习题一.docx

习题一.docx

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习题一

Chapter01

GlobalizationandtheMultinationalFirm

MultipleChoiceQuestions

1. Whatmajordimensionsetsapartinternationalfinancefromdomesticfinance?

A. foreignexchangeandpoliticalrisks

B. Marketimperfections

C. Expandedopportunityset

D. alloftheabove

2. Anexampleofapoliticalriskis 

A. Expropriationofassets

B. Adversechangeintaxrules

C. Theoppositionpartybeingelected

D. Bothanswersa）andb）arecorrect

3. Productionofgoodsandserviceshasbecomeglobalizedtoalargeextentasaresultof 

A. Naturalresourcesbeingdepletedinonecountryafteranother

B. Skilledlaborbeinghighlymobile

C. Multinationalcorporations'effortstosourceinputsandlocateproductionanywherewherecostsarelowerandprofitshigher

D. Commontastesworldwideforthesamegoodsandservices

4. Recently,financialmarketshavebecomehighlyintegrated.Thisdevelopment 

A. Allowsinvestorstodiversifytheirportfoliosinternationally

B. Allowsminorityinvestorstobuyandsellstocks

C. Hasincreasedthecostofcapitalforfirms

D. Answersa）andc）arebothcorrect.

5. Japanhasexperiencedlargetradesurpluses.Japaneseinvestorshaverespondedtothisby 

A. Liquidatingtheirpositionsinstockstobuydollardenominatedbonds

B. InvestingheavilyinU.S.andotherforeignfinancialmarkets

C. LobbyingtheU.S.governmenttodepreciateitscurrency

D. LobbyingtheJapanesegovernmenttoallowtheyentoappreciate

6. Supposeyourfirminvests$100,000inaprojectinItaly.Atthetimetheexchangerateis$1.25=€1.00.Oneyearlatertheexchangerateisthesame,buttheItaliangovernmenthasexpropriatedyourfirm'sassetspayingonly80,000incompensation.Thisisanexampleof 

A. Exchangeraterisk

B. Politicalrisk

C. Marketimperfections

D. Noneoftheabove,since$100,000=€80,000$1.25/1.00

7. Supposeyoustartwith$100andbuystockfor50whentheexchangerateis1=$2.Oneyearlater,thestockrisesto60.Youarehappywithyour20percentreturnonthestock,butwhenyousellthestockandexchangeyour60fordollars,youonlyget$45sincethepoundhasfallento1=$0.75.Thislossofvalueisanexampleof:

A. ExchangeRateRisk.

B. PoliticalRisk.

C. Marketimperfections.

D. Weaknessinthedollar.

8. SupposethatGreatBritainisamajorexportmarketforyourfirm,aU.S.basedMNC.IftheBritishpounddepreciatesagainsttheU.S.dollar, 

A. Yourfirmwillbeabletochargemoreindollartermswhilekeepingpoundpricesstable.

B. YourfirmmaybepricedoutoftheU.K.market,totheextentthatyourdollarcostsstayconstantandyourpoundpriceswillrise.

C. ToprotectU.K.marketshare,yourfirmmayhavetocutthedollarpriceofyourgoodstokeepthepoundpricethesame.

D. b）andc）arebothcorrect.

9. SupposeMexicoisamajorexportmarketforyourU.S.-basedcompanyandtheMexicanpesoappreciatesdrasticallyagainsttheU.S.dollar.Thismeans 

A. Yourcompany'sproductscanbepricedoutoftheMexicanmarket,asthepesopriceofAmericanimportswillrisefollowingthepeso'sfall.

B. Yourfirmwillbeabletochargemoreindollartermswhilekeepingpesopricesstable.

C. YourdomesticcompetitorswillenjoyaperiodoffacinglessenedpricecompetitionfromMexicanimports.

D. b）andc）arebothcorrect

10. SupposeMexicoisamajorexportmarketforyourU.S.-basedcompanyandtheMexicanpesodepreciatesdrasticallyagainsttheU.S.dollar,asitdidinDecember1994.Thismeans 

A. Yourcompany'sproductscanbepricedoutoftheMexicanmarket,asthepesopriceofAmericanimportswillrisefollowingthepeso'sfall.

B. Yourfirmwillbeabletochargemoreindollartermswhilekeepingpesopricesstable.

C. YourdomesticcompetitorswillenjoyaperiodoffacinglittlepricecompetitionfromMexicanimports.

D. b）andc）arebothcorrect

11. SupposethatyouareaU.S.producerofacommoditygoodcompetingwithforeignproducers.Yourinputsofproductionarepricedindollarsandyousellyouroutputindollars.IftheU.S.currencydepreciatesagainstthecurrenciesofourtradingpartners, 

A. Yourcompetitivepositionislikelyimproved.

B. Yourcompetitivepositionislikelyworsened.

C. Yourcompetitivepositionisunchanged.

12. Undoubtedly,wearenowlivinginaworldwhereallthemajoreconomicfunctions—consumption,production,andinvestment 

A. arestillinherentlylocal

B. arestillregionalinnature

C. areslowlybecomingglobalized

D. arehighlyglobalized

13. Mostgovernmentsatleasttrytomakeitdifficultforpeopletocrosstheirbordersillegally.Thisbarriertothefreemovementoflaborisanexampleof 

