Chapter_27 - CHAPTER 27 MULTINATIONAL FINANCIAL MANAGEMENT...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 27 - Page 1 CHAPTER 27 MULTINATIONAL FINANCIAL MANAGEMENT (Difficulty: E = Easy, M = Medium, and T = Tough) True-False Easy: Multinational financial management Answer: a Diff: E 1. Multinational financial management requires that financial analyses consider the effects of changing currency values. a. True b. False Multinational financial management Answer: b Diff: E 2. Legal and economic differences among countries, although important, do not pose significant problems for most multinational corporations when they coordinate and control worldwide operations of subsidiaries. a. True b. False Exchange rates Answer: b Diff: E 3. Exchange rate quotations consist solely of direct quotations. a. True b. False Cross rates Answer: a Diff: E 4. 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 Floating exchange rates Answer: a Diff: E 5. The United States and most other major industrialized nations currently operate under a system of floating exchange rates. a. True b. False Exchange rate risk Answer: a Diff: E 6. Exchange rate risk is the risk that the cash flows from a foreign project will be worth less than those same cash flows denominated in the parent company's home currency. a. True b. False
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Currency appreciation Answer: a Diff: E 7. When the value of the U.S. dollar appreciates against another country's currency, we may purchase more of the foreign currency per dollar. a. True b. False Trade deficit and depreciation Answer: b Diff: E 8. If the United States is running a deficit trade balance with Great Britain, we would expect the value of the British pound to depreciate against the U.S. dollar. a. True b. False Political risk Answer: b Diff: E 9. Because political risk is seldom negotiable, it cannot be explicitly addressed in multinational corporate financial analysis. a. True b. False Eurodollars Answer: a Diff: E 10. A Eurodollar is a U.S. dollar deposited in a bank outside the United States. a. True b. False Eurodollar market Answer: b Diff: E 11. The Eurodollar market is essentially a long-term market; most loans and deposits have maturities of longer than one year. a. True b. False International credit management Answer: a Diff: E 12. Credit policy for the multinational firm is generally more risky due in part to the additional consideration of exchange rates and also due to uncertainty regarding the credit worthiness of many foreign customers. a. True b. False International working capital management Answer: b Diff: E 13. Due to advanced technology and the similarity of general procedures, working capital management for multinational firms is no more complex than it is for domestic firms. a. True
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

Chapter_27 - CHAPTER 27 MULTINATIONAL FINANCIAL MANAGEMENT...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online