Question 1

Which of the following can the partner agree to in order to maintain operational control over a joint venture?

Accepted Answer

A)  Marketing agreements 
B)  Supply agreements 
C)  Contracts with management 
D)  Maintain veto power in the joint venture agreement 
E)  All of these are correct 
A)  Marketing agreements 
B)  Supply agreements 
C)  Contracts with management 
D)  Maintain veto power in the joint venture agreement 
E)  All of these are correct E

Question 2

Because passive investments create the least risk of foreign control,they are the least regulated of foreign investments.

Accepted Answer

A) True 
 B)False  True

Question 3

All foreign nations permit foreign majority ownership of critical industries to the security of the host country.

Accepted Answer

A) True 
 B)False  False

Question 4

Compare and contrast different types of passive investments and the risks and benefits associated with each.

Accepted Answer

Passive investments typically refer to i

Question 5

Weigh the relative benefits of political risk insurance from government agencies and private insurers.

Accepted Answer

Political risk insurance from government

Question 6

If a U.S.company chooses to establish a wholly-owned subsidiary abroad,it faces less potential vicarious liability because it is separated from the branch.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that you plan to set up a subsidiary in a foreign country.Devise a list of the types of tax incentives you seek to accrue.

Accepted Answer

When setting up a subsidiary in a foreig

Question 8

Under the modern traditional theory of the taking of property,a sovereign may take private property only where:

Accepted Answer

A)  the property is taken for a public purpose. 
B)  the taking is nondiscriminatory. 
C)  the taking is accompanied by a prompt, adequate, and effective compensation. 
D)  all of these are correct 
A)  the property is taken for a public purpose. 
B)  the taking is nondiscriminatory. 
C)  the taking is accompanied by a prompt, adequate, and effective compensation. 
D)  all of these are correct

Question 9

In order to avoid double taxation on the income of foreign subsidiary companies,U.S.tax law:

Accepted Answer

A)  does not tax income repatriated to the U.S. parent company. 
B)  allows the U.S. parent company to take a 100 percent tax credit for foreign income taxes paid. 
C)  provides a deduction for foreign income taxes paid. 
D)  none of these. U.S. companies are usually subject to double taxation when they have foreign subsidiaries. 
A)  does not tax income repatriated to the U.S. parent company. 
B)  allows the U.S. parent company to take a 100 percent tax credit for foreign income taxes paid. 
C)  provides a deduction for foreign income taxes paid. 
D)  none of these. U.S. companies are usually subject to double taxation when they have foreign subsidiaries.

Question 10

Under the Foreign Sovereign Immunities Act,the United States courts have jurisdiction over disputes between U.S.firms and the foreign states that expropriated assets without market value compensation.

Accepted Answer

A) True 
 B)False

Question 11

Passive investment in less-developed countries is similar to other developed countries since equity shares are easily transferable worldwide.

Accepted Answer

A) True 
 B)False

Question 12

Explain and assess the different methods that a business may employ to reduce the political risk associated with a foreign investment.

Accepted Answer

There are several methods that a busines

Question 13

When private property is seized gradually by a foreign government,it is known as:

Accepted Answer

A)  crawling expropriation. 
B)  creeping expropriation. 
C)  gradual encroachment. 
D)  none of these are correct. 
A)  crawling expropriation. 
B)  creeping expropriation. 
C)  gradual encroachment. 
D)  none of these are correct.

Question 14

A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.

Accepted Answer

A) True 
 B)False

Question 15

The establishment of a branch overseas will have tax consequences as ordinary business income under U.S.tax law.

Accepted Answer

A) True 
 B)False

Question 16

Compare and contrast the partial sale,trade sale,and concession models of privatization.

Accepted Answer

Privatization can be achieved through va

Question 17

Often,investors must create legal structures for their investment that will maximize the foreign venture's U.S.dollar resources.These might include:

Accepted Answer

A)  borrowing start-up money in local currency. 
B)  buying supplies and services locally, using local currency. 
C)  building unitary index adjustment factors into contractual payment terms. 
D)  all of these are correct. 
A)  borrowing start-up money in local currency. 
B)  buying supplies and services locally, using local currency. 
C)  building unitary index adjustment factors into contractual payment terms. 
D)  all of these are correct.

