Question 1

An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure.

Accepted Answer

A) True 
 B)False

Question 2

How do countries differ in terms of taxation? In regards to taxation,why do some MNEs turn to offshore financial centers? Why are offshore financial centers a concern to the OECD?

Accepted Answer

Countries differ in terms of the types o

Question 3

A translation exposure arises because the dollar value of the exposed asset changes as the exchange rate changes.

Accepted Answer

A) True 
 B)False

Question 4

A negotiable certificate issued by a U.S. bank to represent the underlying shares of a foreign corporation's stock is called a(n)________.

Accepted Answer

A)  Euroequity 
B)  American Depositary Receipt 
C)  Global Depositary Receipt 
D)  European Depositary Receipt 
A)  Euroequity 
B)  American Depositary Receipt 
C)  Global Depositary Receipt 
D)  European Depositary Receipt

Question 5

Capital budgeting is best described as the ________.

Accepted Answer

A)  process that determines which countries will receive capital investment funds 
B)  procedure for determining the proper mix of debt and equity for a country 
C)  proper management of a country's current assets and liabilities 
D)  simplification of corporate tax procedures 
A)  process that determines which countries will receive capital investment funds 
B)  procedure for determining the proper mix of debt and equity for a country 
C)  proper management of a country's current assets and liabilities 
D)  simplification of corporate tax procedures

Question 6

What are the major sources of external funds for an MNE's normal operations? Why do MNEs use offshore financial centers to raise funds?

Accepted Answer

Two major sources of funds external to t

Question 7

One way to account for the challenge of the variability of future cash flows is to ________.

Accepted Answer

A)  adjust the hurdle rate for the project 
B)  use the most likely cash flow estimate 
C)  ignore different rates of inflation to prevent confusion 
D)  leave out a consideration of the terminal value of an investment 
A)  adjust the hurdle rate for the project 
B)  use the most likely cash flow estimate 
C)  ignore different rates of inflation to prevent confusion 
D)  leave out a consideration of the terminal value of an investment

Question 8

The combined effect of an exchange-rate change on the financial statements of a foreign subsidiary is neither a gain nor a loss because of accounting rules.

Accepted Answer

A) True 
 B)False

Question 9

A city or country that provides large amounts of funds in currencies other than its own is a(n)________.

Accepted Answer

A)  offshore financial center 
B)  ADR facilitator 
C)  interbank market 
D)  currency regulator 
A)  offshore financial center 
B)  ADR facilitator 
C)  interbank market 
D)  currency regulator

Question 10

Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?

Accepted Answer

A)  translation exposure 
B)  transaction exposure 
C)  economic exposure 
D)  hedge exposure 
A)  translation exposure 
B)  transaction exposure 
C)  economic exposure 
D)  hedge exposure

Question 11

If a British company exports to a German company and the export is denominated in euros,which of the following is true?

Accepted Answer

A)  The German company would experience a loss if the euro strengthens against the pound. 
B)  The British company would experience a gain if the euro strengthens against the pound. 
C)  The British company would not experience a gain or a loss because the sale is denominated in euros, not pounds. 
D)  Exports result in translation exposures but not transaction exposures. 
A)  The German company would experience a loss if the euro strengthens against the pound. 
B)  The British company would experience a gain if the euro strengthens against the pound. 
C)  The British company would not experience a gain or a loss because the sale is denominated in euros, not pounds. 
D)  Exports result in translation exposures but not transaction exposures.

Question 12

When using a lag strategy,a company collects foreign-currency receivables before they are due when the foreign currency is expected to weaken.

Accepted Answer

A) True 
 B)False

Question 13

What is capital budgeting? What types of risks are involved? How can an MNE manage these risks?

Accepted Answer

When making a capital budgeting decision

Question 14

Subpart F income is ________.

