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1 Copyright © 2023 Pearson Education, Inc.Multinational Business Finance, 16e (Eiteman/Stonehill/Moffett)
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.
- an increase in quantity and speed in the flow of capital across the world.
- capital markets less open and a decrease in the availability of capital for many organizations.
- 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:
- continuing imbalances of balance of payments.
- an increase in quantity and speed in the flow of capital across the world.
- capital markets more open and an increase in the availability of capital for many
- an increase in the flow of capital into and out of industrialized markets.
organizations.
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:
- central banks.
- commercial banks.
- investment banks.
- All of the above are institutions of global finance.
Answer: D
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
Multinational Business Finance, 16e David Eiteman, Arthur Stonehill, Michael Moffett (Test Bank All Chapters) 1 / 4
2 Copyright © 2023 Pearson Education, Inc.4) A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees,
such as:
- Federal Deposit Insurance Corporation — FDIC.
- Office of the Comptroller of the Currency — OCC.
- International Monetary Fund — IMF.
- 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:
- World War II.
- World War I.
- Korean War.
- 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:
- London Interbank Offered Rate.
- Prima rate.
- Federal funds rate.
- 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:
- Eurocurrency loans are secured loans.
- Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecured
- The eurocurrency is a wholesale market.
- Borrowers are usually large corporations or government entities.
basis.
Answer: A
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
- / 4
3 Copyright © 2023 Pearson Education, Inc.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
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
- / 4
4 Copyright © 2023 Pearson Education, Inc.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
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
16) Eurocurrencies are domestic currencies of one country on deposit in a second country.
Answer: TRUE
Diff: 1
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
17) A eurodollar deposit is a demand deposit.
Answer: FALSE
Diff: 2
L.O.: 1.1 The Global Financial Marketplace
Skill: Recognition
AACSB: Application of knowledge
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