TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
TEST BANK for International Financial Management 9th
# # # # # # #
Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun. I
# # # # # # # # #
SBN-13: 9781260013870
#
Test#Bank Page#1
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
MULTIPLE#CHOICE#-
Choose#the#one#alternative#that#best#completes#the#statement#or#answers#the#question.
#
1) What#major#dimension#sets#apart#international#finance#from#domestic#finance?
A) Foreign#exchange#and#political#risks
B) Market#imperfections
C) Expanded#opportunity#set
D) all#of#the#options
2) An#example(s)#of#a#political#risk#is
A) expropriation#of#assets.
B) adverse#change#in#tax#rules.
C) the#opposition#party#being#elected.
D) both#the#expropriation#of#assets#and#adverse#changes#in#tax#rules#are#correct.
3) Production#of#goods#and#services#has#become#globalized#to#a#large#extent#as#a#result#of
A) natural#resources#being#depleted#in#one#country#after#another.
B) skilled#labor#being#highly#mobile.
C) multinational#corporations'#efforts#to#source#inputs#and#locate#production#anywhere#
where#costs#are#lower#and#profits#higher.
D) common#tastes#worldwide#for#the#same#goods#and#services.
4) Recently,#financial#markets#have#become#highly#integrated.#This#development
Test#Bank Page#2
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
A) allows#investors#to#diversify#their#portfolios#internationally.
B) allows#minority#investors#to#buy#and#sell#stocks.
C) has#increased#the#cost#of#capital#for#firms.
D) none#of#the#options
5) Japan#has#experienced#large#trade#surpluses.#Japanese#investors#have#responded#to#this#by
A) liquidating#their#positions#in#stocks#to#buy#dollar-denominated#bonds.
B) investing#heavily#in#U.S.#and#other#foreign#financial#markets.
C) lobbying#the#U.S.#government#to#depreciate#its#currency.
D) lobbying#the#Japanese#government#to#allow#the#yen#to#appreciate.
6) Suppose#your#firm#invests#$100,000#in#a#project#in#Italy.#At#the#time#the#exchange#rate#is
$1.25#=#€1.00.#One#year#later#the#exchange#rate#is#the#same,#but#the#Italian#government#has#expropriate
d#your#firm's#assets#paying#only#€80,000#in#compensation.#This#is#an#example#of
A) exchange#rate#risk.
B) political#risk.
C) market#imperfections.
D) none#of#the#options,#since#$100,000#=#€80,000#×#$1.25/€1.00.
Test#Bank Page#3
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
7) Suppose#you#start#with#$100#and#buy#stock#for#£50#when#the#exchange#rate#is#£1#=#$2.#On
e#year#later,#the#stock#rises#to#£60.#You#are#happy#with#your#20#percent#return#on#the#stock,#but#wh
en#you#sell#the#stock#and#exchange#your#£60#for#dollars,#you#only#get#$45#since#the#pound#has#falle
n#to#£1#=#$0.75.#This#loss#of#value#is#an#example#of
A) exchange#rate#risk.
B) political#risk.
C) market#imperfections.
D) weakness#in#the#dollar.
8) Suppose#that#Great#Britain#is#a#major#export#market#for#your#firm,#a#U.S.-
based#MNC.#If#the#British#pound#depreciates#against#the#U.S.#dollar,
A) your#firm#will#be#able#to#charge#more#in#dollar#terms#while#keeping#pound#prices
stable.
B) your#firm#may#be#priced#out#of#the#U.K.#market,#to#the#extent#that#your#dollar#costs
stay#constant#and#your#pound#prices#will#rise.
C) to#protect#U.K.#market#share,#your#firm#may#have#to#cut#the#dollar#price#of#your#goods#t
o#keep#the#pound#price#the#same.
D) your#firm#may#be#priced#out#of#the#U.K.#market,#to#the#extent#that#your#dollar#costs#st
ay#constant#and#your#pound#prices#will#rise,#and#to#protect#U.K.#market#share,#your#firm#may#ha
ve#to#cut#the#dollar#price#of#your#goods#to#keep#the#pound#price#the#same.
9) Suppose#Mexico#is#a#major#export#market#for#your#U.S.-
based#company#and#the#Mexican#peso#appreciates#drastically#against#the#U.S.#dollar.#This#means
Test#Bank Page#4
Chuluun.