Question 18

International investment disputes are arbitrated by:

Accepted Answer

A)  The International Chamber of Commerce. 
B)  The International Centre for the Settlement of Investment Disputes. 
C)  The United Nations. 
D)  all of these are correct. 
E)  The International Chamber of Commerce and the International Centre for the Settlement of Investment Disputes only. 
A)  The International Chamber of Commerce. 
B)  The International Centre for the Settlement of Investment Disputes. 
C)  The United Nations. 
D)  all of these are correct. 
E)  The International Chamber of Commerce and the International Centre for the Settlement of Investment Disputes only.

Question 19

Which is not a type of adjustment to regulations often addressed in privatizations?

Accepted Answer

A)  Exemptions from taxation 
B)  Exemptions from regulations affecting tariffs, rates of return and technical standards 
C)  Right of first refusal rights in future privatization efforts 
D)  Remittance rights on capital and other exemptions from regulations relating to repatriation of profits and exchange rates 
A)  Exemptions from taxation 
B)  Exemptions from regulations affecting tariffs, rates of return and technical standards 
C)  Right of first refusal rights in future privatization efforts 
D)  Remittance rights on capital and other exemptions from regulations relating to repatriation of profits and exchange rates

Question 20

The United States does not tax foreign subsidiaries on the income they earn abroad.

Accepted Answer

A) True 
 B)False

Exam 18: The Legal Environment of Foreign Direct Investment

Which of the following can the partner agree to in order to maintain operational control over a joint venture?

Because passive investments create the least risk of foreign control,they are the least regulated of foreign investments.

All foreign nations permit foreign majority ownership of critical industries to the security of the host country.

Compare and contrast different types of passive investments and the risks and benefits associated with each.

Weigh the relative benefits of political risk insurance from government agencies and private insurers.

If a U.S.company chooses to establish a wholly-owned subsidiary abroad,it faces less potential vicarious liability because it is separated from the branch.

Suppose that you plan to set up a subsidiary in a foreign country.Devise a list of the types of tax incentives you seek to accrue.

Under the modern traditional theory of the taking of property,a sovereign may take private property only where:

In order to avoid double taxation on the income of foreign subsidiary companies,U.S.tax law:

Under the Foreign Sovereign Immunities Act,the United States courts have jurisdiction over disputes between U.S.firms and the foreign states that expropriated assets without market value compensation.

Passive investment in less-developed countries is similar to other developed countries since equity shares are easily transferable worldwide.

Explain and assess the different methods that a business may employ to reduce the political risk associated with a foreign investment.

When private property is seized gradually by a foreign government,it is known as:

A foreign investor may enter into a joint venture by combining with a national of a host country to create a new entity or by acquiring a portion of an existing local entity.

The establishment of a branch overseas will have tax consequences as ordinary business income under U.S.tax law.

Compare and contrast the partial sale,trade sale,and concession models of privatization.

Often,investors must create legal structures for their investment that will maximize the foreign venture's U.S.dollar resources.These might include:

International investment disputes are arbitrated by:

Which is not a type of adjustment to regulations often addressed in privatizations?

The United States does not tax foreign subsidiaries on the income they earn abroad.

Introduction to International Business

International Law and the World's Legal Systems

Resolving International Commercial Disputes

The Formation and Performance of Contracts for the Sale of Goods

The Documentary Sale and Terms of Trade

Legal Issues in International Transportation

Bank Collections and Letters of Credit

National Lawmaking Powers and the Regulation of U.S.Trade

The World Trade Organization: Basic Legal Principles

Laws Governing Access to Foreign Markets

Regulating Import Competition and Unfair Trade

Imports,Customs,and Tariff Law

Export Controls and Sanctions

North American Free Trade Law

The European Union

Marketing: Representatives,Advertising,and Anti-Corruption

Protection and Licensing of Intellectual Property

Labor and Employment Discrimination Law

Environmental Law

Regulating the Competitive Environment

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