Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
Test bank for
international financial management 9th edition
by cheol eun bruce resnick
International Financial Management 9th Edition
e e e e
,Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
MULTIPLEeCHOICEe-
eChooseetheeoneealternativeethatebestecompletesetheestatementeoreanswersetheequestion.
1) Whatemajoredimensionesetseaparteinternationalefinanceefromedomesticefinance?
A) Foreigneexchangeeandepoliticalerisks
B) Marketeimperfections
C) Expandedeopportunityeset
D) alleofetheeoptions
2) Aneexample(s)eofeaepoliticaleriskeis
A) expropriationeofeassets.
B) adverseechangeeinetaxerules.
C) theeoppositionepartyebeingeelected.
D) bothetheeexpropriationeofeassetseandeadverseechangeseinetaxeruleseareecorrect.
3) Productioneofegoodseandeservicesehasebecomeeglobalizedetoeaelargeeextenteaseaeresulteof
A) naturaleresourcesebeingedepletedeineoneecountryeaftereanother.
B) skilledelaborebeingehighlyemobile.
C) multinationalecorporations'eeffortsetoesourceeinputseandelocateeproductioneanyw
hereewhereecostseareelowereandeprofitsehigher.
D) commonetasteseworldwideeforetheesameegoodseandeservices.
4) Recently,efinancialemarketsehaveebecomeehighlyeintegrated.eThisedevelopment
International Financial Management 9th Edition
e e e e
,Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
A) allowseinvestorsetoediversifyetheireportfolioseinternationally.
B) allowseminorityeinvestorsetoebuyeandesellestocks.
C) haseincreasedetheecosteofecapitaleforefirms.
D) noneeofetheeoptions
5) Japanehaseexperiencedelargeetradeesurpluses.eJapaneseeinvestorsehaveerespondedetoethiseb
y
A) liquidatingetheirepositionseinestocksetoebuyedollar-denominatedebonds.
B) investingeheavilyeineU.S.eandeothereforeignefinancialemarkets.
C) lobbyingetheeU.S.egovernmentetoedepreciateeitsecurrency.
D) lobbyingetheeJapaneseegovernmentetoeallowetheeyenetoeappreciate.
6) Supposeeyourefirmeinvestse$100,000eineaeprojecteineItaly.eAtetheetimeetheeexchangeerateeis
$1.25e=e€1.00.eOneeyearelateretheeexchangeerateeisetheesame,ebutetheeItalianegovernmenteh
aseexpropriatedeyourefirm'seassetsepayingeonlye€80,000einecompensation.eThiseiseaneexam
pleeof
A) exchangeerateerisk.
B) politicalerisk.
C) marketeimperfections.
D)enoneeofetheeoptions,esincee$100,000e=e€80,000e×e$1.25/€1.00.
International Financial Management 9th Edition
e e e e
, Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
7) Supposeeyouestartewithe$100eandebuyestockefore£50ewhenetheeexchangeerateeise£1e=e$2.e
Oneeyearelater,etheestockerisesetoe£60.eYoueareehappyewitheyoure20epercentereturneonetheestock,e
butewheneyoueselletheestockeandeexchangeeyoure£60eforedollars,eyoueonlyegete$45esinceetheepou
ndehasefallenetoe£1e=e$0.75.eThiselosseofevalueeiseaneexampleeof
A) exchangeerateerisk.
B) politicalerisk.
C) marketeimperfections.
D) weaknesseinetheedollar.
8) SupposeethateGreateBritaineiseaemajoreexportemarketeforeyourefirm,eaeU.S.-
basedeMNC.eIfetheeBritishepoundedepreciateseagainstetheeU.S.edollar,
A) yourefirmewillebeeableetoechargeemoreeinedollaretermsewhileekeepingepoundeprices
stable
.
B) yourefirmemayebeepricedeouteofetheeU.K.emarket,etoetheeextentethateyouredollarecosts
stayeconstanteandeyourepoundepricesewillerise.
C) toeprotecteU.K.emarketeshare,eyourefirmemayehaveetoecutetheedollarepriceeofeyouregoo
dsetoekeepetheepoundepriceetheesame.
D) yourefirmemayebeepricedeouteofetheeU.K.emarket,etoetheeextentethateyouredollarecos
tsestayeconstanteandeyourepoundepricesewillerise,eandetoeprotecteU.K.emarketeshare,eyourefir
memayehaveetoecutetheedollarepriceeofeyouregoodsetoekeepetheepoundepriceetheesame.
9) SupposeeMexicoeiseaemajoreexportemarketeforeyoureU.S.-
basedecompanyeandetheeMexicanepesoeappreciatesedrasticallyeagainstetheeU.S.edollar.eThiseme
ans
International Financial Management 9th Edition
e e e e
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
Test bank for
international financial management 9th edition
by cheol eun bruce resnick
International Financial Management 9th Edition
e e e e
,Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
MULTIPLEeCHOICEe-
eChooseetheeoneealternativeethatebestecompletesetheestatementeoreanswersetheequestion.