TEST BANK for International Financial Management 9th
# # # # # # #
Edition by Cheol Eun, Bruce Resnick and Tuugi Chuluun. I
# # # # # # # # #
SBN-13: 9781260013870
#
Test#Bank Page#1
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
MULTIPLE#CHOICE#-
Choose#the#one#alternative#that#best#completes#the#statement#or#answers#the#question.
#
1) What#major#dimension#sets#apart#international#finance#from#domestic#finance?
A) Foreign#exchange#and#political#risks
B) Market#imperfections
C) Expanded#opportunity#set
D) all#of#the#options
2) An#example(s)#of#a#political#risk#is
A) expropriation#of#assets.
B) adverse#change#in#tax#rules.
C) the#opposition#party#being#elected.
D) both#the#expropriation#of#assets#and#adverse#changes#in#tax#rules#are#correct.
3) Production#of#goods#and#services#has#become#globalized#to#a#large#extent#as#a#result#of
A) natural#resources#being#depleted#in#one#country#after#another.
B) skilled#labor#being#highly#mobile.
C) multinational#corporations'#efforts#to#source#inputs#and#locate#production#anywhere#
where#costs#are#lower#and#profits#higher.
D) common#tastes#worldwide#for#the#same#goods#and#services.
4) Recently,#financial#markets#have#become#highly#integrated.#This#development
Test#Bank Page#2
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
A) allows#investors#to#diversify#their#portfolios#internationally.
B) allows#minority#investors#to#buy#and#sell#stocks.
C) has#increased#the#cost#of#capital#for#firms.
D) none#of#the#options
5) Japan#has#experienced#large#trade#surpluses.#Japanese#investors#have#responded#to#this#by
A) liquidating#their#positions#in#stocks#to#buy#dollar-denominated#bonds.
B) investing#heavily#in#U.S.#and#other#foreign#financial#markets.
C) lobbying#the#U.S.#government#to#depreciate#its#currency.
D) lobbying#the#Japanese#government#to#allow#the#yen#to#appreciate.
6) Suppose#your#firm#invests#$100,000#in#a#project#in#Italy.#At#the#time#the#exchange#rate#is
$1.25#=#€1.00.#One#year#later#the#exchange#rate#is#the#same,#but#the#Italian#government#has#expropriate
d#your#firm's#assets#paying#only#€80,000#in#compensation.#This#is#an#example#of
A) exchange#rate#risk.
B) political#risk.
C) market#imperfections.
D) none#of#the#options,#since#$100,000#=#€80,000#×#$1.25/€1.00.
Test#Bank Page#3
, TEST#BANK#for#International#Financial#Management#9th#Edition#by#Cheol#Eun,#Bruce#Resnick#and#Tuugi
Chuluun.
7) Suppose#you#start#with#$100#and#buy#stock#for#£50#when#the#exchange#rate#is#£1#=#$2.#On
e#year#later,#the#stock#rises#to#£60.#You#are#happy#with#your#20#percent#return#on#the#stock,#but#wh
en#you#sell#the#stock#and#exchange#your#£60#for#dollars,#you#only#get#$45#since#the#pound#has#falle
n#to#£1#=#$0.75.#This#loss#of#value#is#an#example#of
A) exchange#rate#risk.
B) political#risk.
C) market#imperfections.
D) weakness#in#the#dollar.
8) Suppose#that#Great#Britain#is#a#major#export#market#for#your#firm,#a#U.S.-
based#MNC.#If#the#British#pound#depreciates#against#the#U.S.#dollar,
A) your#firm#will#be#able#to#charge#more#in#dollar#terms#while#keeping#pound#prices
stable.
B) your#firm#may#be#priced#out#of#the#U.K.#market,#to#the#extent#that#your#dollar#costs
stay#constant#and#your#pound#prices#will#rise.
C) to#protect#U.K.#market#share,#your#firm#may#have#to#cut#the#dollar#price#of#your#goods#t
o#keep#the#pound#price#the#same.
D) your#firm#may#be#priced#out#of#the#U.K.#market,#to#the#extent#that#your#dollar#costs#st
ay#constant#and#your#pound#prices#will#rise,#and#to#protect#U.K.#market#share,#your#firm#may#ha
ve#to#cut#the#dollar#price#of#your#goods#to#keep#the#pound#price#the#same.
9) Suppose#Mexico#is#a#major#export#market#for#your#U.S.-
based#company#and#the#Mexican#peso#appreciates#drastically#against#the#U.S.#dollar.#This#means
Test#Bank Page#4
