IFM11 TB Ch27
CHAPTER 27
MULTINATIONAL FINANCIAL MANAGEMENT
Please see the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines.
True/False
Easy:
(27.3) Multinational financial management FT Answer: a EASY
1. Multinational financial management requires that financial analysts consider the effects of changing currency values.
a. True
b. False
(27.3) Multinational financial management FT Answer: b EASY
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
(27.3) Exchange rates FT Answer: b EASY
3. Exchange rate quotations consist solely of direct quotations.
a. True
b. False
(27.3) Cross rates FT Answer: a EASY
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
(27.3) Currency appreciation FT Answer: a EASY
5. 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
(27.4) Trade deficit and depreciation FT Answer: b EASY
6. If the United States is running a deficit trade balance with China, then in a free market we would expect the value of the Chinese yuan to depreciate against the U.S. dollar.
a. True
b. False
(27.5) Floating exchange rates FT Answer: a EASY
7. The United States and most other major industrialized nations currently operate under a system of floating exchange rates.
a. True
b. False
(27.5) Exchange rate risk FT Answer: a EASY
8. Exchange rate risk is the risk that the cash flows from a foreign project, when converted to the parent company’s currency, will be worth less than was originally projected because of exchange
MULTINATIONAL FINANCIAL MANAGEMENT
Please see the preface for information on the AACSB letter indicators (F, M, etc.) on the subject lines.
True/False
Easy:
(27.3) Multinational financial management FT Answer: a EASY
1. Multinational financial management requires that financial analysts consider the effects of changing currency values.
a. True
b. False
(27.3) Multinational financial management FT Answer: b EASY
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
(27.3) Exchange rates FT Answer: b EASY
3. Exchange rate quotations consist solely of direct quotations.
a. True
b. False
(27.3) Cross rates FT Answer: a EASY
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
(27.3) Currency appreciation FT Answer: a EASY
5. 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
(27.4) Trade deficit and depreciation FT Answer: b EASY
6. If the United States is running a deficit trade balance with China, then in a free market we would expect the value of the Chinese yuan to depreciate against the U.S. dollar.
a. True
b. False
(27.5) Floating exchange rates FT Answer: a EASY
7. The United States and most other major industrialized nations currently operate under a system of floating exchange rates.
a. True
b. False
(27.5) Exchange rate risk FT Answer: a EASY
8. Exchange rate risk is the risk that the cash flows from a foreign project, when converted to the parent company’s currency, will be worth less than was originally projected because of exchange