Question 1

The financial management activity that determines the proper mix of debt and equity is ________.

Accepted Answer

A)  capital structure 
B)  long-term financing 
C)  capital budgeting 
D)  working capital management 
A)  capital structure 
B)  long-term financing 
C)  capital budgeting 
D)  working capital management

Question 2

MNEs most likely use offshore debt markets ________.

Accepted Answer

A)  to hide their cash from tax authorities 
B)  to take advantage of their ability to access capital in different countries 
C)  since debt in foreign countries is always cheaper than in the home country market 
D)  because investors don't like to invest in companies that only raise capital in their home markets 
A)  to hide their cash from tax authorities 
B)  to take advantage of their ability to access capital in different countries 
C)  since debt in foreign countries is always cheaper than in the home country market 
D)  because investors don't like to invest in companies that only raise capital in their home markets

Question 3

A French company floating a bond issued in Swiss francs in Switzerland would be selling a foreign bond.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is unique to foreign project assessment in the capital budgeting decision?

Accepted Answer

A)  Project cash flows must be determined. 
B)  Parent cash flows and project cash flows are the same. 
C)  Local tax issues affect the determination of free cash flows and the remittance of earnings. 
D)  Inflation is not an issue, because companies use the same inflation rate in both the domestic and international setting in order to make the analysis more comparative. 
A)  Project cash flows must be determined. 
B)  Parent cash flows and project cash flows are the same. 
C)  Local tax issues affect the determination of free cash flows and the remittance of earnings. 
D)  Inflation is not an issue, because companies use the same inflation rate in both the domestic and international setting in order to make the analysis more comparative.

Question 5

FTX,a U.S. electronics firm,has operations in Japan. Currently,the yen is rising against the dollar. Which of the following will most likely occur?

Accepted Answer

A)  Translated earnings will be higher than before the strengthening of the exchange rate. 
B)  Translated earnings will be lower than before the strengthening of the exchange rate. 
C)  There will be no gain or loss on translating the financial statements into dollars. 
D)  The gains or losses will not affect earnings per share and stock prices. 
A)  Translated earnings will be higher than before the strengthening of the exchange rate. 
B)  Translated earnings will be lower than before the strengthening of the exchange rate. 
C)  There will be no gain or loss on translating the financial statements into dollars. 
D)  The gains or losses will not affect earnings per share and stock prices.

Question 6

A U.S. importer buys merchandise from a German manufacturer worth €100,000 when the exchange rate is €0.6451 per dollar with payment due in 30 days. The importer decides to enter into a forward contract to deliver dollars for euros for €0.6329. At the time the payment is due,the spot rate is €0.6711. Based on this,which of the following is true?

Accepted Answer

A)  The importer would have paid more for the merchandise at the future spot rate than at the forward rate. 
B)  The importer will have to pay $67,110 for the merchandise. 
C)  There is no foreign exchange risk to the importer since the sale is denominated in euros. 
D)  The exporter will receive €100,000 for the sale. 
A)  The importer would have paid more for the merchandise at the future spot rate than at the forward rate. 
B)  The importer will have to pay $67,110 for the merchandise. 
C)  There is no foreign exchange risk to the importer since the sale is denominated in euros. 
D)  The exporter will receive €100,000 for the sale.

Question 7

Which of the following is NOT a major internal source of funds available to MNEs?

Accepted Answer

A)  intercompany loans 
B)  equity investments by the parent company in its subsidiaries 
C)  equity capital raised within the country where the subsidiary is located 
D)  intercompany receivables and payables 
A)  intercompany loans 
B)  equity investments by the parent company in its subsidiaries 
C)  equity capital raised within the country where the subsidiary is located 
D)  intercompany receivables and payables

Question 8

The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore taxes for MNEs and the countries where they operate.

Accepted Answer

A) True 
 B)False

Question 9

A bond issue floated by a U.S. company in dollars in London,Luxembourg,and Switzerland by a syndication of bonds is an example of a(n)________.

Accepted Answer

A)  global bond 
B)  domestic bond 
C)  Eurobond 
D)  foreign bond 
A)  global bond 
B)  domestic bond 
C)  Eurobond 
D)  foreign bond

Question 10

The process of coordinating cash inflows and outflows among subsidiaries so that only net cash is transferred is known as multilateral netting.

Accepted Answer

A) True 
 B)False

Question 11

The international bond market is much larger and more lucrative than the domestic bond market.

Accepted Answer

A) True 
 B)False

Question 12

Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.

Accepted Answer

A) True 
 B)False

Question 13

The degree to which a firm funds the growth of a business by debt is known as ________.

Accepted Answer

A)  leveraging 
B)  equity financing 
C)  hedging 
D)  after-tax cost of debt 
A)  leveraging 
B)  equity financing 
C)  hedging 
D)  after-tax cost of debt

Question 14

What is the primary concern about offshore financial centers?

Accepted Answer

A)  engaging in illegal activities 
B)  enabling firms to avoid taxation 
C)  allowing the transfer of large funds 
D)  existing in politically risky environments 
A)  engaging in illegal activities 
B)  enabling firms to avoid taxation 
C)  allowing the transfer of large funds 
D)  existing in politically risky environments

Question 15

Two forms of equity financing are private placement with a venture capital firm and the equity capital market,otherwise known as the stock market.

