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Chapter 17: Multinational Financial Management Test Banks

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Chapter 17: Multinational Financial Management Test Banks
CHAPTER 17

MULTINATIONAL FINANCIAL MANAGEMENT
(Difficulty Levels: Easy, Easy/Medium, Medium, Medium/Hard, and Hard)

Please see the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines.

Multiple Choice: True/False

(17-2) Multinational fin. mgmt. F T Answer: a EASY
[i]. Multinational financial management requires that financial analysts consider the effects of changing currency values.

a. True b. False

(17-2) Multinational fin. mgmt. F T Answer: b EASY
[ii]. Legal and economic differences among countries, although important, do NOT pose significant problems for most multinational corporations when they coordinate and control worldwide operations and subsidiaries.

a. True b. False

(17-3) Currency appreciation F T Answer: a EASY
[iii]. When the value of the U.S. dollar appreciates against another country's currency, we may purchase more of the foreign currency with a dollar.

a. True b. False

(17-3) Floating exchange rates F T Answer: a EASY
[iv]. The United States and most other major industrialized nations currently operate under a system of floating exchange rates.

a. True b. False

(17-4) Exchange rates F T Answer: b EASY
[v]. Exchange rate quotations consist solely of direct quotations.

a. True b. False

(17-4) Cross rates F T Answer: a EASY
[vi]. Calculating a currency cross rate involves determining the exchange rate for two currencies by using a third currency as a base.

a. True b. False

(17-9) Eurodollars F T Answer: a EASY
[vii]. A Eurodollar is a U.S. dollar deposited in a bank outside the United States.

a. True b. False

(17-9) LIBOR F T Answer: b EASY
[viii]. LIBOR is an acronym for London Interbank Offer Rate, which is an average of interest rates offered by London banks to smaller U.S. corporations.

a. True b. False
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