Get清风Ch001GlobalizationandtheMultinationalFirmWord文件下载.docx

1、Expanded Opportunity SetGoals for International FinancialManagementGlobalization of the World Economy:Major TrendsEmergence of Globalized Financial MarketsEmergence of the Euro as a Global CurrencyTrade Liberalization and Economic IntegrationPrivatizationMultinational CorporationsSummaryMINI CASE: N

2、ike and Sweatshop LaborAPPENDIX 1A: Gains from Trade: The Theory ofComparative AdvantageWhats Special about “International Finance?1）What major dimension sets apart international finance from domestic finance?a）foreign exchange and political risksb）Market imperfectionsc）Expanded opportunity setd）all

3、 of the aboveAnswer: d2）An example of a political risk is a）Expropriation of assetsb）Adverse change in tax rulesc）The opposition party being electedd）a） and b） are both correct d - p. 53）Production of goods and services has become globalized to a large extent as a result ofa）Skilled labor being high

4、ly mobileb）Natural resources being depleted in one country after anotherc）Multinational corporations efforts to source inputs and locate production anywhere where costs are lower and profits higherd）Common tastes worldwide for the same goods and services c - p. 44）Recently, financial markets have be

5、come highly integrated. This development a）Allows investors to diversify their portfolios internationallyb）Allows minority investors to buy and sell stocksc）Has increased the cost of capital for firmsd）Answers a） and c） are both correct. a. see page 45）Japan has experienced large trade surpluses. Ja

6、panese investors have responded to this bya）Liquidating their positions in stocks to buy dollar denominated bondsb）Investing heavily in U.S. and other foreign financial marketsc）Lobbying the U.S. government to depreciate its currencyd）Lobbying the Japanese government to allow the yen to appreciate b

7、 - p. 46）Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is $1.25 = 1.00. One year later the exchange rate is the same, but the Italian government has expropriated your firms assets paying only 80,000 in compensation. This is an example of a）Exchange rate risk

8、b）Political riskc）Market imperfectionsd） b） political riskthe government is only giving you back your initial investment, if this was a good investment it should have been worth more than $100,000 a year later. For example if your cost of capital was 8% it should have been worth $108,000.7）Suppose t

9、hat Great Britain is a major export market for your firm, a U.S. based MNC. If the British pound depreciates against the U.S. dollar, a）Your firm will be able to charge more in dollar terms while keeping pound prices stable.b）Your firm may be priced out of the U.K. market, to the extent that your do

10、llar costs stay constant and your pound prices will rise.c）To protect U.K. market share, your firm may have to cut the dollar price of your goods to keep the pound price the same.d）b） and c） are both correct. b） and c） are both correct. See page 5.8）Most governments at least try to make it difficult

11、 for people to cross their borders illegally. This barrier to the free movement of labor is an example ofa）Information asymmetryb）Excessive transactions costsc）Racial discriminationd）A market imperfection d） see page 6.9）When individual investors become aware of overseas investment opportunities and

12、 are willing to diversify their portfolios internationally, a）they trade one market imperfection, information asymmetry, for another, exchange rate risk.b）they benefit from an expanded opportunity set.c）They should not bother to read or to understand the prospectus, since its probably written in a f

13、oreign language d）They should invest only in dollars or euros. b see page 8.10）Nestl, a well-known Swiss corporation,a）Has been a paragon of virtue in its opposition to all forms of political risk.b）At one time placed restrictions on foreign ownership of its stock. When it relaxed these restrictions

14、, the total market value of the firm fell.c）At one time placed restrictions on foreign ownership of its stock. When it relaxed these restrictions, there was a major transfer of wealth from foreign shareholders to Swiss shareholders.d）None of the above c） See page 7.Goals for International Financial Management11）The goal of shareholder wealth maximization a）is not appropriate for non-U.S. business firmsb）means that all business decisions and investments that a firm makes are done for the purpose of making the owners of the fi