Accepted Answer

A) True 
 B)False

Question 16

The concept of leveraging in finance refers to ________.

Accepted Answer

A)  the degree to which companies rely on foreign exchange to fund operations 
B)  how a company hedges its foreign currency obligations 
C)  the degree to which a firm funds the growth of a business by debt 
D)  how much cash the CFO has in the bank 
A)  the degree to which companies rely on foreign exchange to fund operations 
B)  how a company hedges its foreign currency obligations 
C)  the degree to which a firm funds the growth of a business by debt 
D)  how much cash the CFO has in the bank

Question 17

If a U.S. company exports to Canada and the sale is denominated in Canadian dollars,which of the following is true?

Accepted Answer

A)  The U.S. company would report a gain if the U.S. dollar rises against the Canadian dollar. 
B)  The Canadian company would report a gain if the Canadian dollar falls against the U.S. dollar. 
C)  The U.S. company would report a loss if the Canadian dollar falls against the U.S. dollar. 
D)  Exports do not result in a gain or loss. 
A)  The U.S. company would report a gain if the U.S. dollar rises against the Canadian dollar. 
B)  The Canadian company would report a gain if the Canadian dollar falls against the U.S. dollar. 
C)  The U.S. company would report a loss if the Canadian dollar falls against the U.S. dollar. 
D)  Exports do not result in a gain or loss.

Question 18

Taxation is an important cash flow issue,but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary)or the location of an investment.

Accepted Answer

A) True 
 B)False

Question 19

If a foreign subsidiary is located in a low tax country,the parent company would probably use a ________.

Accepted Answer

A)  high transfer price on inventory shipped from the parent to the subsidiary 
B)  high transfer price on goods sold by the subsidiary to the parent 
C)  low transfer price on inventory shipped from the subsidiary to the parent 
D)  tax credit price to minimize local tax liabilities 
A)  high transfer price on inventory shipped from the parent to the subsidiary 
B)  high transfer price on goods sold by the subsidiary to the parent 
C)  low transfer price on inventory shipped from the subsidiary to the parent 
D)  tax credit price to minimize local tax liabilities

Question 20

A Eurocurrency is any currency that is banked outside its country of origin.

Accepted Answer

A) True 
 B)False

The financial management activity that determines the proper mix of debt and equity is ________.

MNEs most likely use offshore debt markets ________.

A French company floating a bond issued in Swiss francs in Switzerland would be selling a foreign bond.

Which of the following is unique to foreign project assessment in the capital budgeting decision?

FTX,a U.S. electronics firm,has operations in Japan. Currently,the yen is rising against the dollar. Which of the following will most likely occur?

Which of the following is NOT a major internal source of funds available to MNEs?

The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore taxes for MNEs and the countries where they operate.

A bond issue floated by a U.S. company in dollars in London,Luxembourg,and Switzerland by a syndication of bonds is an example of a(n)________.

The process of coordinating cash inflows and outflows among subsidiaries so that only net cash is transferred is known as multilateral netting.

The international bond market is much larger and more lucrative than the domestic bond market.

Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.

The degree to which a firm funds the growth of a business by debt is known as ________.

What is the primary concern about offshore financial centers?

Two forms of equity financing are private placement with a venture capital firm and the equity capital market,otherwise known as the stock market.

The concept of leveraging in finance refers to ________.

If a U.S. company exports to Canada and the sale is denominated in Canadian dollars,which of the following is true?

Taxation is an important cash flow issue,but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary)or the location of an investment.

If a foreign subsidiary is located in a low tax country,the parent company would probably use a ________.

A Eurocurrency is any currency that is banked outside its country of origin.

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Determination of Exchange Rates

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

International Human Resources

Filters

Exam 19: The Multinational Finance Function

The financial management activity that determines the proper mix of debt and equity is ________.

MNEs most likely use offshore debt markets ________.

A French company floating a bond issued in Swiss francs in Switzerland would be selling a foreign bond.

Which of the following is unique to foreign project assessment in the capital budgeting decision?

FTX,a U.S. electronics firm,has operations in Japan. Currently,the yen is rising against the dollar. Which of the following will most likely occur?

Which of the following is NOT a major internal source of funds available to MNEs?

The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore taxes for MNEs and the countries where they operate.

A bond issue floated by a U.S. company in dollars in London,Luxembourg,and Switzerland by a syndication of bonds is an example of a(n)________.

The process of coordinating cash inflows and outflows among subsidiaries so that only net cash is transferred is known as multilateral netting.

The international bond market is much larger and more lucrative than the domestic bond market.

Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.

The degree to which a firm funds the growth of a business by debt is known as ________.

What is the primary concern about offshore financial centers?

Two forms of equity financing are private placement with a venture capital firm and the equity capital market,otherwise known as the stock market.

The concept of leveraging in finance refers to ________.

If a U.S. company exports to Canada and the sale is denominated in Canadian dollars,which of the following is true?

Taxation is an important cash flow issue,but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary)or the location of an investment.

If a foreign subsidiary is located in a low tax country,the parent company would probably use a ________.

A Eurocurrency is any currency that is banked outside its country of origin.

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Determination of Exchange Rates

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

International Human Resources

Filters