A. Informationasymmetry

B. Excessivetransactionscosts

C. Racialdiscrimination

D. Amarketimperfection

14. Althoughtheworldeconomyismuchmoreintegratedtodaythanwasthecase10or20yearsago,avarietyofbarriersstillhamperfreemovementsofpeople,goods,services,andcapitalacrossnationalboundaries.Thesebarriersinclude 

A. legalrestrictions

B. excessivetransportationcosts

C. informationasymmetry

D. Alloftheabove

15. TheJapaneseautomobilecompanyHondadecidedtoestablishproductionfacilitiesinOhio,mainlyto 

A. circumventtradebarriers

B. reducetransportationcosts

C. reducetransactionscosts

D. Botha）andb）

16. Whenindividualinvestorsbecomeawareofoverseasinvestmentopportunitiesandarewillingtodiversifytheirportfoliosinternationally, 

A. theytradeonemarketimperfection,informationasymmetry,foranother,exchangeraterisk.

B. theybenefitfromanexpandedopportunityset.

C. Theyshouldnotbothertoreadortounderstandtheprospectus,sinceitsprobablywritteninaforeignlanguage

D. Theyshouldinvestonlyindollarsoreuros.

17. TheNestléCorporation,awell-knownSwissMNC,usedtoissuetwodifferentclassesofcommonstock,bearersharesandregisteredshares,andforeignerswereallowedtoholdonly 

A. registeredshares

B. bearershares

C. votingshares

D. convertibleshares

18. Deregulatedfinancialmarketsandheightenedcompetitioninfinancialservicesprovidedanenvironmentforfinancialinnovationsthatresultedintheintroductionofvariousinstruments.Examplesoftheseinnovativeinstrumentsinclude 

A. Currencyfuturesandoptions,foreignstockindexfuturesandoptions

B. multicurrencybonds

C. internationalmutualfunds,countryfunds,exchangetradedfunds

D. alloftheabove

19. Nestlé,awell-knownSwisscorporation, 

A. Hasbeenaparagonofvirtueinitsoppositiontoallformsofpoliticalrisk.

B. Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,thetotalmarketvalueofthefirmfell.

C. Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,therewasamajortransferofwealthfromforeignshareholderstoSwissshareholders.

D. Noneoftheabove

20. Thegoalofshareholderwealthmaximization 

A. isnotappropriatefornon-U.S.businessfirms

B. meansthatallbusinessdecisionsandinvestmentsthatafirmmakesaredoneforthepurposeofmakingtheownersofthefirmbetterofffinancially

C. isasub-objectivethefirmshouldattempttoachieveaftertheobjectiveofcustomersatisfactionismet

D. isinconflictwiththeprivatizationprocesstakingplaceinthird-worldcountries

21. Ascapitalmarketsarebecomingmoreintegrated,thegoalofshareholderwealthmaximization 

A. Hasbeenalteredtoincludeothergoalsaswell.

B. Haslostouttoothergoals,evenintheU.S.

C. HasbeengivenincreasingimportancebymanagersinEurope.

D. Hasbeenshowntobeadeterrenttoraisingfundsabroad.

22. RecentcorporatescandalsatfirmssuchasEnron,WorldComandtheItalianfirmParmalat 

A. Showthatmanagersmightbetemptedtopursuetheirownprivateinterestsattheexpenseofshareholders.

B. ShowthatItalianshareholdersarebetteratmonitoringmanagerialbehaviorthanU.S.shareholders.

C. Showthatwhite-collarcriminalshardlyevergetpunished.

D. Showthatsocialismisabetterwaytogothancapitalism.

23. WhilethecorporategovernanceproblemisnotconfinedtotheUnitedStates, 

A. Itcanbeamuchmoreseriousprobleminmanyotherpartsoftheworld,wherelegalprotectionofshareholdersisweakornonexistent.

B. IthasreacheditshighpointintheUnitedStates.

C. TheU.S.legalsystem,withlawsuitsusedonlyasalastresort,ensuredthatanyconflictsofinterestwillsoonbeathingofthepast.

D. Noneoftheabove

24. Theownersofabusinessarethe 

A. Taxpayers

B. Workers

C. Suppliers

D. Shareholders

25. Themassiveprivatizationthatiscurrentlytakingplaceinformerlysocialistcountries,willlikely 

A. eventuallyenhancethestandardoflivingtothesecountries'citizens

B. dependonprivateinvestment

C. increasetheopportunitysetfacingthesecountries'citizens

D. alloftheabove

26. Afirmwithconcentratedownership 

A. Maygiverisetoconflictsofinterestbetweendominantshareholdersandsmalloutsideshareholders.

B. Mayenjoymoreaccountingtransparencythanfirmswithdiffuseownershipstructures.

C. Isapartnership,neveracorporation.

D. TendstoexistoverseasbutnotintheU.S.

27. Theultimateguardiansofshareholderinterestinacorporation,arethe 

A. Rankandfileworkers

B. Seniormanagement

C. Boardsofdirectors

D. Alloftheabove

28. IncountrieslikeFranceandGermany, 

A. Managershaveoftenmadebusinessdecisionswithregardmaximizingmarketsharetotheexclusionofothergoals.

B. Managershaveoftenviewedshareholdersasoneofthe"stakeholders"ofthefirm,o