU.S.xandxotherxforeignxfinancialxmarkets.
C) lobbyingxthexU.S.xgovernmentxtoxdepreciatexitsxcurrency.
D) lobbyingxthexJapanesexgovernmentxtoxallowxthexyenxtoxappreciate.
6) Supposexyourxfirmxinvestsx$100,000xinxaxprojectxinxItaly.xAtxthextimexthexexchangexratexis
$1.25x=x€1.00.xOnexyearxlaterxthexexchangexratexisxthexsame,xbutxthexItalianxgovernmentxhasxexpropriate
dxyourxfirm'sxassetsxpayingxonlyx€80,000xinxcompensation.xThisxisxanxexamplexof
A) exchangexratexrisk.
B) politicalxrisk.
C) marketximperfections.
D) nonexofxthexoptions,xsincex$100,000x=x€80,000x×x$1.25/€1.00.
TestxBank Pagex3
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
7) Supposexyouxstartxwithx$100xandxbuyxstockxforx£50xwhenxthexexchangexratexisx£1x=x$2.xOn
exyearxlater,xthexstockxrisesxtox£60.xYouxarexhappyxwithxyourx20xpercentxreturnxonxthexstock,xbutxwh
enxyouxsellxthexstockxandxexchangexyourx£60xforxdollars,xyouxonlyxgetx$45xsincexthexpoundxhasxfalle
nxtox£1x=x$0.75.xThisxlossxofxvaluexisxanxexamplexof
A) exchangexratexrisk.
B) politicalxrisk.
C) marketximperfections.
D) weaknessxinxthexdollar.
8) SupposexthatxGreatxBritainxisxaxmajorxexportxmarketxforxyourxfirm,xaxU.S.-
basedxMNC.xIfxthexBritishxpoundxdepreciatesxagainstxthexU.S.xdollar,
A) yourxfirmxwillxbexablextoxchargexmorexinxdollarxtermsxwhilexkeepingxpoundxprices
stable.
B) yourxfirmxmayxbexpricedxoutxofxthexU.K.xmarket,xtoxthexextentxthatxyourxdollarxcosts
stayxconstantxandxyourxpoundxpricesxwillxrise.
C) toxprotectxU.K.xmarketxshare,xyourxfirmxmayxhavextoxcutxthexdollarxpricexofxyourxgoodsxt
oxkeepxthexpoundxpricexthexsame.
D) yourxfirmxmayxbexpricedxoutxofxthexU.K.xmarket,xtoxthexextentxthatxyourxdollarxcostsxst
ayxconstantxandxyourxpoundxpricesxwillxrise,xandxtoxprotectxU.K.xmarketxshare,xyourxfirmxmayxha
vextoxcutxthexdollarxpricexofxyourxgoodsxtoxkeepxthexpoundxpricexthexsame.
9) SupposexMexicoxisxaxmajorxexportxmarketxforxyourxU.S.-
basedxcompanyxandxthexMexicanxpesoxappreciatesxdrasticallyxagainstxthexU.S.xdollar.xThisxmeans
TestxBank Pagex4
Chuluun.
TEST BANK for International Financial Management 9th
x x x x x x x
Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun. I
x x x x x x x x x
SBN-13: 9781260013870
x
TestxBank Pagex1
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
MULTIPLExCHOICEx-
Choosexthexonexalternativexthatxbestxcompletesxthexstatementxorxanswersxthexquestion.
x
1) Whatxmajorxdimensionxsetsxapartxinternationalxfinancexfromxdomesticxfinance?
A) Foreignxexchangexandxpoliticalxrisks
B) Marketximperfections
C) Expandedxopportunityxset
D) allxofxthexoptions
2) Anxexample(s)xofxaxpoliticalxriskxis
A) expropriationxofxassets.
B) adversexchangexinxtaxxrules.
C) thexoppositionxpartyxbeingxelected.
D) bothxthexexpropriationxofxassetsxandxadversexchangesxinxtaxxrulesxarexcorrect.
3) Productionxofxgoodsxandxservicesxhasxbecomexglobalizedxtoxaxlargexextentxasxaxresultxof
A) naturalxresourcesxbeingxdepletedxinxonexcountryxafterxanother.
