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Fundamentals of Multinational Finance, 4e
(Moffett)
Chapter 1
Current
Multinational Challenges and the Global Economy
Multiple Choice and True/ False
Questions
1.1
The Global Financial Marketplace
1) Which of the following firms are NOT
considered to be multinational enterprises (MNEs)
even if they have
operations in more
than one country?
A) for-profit
companies
B) not-for-profit
organizations
C) non-government
organizations (NGOs)
D) all of the
above may be considered MNEs
Answer:
D
Diff: 1
Topic:
1.1 The
Global Financial Marketplace
Skill:
Recognition
2)
development. The BRIC
countries are ________.
A) Belgium,
Romania, Italy, and Canada
B) Brazil,
Russia, India, and China
C) Britain,
Romania, Israel, and Colombia
D)
Brazil, Russia, Italy, and Chile
Answer:
B
Diff: 1
Topic:
1.1 The Global Financial Marketplace
Skill:
Recognition
3)
According to the authors, which of the following
groups or securities are at the
markets?
A) debt securities
issued by governments
B) bank loans and
corporate bons
C) equity securities
D) derivative securities
Answer:
A
Diff: 1
Topic:
1.1 The Global Financial Marketplace
Skill:
Recognition
4) ________ are
the largest markets in the world.
A)
United States equity markets
B)
European debt markets
C) Global
currency markets
D) Chinese export
markets
Answer:
C
Diff: 1
Topic:
1.1 The Global Financial
Marketplace
Skill:
Recognition
5)
Domestic currencies of one country on deposit in a
second country are called ________.
A)
export deposits
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? 2012 Pearson Education, Inc.
B) eurocurrencies
C) import
deposits
D) forocurrencies
Answer:
B
Diff: 1
Topic:
1.1 The Global Financial Marketplace
Skill:
Recognition
6)
Eurocurrency deposits are an efficient and
convenient money market device for holding excess
corporate
liquidity.
Answer:
TRUE
Diff: 1
Topic:
1.1 The
Global Financial Marketplace
Skill:
Recognition
7) The Eurocurrency loan market is
characterized by narrow interest rate spreads
between deposit and loan rates.
This is
due in part to which of the following factors?
A) The Eurocurrency market is a
B) Loan amounts are very large, often
in excess of $$500,000.
C) Eurocurrency
borrowers are typically large, low-risk
corporations or government entities.
D)
All of the above are legitimate reasons for the
narrow spread in the Eurocurrency market.
Answer:
D
Diff: 1
Topic:
1.1 The Global Financial Marketplace
Skill:
Conceptual
1.2
The Theory of Comparative
Advantage
1) The theory that suggests
specialization by country can increase worldwide
production is ________.
A) the theory
of comparative advantage
B) the theory
of foreign direct investment
C) the
international Fisher effect
D) the
theory of working capital management
Answer:
A
Diff: 1
Topic:
1.2 Comparative Advantage
Skill:
Recognition
2)
Of the following, which would NOT be considered a
way that government interferes with comparative
advantage?
A) tariffs
B) managerial skills
C)
quotas
D) other non-tariff restrictions
Answer:
B
Diff: 1
Topic:
1.2 Comparative Advantage
Skill:
Recognition
3)
Comparative advantage shifts over time as less
developed countries become more developed and
realize their
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2012 Pearson Education, Inc.
latent opportunities.
Answer:
TRUE
Diff: 1
Topic:
1.2 Comparative Advantage
Skill:
Recognition
4)
Although the world is a long way from the
classical trade model, the general principle of
comparative advantage
is still valid.
Answer:
TRUE
Diff: 1
Topic:
1.2 Comparative Advantage
Skill:
Analytical
TABLE 1.1
Use the information in the table to
answer the following question(s).
5) Refer to Table 1.1. A
production unit in Austria has a/an ________ over
a production unit in Russia in
________.
A) absolute
disadvantage; digital cameras
B)
absolute disadvantage; snowboards
C)
absolute advantage; both cameras and snowboards
D) none of the above
Answer:
C
Diff: 2
Topic:
1.2
Comparative Advantage
Skill:
Conceptual
6) Refer to Table 1.1. Austria has a
larger relative advantage over Russia in the
production of ________ at a ratio
of
________.
A) snowboards; 5 to 4
B) cameras; 8 to 3
C)
snowboards; 8 to 3
D) cameras; 3 to 8
Answer:
B
Diff: 2
Topic:
1.2 Comparative Advantage
Skill:
Conceptual
7)
Refer to Table 1.1. Assume no trade between Russia
and Austria. If each country put 50% of their
production
units into each product, the
total number of snowboards and digital cameras
produced by the two countries
combined
are ________ and ________.
A) 15,000
snowboards; 3,000 digital cameras
B)
6,000 snowboards; 4,000 digital cameras
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C) 2,750
digital cameras; 6,750 snowboards
D)
15,000 digital cameras; 1,000 snowboards
Answer:
C
Diff: 2
Topic:
1.2 Comparative Advantage
Skill:
Analytical
8) Refer to Table
1.1. If trade takes place at Brazil's domestic
price, ________ snowboards will be required to
obtain 1 digital camera.
A)
4
B) 2 and 2/3
C) 1.25
D) 0.25
Answer:
A
Diff: 2
Topic:
1.2
Comparative Advantage
Skill:
Analytical
9) Refer to Table 1.1. If each country
specializes in their production with Austria
producing only digital cameras
and
Russia producing only snowboards, at a trading
rate of three snowboards per digital camera, how
many
cameras and snowboards will be
available to be consumed in Austria if they trade
3,000 cameras to Russia?
A) 9,000
snowboards and 5,000 digital cameras
B)
3,000 snowboards and 3,000 digital cameras
C) 3,000 snowboards and 9,000 digital
cameras
D) There is not enough
information to answer this question.
Answer:
A
Diff: 2
Topic:
1.2 Comparative Advantage
Skill:
Analytical
10)
Refer to Table 1.1. If each country specializes in
their production with Austria producing only
digital cameras
and Russia producing
only snowboards, at a trading rate of three
snowboards per digital camera, how many
cameras and snowboards will be
available to be consumed in Russia if they trade
9,000 snowboards to Austria?
A) 9,000
snowboards and 5,000 digital cameras
B)
3,000 snowboards and 3,000 digital cameras
C) 3,000 snowboards and 9,000 digital
cameras
D) There is not enough
information to answer this question.
Answer:
C
Diff: 2
Topic:
1.2 Comparative Advantage
Skill:
Analytical
1.3
What is Different about
Global Financial Management?
1) Which of these factors may differ
for management of a domestic firm vs an
international firm?
A) culture
B) corporate governance
C)
political risk
D) All of the above may
differ.
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