Test Bank & Solution Manual For Multinational Business Finance
16th Edition By David k. Eiteman Stamped - (All Chapters) | 2024 A+
Chapter 1 Multinational Financial Management: Opportunities and Challenges
1.1 The Global Financial Marketplace
1) Financial globalization has NOT resulted in:
A) continuing imbalances of balance of payments.
B) an increase in quantity and speed in the flow of capital across the world.
C) capital markets less open and a decrease in the availability of capital for many organizations.
D) uniform ways of ownership, control, and governance across the world.
Answer: D
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
2) Financial globalization has NOT resulted in:
A) continuing imbalances of balance of payments.
B) an increase in quantity and speed in the flow of capital across the world.
C) capital markets more open and an increase in the availability of capital for many organizations.
D) an increase in the flow of capital into and out of industrialized markets.
Answer: C
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
3) The institutions of global finance are:
A) central banks.
B) commercial banks.
C) investment banks.
D) All of the above are institutions of global finance.
Answer: D
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
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AACSB: Application of knowledge
4) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such
as:
A) Federal Deposit Insurance Corporation — FDIC.
B) Office of the Comptroller of the Currency — OCC.
C) International Monetary Fund — IMF.
D) World Bank — WB.
Answer: A
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
5) The modern eurocurrency market was born shortly after:
A) World War II.
B) World War I.
C) Korean War.
D) Bosnian War.
Answer: A
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
6) The reference rate of interest in the eurocurrency market is the:
A) London Interbank Offered Rate.
B) Prima rate.
C) Federal funds rate.
D) Treasury rate.
Answer: A
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
7) Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
A) Eurocurrency loans are secured loans.
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B) Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecured
basis.
C) The eurocurrency is a wholesale market.
D) Borrowers are usually large corporations or government entities.
Answer: A
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
8) Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-profit
organizations, that have operations in more than one country, and conduct their business through
foreign subsidiaries, branches, or joint ventures with host country firms.
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
9) Ownership, control, and governance changes radically across the world. The publicly traded
company is not the dominant global business organization—the privately held or family-owned
business is the prevalent structure—and their goals and measures of performance differ
dramatically.
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
10) The securities at the heart of the global capital markets are the Mortgage Backed Securities
(MBS). The health and security of the global financial system rely on the quality of these
securities.
Answer: FALSE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
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11) The U.S. dollar has been the focal point of currency trading since the 1940s. As a result, most
of the world's currencies are quoted against the dollar.
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
12) Several of the world's major currency exchange rates follow a specific quotation convention
that is the result of tradition and history. The exchange rate between the U.S. dollar and the euro is
always quoted as "dollars per euro."
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
13) Several of the world's major currency exchange rates follow a specific quotation convention
that is the result of tradition and history. The exchange rate between the U.S. dollar and the British
pound is always quoted as "dollars per pound."
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
14) Several of the world's major currency exchange rates follow a specific quotation convention
that is the result of tradition and history. The exchange rate between the U.S. dollar and the
Japanese yen is always quoted as "dollars per Japanese yen."
Answer: FALSE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
15) Your authors suggest that one way to characterize the global financial marketplace is through
its assets, institutions, and linkages.
Answer: TRUE
Diff: 1
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