B) skilledxlaborxbeingxhighlyxmobile.
C) multinationalxcorporations'xeffortsxtoxsourcexinputsxandxlocatexproductionxanywherex
wherexcostsxarexlowerxandxprofitsxhigher.
D) commonxtastesxworldwidexforxthexsamexgoodsxandxservices.
4) Recently,xfinancialxmarketsxhavexbecomexhighlyxintegrated.xThisxdevelopment
TestxBank Pagex2
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
A) allowsxinvestorsxtoxdiversifyxtheirxportfoliosxinternationally.
B) allowsxminorityxinvestorsxtoxbuyxandxsellxstocks.
C) hasxincreasedxthexcostxofxcapitalxforxfirms.
D) nonexofxthexoptions
5) Japanxhasxexperiencedxlargextradexsurpluses.xJapanesexinvestorsxhavexrespondedxtoxthisxby
A) liquidatingxtheirxpositionsxinxstocksxtoxbuyxdollar-denominatedxbonds.
B) investingxheavilyxinxU.S.xandxotherxforeignxfinancialxmarkets.
C) lobbyingxthexU.S.xgovernmentxtoxdepreciatexitsxcurrency.
D) lobbyingxthexJapanesexgovernmentxtoxallowxthexyenxtoxappreciate.
6) Supposexyourxfirmxinvestsx$100,000xinxaxprojectxinxItaly.xAtxthextimexthexexchangexratexis
$1.25x=x€1.00.xOnexyearxlaterxthexexchangexratexisxthexsame,xbutxthexItalianxgovernmentxhasxexpropriate
dxyourxfirm'sxassetsxpayingxonlyx€80,000xinxcompensation.xThisxisxanxexamplexof
A) exchangexratexrisk.
B) politicalxrisk.
C) marketximperfections.
D) nonexofxthexoptions,xsincex$100,000x=x€80,000x×x$1.25/€1.00.
TestxBank Pagex3
, TESTxBANKxforxInternationalxFinancialxManagementx9thxEditionxbyxCheolxEun,xBrucexResnickxandxTuugi
Chuluun.
7) Supposexyouxstartxwithx$100xandxbuyxstockxforx£50xwhenxthexexchangexratexisx£1x=x$2.xOn
exyearxlater,xthexstockxrisesxtox£60.xYouxarexhappyxwithxyourx20xpercentxreturnxonxthexstock,xbutxwh
enxyouxsellxthexstockxandxexchangexyourx£60xforxdollars,xyouxonlyxgetx$45xsincexthexpoundxhasxfalle
nxtox£1x=x$0.75.xThisxlossxofxvaluexisxanxexamplexof
A) exchangexratexrisk.
B) politicalxrisk.
C) marketximperfections.
D) weaknessxinxthexdollar.
8) SupposexthatxGreatxBritainxisxaxmajorxexportxmarketxforxyourxfirm,xaxU.S.-
basedxMNC.xIfxthexBritishxpoundxdepreciatesxagainstxthexU.S.xdollar,
A) yourxfirmxwillxbexablextoxchargexmorexinxdollarxtermsxwhilexkeepingxpoundxprices
stable.
B) yourxfirmxmayxbexpricedxoutxofxthexU.K.xmarket,xtoxthexextentxthatxyourxdollarxcosts
stayxconstantxandxyourxpoundxpricesxwillxrise.
C) toxprotectxU.K.xmarketxshare,xyourxfirmxmayxhavextoxcutxthexdollarxpricexofxyourxgoodsxt
oxkeepxthexpoundxpricexthexsame.
D) yourxfirmxmayxbexpricedxoutxofxthexU.K.xmarket,xtoxthexextentxthatxyourxdollarxcostsxst
ayxconstantxandxyourxpoundxpricesxwillxrise,xandxtoxprotectxU.K.xmarketxshare,xyourxfirmxmayxha
vextoxcutxthexdollarxpricexofxyourxgoodsxtoxkeepxthexpoundxpricexthexsame.
9) SupposexMexicoxisxaxmajorxexportxmarketxforxyourxU.S.-
basedxcompanyxandxthexMexicanxpesoxappreciatesxdrasticallyxagainstxthexU.S.xdollar.xThisxmeans
TestxBank Pagex4
