Get清风Ch001GlobalizationandtheMultinationalFirmWord文件下载.docx

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ExpandedOpportunitySet

GoalsforInternationalFinancial

Management

GlobalizationoftheWorldEconomy:

MajorTrends

EmergenceofGlobalizedFinancialMarkets

EmergenceoftheEuroasaGlobalCurrency

TradeLiberalizationandEconomicIntegration

Privatization

MultinationalCorporations

Summary

MINICASE:

NikeandSweatshopLabor

APPENDIX1A:

GainsfromTrade:

TheTheoryof

ComparativeAdvantage

What’sSpecialabout“International〞Finance?

1）Whatmajordimensionsetsapartinternationalfinancefromdomesticfinance?

a）foreignexchangeandpoliticalrisks

b）Marketimperfections

c）Expandedopportunityset

d）alloftheabove

Answer:

d

2）Anexampleofapoliticalriskis

a）Expropriationofassets

b）Adversechangeintaxrules

c）Theoppositionpartybeingelected

d）a）andb）arebothcorrect

d-p.5

3）Productionofgoodsandserviceshasbecomeglobalizedtoalargeextentasaresultof

a）Skilledlaborbeinghighlymobile

b）Naturalresourcesbeingdepletedinonecountryafteranother

c）Multinationalcorporations’effortstosourceinputsandlocateproductionanywherewherecostsarelowerandprofitshigher

d）Commontastesworldwideforthesamegoodsandservices

c-p.4

4）Recently,financialmarketshavebecomehighlyintegrated.Thisdevelopment

a）Allowsinvestorstodiversifytheirportfoliosinternationally

b）Allowsminorityinvestorstobuyandsellstocks

c）Hasincreasedthecostofcapitalforfirms

d）Answersa）andc）arebothcorrect.

a.seepage4

5）Japanhasexperiencedlargetradesurpluses.Japaneseinvestorshaverespondedtothisby

a）Liquidatingtheirpositionsinstockstobuydollardenominatedbonds

b）InvestingheavilyinU.S.andotherforeignfinancialmarkets

c）LobbyingtheU.S.governmenttodepreciateitscurrency

d）LobbyingtheJapanesegovernmenttoallowtheyentoappreciate

b-p.4

6）Supposeyourfirminvests$100,000inaprojectinItaly.Atthetimetheexchangerateis$1.25=€1.00.Oneyearlatertheexchangerateisthesame,buttheItaliangovernmenthasexpropriatedyourfirm’sassetspayingonly€80,000incompensation.Thisisanexampleof

a）Exchangeraterisk

b）Politicalrisk

c）Marketimperfections

d）

b）politicalrisk—thegovernmentisonlygivingyoubackyourinitialinvestment,ifthiswasagoodinvestmentitshouldhavebeenworthmorethan$100,000ayearlater.Forexampleifyourcostofcapitalwas8%itshouldhavebeenworth$108,000.

7）SupposethatGreatBritainisamajorexportmarketforyourfirm,aU.S.basedMNC.IftheBritishpounddepreciatesagainsttheU.S.dollar,

a）Yourfirmwillbeabletochargemoreindollartermswhilekeepingpoundpricesstable.

b）YourfirmmaybepricedoutoftheU.K.market,totheextentthatyourdollarcostsstayconstantandyourpoundpriceswillrise.

c）ToprotectU.K.marketshare,yourfirmmayhavetocutthedollarpriceofyourgoodstokeepthepoundpricethesame.

d）b）andc）arebothcorrect.

b）andc）arebothcorrect.Seepage5.

8）Mostgovernmentsatleasttrytomakeitdifficultforpeopletocrosstheirbordersillegally.Thisbarriertothefreemovementoflaborisanexampleof

a）Informationasymmetry

b）Excessivetransactionscosts

c）Racialdiscrimination

d）Amarketimperfection

d）seepage6.

9）Whenindividualinvestorsbecomeawareofoverseasinvestmentopportunitiesandarewillingtodiversifytheirportfoliosinternationally,

a）theytradeonemarketimperfection,informationasymmetry,foranother,exchangeraterisk.

b）theybenefitfromanexpandedopportunityset.

c）Theyshouldnotbothertoreadortounderstandtheprospectus,sinceitsprobablywritteninaforeignlanguage

d）Theyshouldinvestonlyindollarsoreuros.

bseepage8.

10）Nestlé

awell-knownSwisscorporation,

a）Hasbeenaparagonofvirtueinitsoppositiontoallformsofpoliticalrisk.

b）Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,thetotalmarketvalueofthefirmfell.

c）Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,therewasamajortransferofwealthfromforeignshareholderstoSwissshareholders.

d）Noneoftheabove

c）Seepage7.

GoalsforInternationalFinancialManagement

11）Thegoalofshareholderwealthmaximization

a）isnotappropriatefornon-U.S.businessfirms

b）meansthatallbusinessdecisionsandinvestmentsthatafirmmakesaredoneforthepurposeofmakingtheownersofthefi