Test Bank and Solution Manual for Multinational Business Finance 16th Edition by David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett| All Chapters Updated|2025!!

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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. v v v v v


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
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Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: 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. v v v v v


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.
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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 Marketplace
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Skill: 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. v


B) commercial banks. v


C) investment banks. v


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 Marketplace
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Skill: 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. v v v v


D) World Bank — WB. v v v


Answer: A
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Diff: 2
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge
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5) The modern eurocurrency market was born shortly after:
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A) World War II. v v


B) World War I. v v


C) Korean War. v


D) Bosnian War. v


Answer: A
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vDiff: 1 v


L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge
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6) The reference rate of interest in the eurocurrency market is the:
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A) London Interbank Offered Rate. v v v


B) Prima rate. v


C) Federal funds rate. v v


D) Treasury rate. v


Answer: A
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vDiff: 1 v


L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge
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7) Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
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A) Eurocurrency loans are secured loans. v v v v


B) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecured
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basis.
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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
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Diff: 2
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge
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8) Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-profit
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organizations, that have operations in more than one country, and conduct their business through
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foreign subsidiaries, branches, or joint ventures with host country firms.
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Answer: TRUE v


Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge v v v v




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-owned
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business is the prevalent structure—and their goals and measures of performance differ
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dramatically.
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Answer: TRUE v


Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge v v v v




10) The securities at the heart of the global capital markets are the Mortgage Backed Securities
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(MBS). The health and security of the global financial system rely on the quality of these
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securities.
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Answer: FALSE v


Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge v v v v




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: TRUE v


Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge v v v v




12) Several of the world's major currency exchange rates follow a specific quotation convention
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that is the result of tradition and history. The exchange rate between the U.S. dollar and the euro
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is always quoted as "dollars per euro."
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Answer: TRUE v


Diff: 1
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L.O.: 1.1 The Global Financial Marketplace
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Skill: Recognition
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AACSB: Application of knowledge v v v v




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