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Internatinal

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Submitted By Bella0628
Words 3743
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Eun & Resnick 4e
CHAPTER 1 Globalization and the Multinational Firm

Questions in the test bank follow the order of the chapter outline:

What’s Special about International Finance? Foreign Exchange and Political Risks Market Imperfections Expanded Opportunity Set Goals for International Financial Management Globalization of the World Economy: Major Trends Emergence of Globalized Financial Markets Emergence of the Euro as a Global Currency Trade Liberalization and Economic Integration Privatization Multinational Corporations Summary MINI CASE: Nike and Sweatshop Labor APPENDIX 1A: Gains from Trade: The Theory of Comparative Advantage

What’s Special about “International” Finance?

1) What major dimension sets apart international finance from domestic finance? a) foreign exchange and political risks b) Market imperfections c) Expanded opportunity set d) all of the above
Answer: d

2) An example of a political risk is a) Expropriation of assets b) Adverse change in tax rules c) The opposition party being elected d) a) and b) are both correct
Answer: d - p. 5

3) Production of goods and services has become globalized to a large extent as a result of a) Skilled labor being highly mobile b) Natural resources being depleted in one country after another c) Multinational corporations’ efforts to source inputs and locate production anywhere where costs are lower and profits higher d) Common tastes worldwide for the same goods and services
Answer: c - p. 4

4) Recently, financial markets have become highly integrated. This development a) Allows investors to diversify their portfolios internationally b) Allows minority investors to buy and sell stocks c) Has increased the cost of capital for firms d) Answers a)

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