1) Whatemajoredimensionesetseaparteinternationalefinanceefromedomesticefinance?
A) Foreigneexchangeeandepoliticalerisks
B) Marketeimperfections
C) Expandedeopportunityeset
D) alleofetheeoptions
2) Aneexample(s)eofeaepoliticaleriskeis
A) expropriationeofeassets.
B) adverseechangeeinetaxerules.
C) theeoppositionepartyebeingeelected.
D) bothetheeexpropriationeofeassetseandeadverseechangeseinetaxeruleseareecorrect.
3) Productioneofegoodseandeservicesehasebecomeeglobalizedetoeaelargeeextenteaseaeresulteof
A) naturaleresourcesebeingedepletedeineoneecountryeaftereanother.
B) skilledelaborebeingehighlyemobile.
C) multinationalecorporations'eeffortsetoesourceeinputseandelocateeproductioneanyw
hereewhereecostseareelowereandeprofitsehigher.
D) commonetasteseworldwideeforetheesameegoodseandeservices.
4) Recently,efinancialemarketsehaveebecomeehighlyeintegrated.eThisedevelopment
International Financial Management 9th Edition
e e e e
,Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
A) allowseinvestorsetoediversifyetheireportfolioseinternationally.
B) allowseminorityeinvestorsetoebuyeandesellestocks.
C) haseincreasedetheecosteofecapitaleforefirms.
D) noneeofetheeoptions
5) Japanehaseexperiencedelargeetradeesurpluses.eJapaneseeinvestorsehaveerespondedetoethiseb
y
A) liquidatingetheirepositionseinestocksetoebuyedollar-denominatedebonds.
B) investingeheavilyeineU.S.eandeothereforeignefinancialemarkets.
C) lobbyingetheeU.S.egovernmentetoedepreciateeitsecurrency.
D) lobbyingetheeJapaneseegovernmentetoeallowetheeyenetoeappreciate.
6) Supposeeyourefirmeinvestse$100,000eineaeprojecteineItaly.eAtetheetimeetheeexchangeerateeis
$1.25e=e€1.00.eOneeyearelateretheeexchangeerateeisetheesame,ebutetheeItalianegovernmenteh
aseexpropriatedeyourefirm'seassetsepayingeonlye€80,000einecompensation.eThiseiseaneexam
pleeof
A) exchangeerateerisk.
B) politicalerisk.
C) marketeimperfections.
D)enoneeofetheeoptions,esincee$100,000e=e€80,000e×e$1.25/€1.00.
International Financial Management 9th Edition
e e e e
, Test
ial ebaTestebank
emanagement efor
e9th einternational
eedition efinancial
ebyecheol emanagement
eeunebruce eresnick e9theeditionebyecheoleeunebruceeresnicknkeforeinternational efinanc
7) Supposeeyouestartewithe$100eandebuyestockefore£50ewhenetheeexchangeerateeise£1e=e$2.e
Oneeyearelater,etheestockerisesetoe£60.eYoueareehappyewitheyoure20epercentereturneonetheestock,e
butewheneyoueselletheestockeandeexchangeeyoure£60eforedollars,eyoueonlyegete$45esinceetheepou
ndehasefallenetoe£1e=e$0.75.eThiselosseofevalueeiseaneexampleeof
A) exchangeerateerisk.
B) politicalerisk.
C) marketeimperfections.
D) weaknesseinetheedollar.
8) SupposeethateGreateBritaineiseaemajoreexportemarketeforeyourefirm,eaeU.S.-
basedeMNC.eIfetheeBritishepoundedepreciateseagainstetheeU.S.edollar,
A) yourefirmewillebeeableetoechargeemoreeinedollaretermsewhileekeepingepoundeprices
stable
.
B) yourefirmemayebeepricedeouteofetheeU.K.emarket,etoetheeextentethateyouredollarecosts
stayeconstanteandeyourepoundepricesewillerise.
C) toeprotecteU.K.emarketeshare,eyourefirmemayehaveetoecutetheedollarepriceeofeyouregoo
dsetoekeepetheepoundepriceetheesame.
D) yourefirmemayebeepricedeouteofetheeU.K.emarket,etoetheeextentethateyouredollarecos
tsestayeconstanteandeyourepoundepricesewillerise,eandetoeprotecteU.K.emarketeshare,eyourefir
memayehaveetoecutetheedollarepriceeofeyouregoodsetoekeepetheepoundepriceetheesame.
9) SupposeeMexicoeiseaemajoreexportemarketeforeyoureU.S.-
basedecompanyeandetheeMexicanepesoeappreciatesedrasticallyeagainstetheeU.S.edollar.eThiseme
ans
International Financial Management 9th Edition
e e e e