Accepted Answer

A)  usually earned by a branch rather than a corporation 
B)  not taxed to the parent unless a dividend is remitted 
C)  not eligible for the tax credit 
D)  passive and usually derived from operations in a tax-haven country 
A)  usually earned by a branch rather than a corporation 
B)  not taxed to the parent unless a dividend is remitted 
C)  not eligible for the tax credit 
D)  passive and usually derived from operations in a tax-haven country

Question 15

The market for shares sold outside the boundaries of the issuing company's home country is the ________.

Accepted Answer

A)  Eurocurrency market 
B)  international bond market 
C)  international equity market 
D)  Euroequity market 
A)  Eurocurrency market 
B)  international bond market 
C)  international equity market 
D)  Euroequity market

Question 16

What is an offshore financial center? What are the main characteristics of OFCs?

Accepted Answer

Offshore financial centers are cities or

Question 17

A foreign exchange exposure that occurs because of a change in the value of exposed assets or liabilities of foreign currency financial statements is a(n)________.

Accepted Answer

A)  translation exposure 
B)  transaction exposure 
C)  economic exposure 
D)  hedge exposure 
A)  translation exposure 
B)  transaction exposure 
C)  economic exposure 
D)  hedge exposure

Question 18

Firms most likely borrow money in the international bond market to ________.

Accepted Answer

A)  guarantee high yields and low rates 
B)  enable diversification of funding sources 
C)  protect against costly government regulations 
D)  allow emerging markets to invest in foreign exchange 
A)  guarantee high yields and low rates 
B)  enable diversification of funding sources 
C)  protect against costly government regulations 
D)  allow emerging markets to invest in foreign exchange

Question 19

Vale,the large Brazilian mining company,is trying to decide if it wants to invest in a Canadian nickel mine. Which of the following questions is LEAST relevant to Vale's capital budgeting decision?

Accepted Answer

A)  How will differing rates of inflation in Canada and Brazil affect the parent and subsidiary? 
B)  How will dividends be affected by the Canadian and Brazilian tax systems? 
C)  What is the difference in inflation rates between Brazil and Canada? 
D)  Does Brazil or Canada have the absolute advantage in exporting? 
A)  How will differing rates of inflation in Canada and Brazil affect the parent and subsidiary? 
B)  How will dividends be affected by the Canadian and Brazilian tax systems? 
C)  What is the difference in inflation rates between Brazil and Canada? 
D)  Does Brazil or Canada have the absolute advantage in exporting?

Question 20

The OECD is concerned about transfer pricing practices because ________.

Accepted Answer

A)  transfer pricing can help maximize a company's worldwide tax liability 
B)  transfer prices tend to be higher in industrial than developing countries 
C)  governments use transfer prices to manipulate companies' investment strategies 
D)  companies use transfer prices to manipulate prices and therefore taxes 
A)  transfer pricing can help maximize a company's worldwide tax liability 
B)  transfer prices tend to be higher in industrial than developing countries 
C)  governments use transfer prices to manipulate companies' investment strategies 
D)  companies use transfer prices to manipulate prices and therefore taxes

An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure.

How do countries differ in terms of taxation? In regards to taxation,why do some MNEs turn to offshore financial centers? Why are offshore financial centers a concern to the OECD?

A translation exposure arises because the dollar value of the exposed asset changes as the exchange rate changes.

A negotiable certificate issued by a U.S. bank to represent the underlying shares of a foreign corporation's stock is called a(n)________.

Capital budgeting is best described as the ________.

What are the major sources of external funds for an MNE's normal operations? Why do MNEs use offshore financial centers to raise funds?

One way to account for the challenge of the variability of future cash flows is to ________.

The combined effect of an exchange-rate change on the financial statements of a foreign subsidiary is neither a gain nor a loss because of accounting rules.

A city or country that provides large amounts of funds in currencies other than its own is a(n)________.

Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?

If a British company exports to a German company and the export is denominated in euros,which of the following is true?

When using a lag strategy,a company collects foreign-currency receivables before they are due when the foreign currency is expected to weaken.

What is capital budgeting? What types of risks are involved? How can an MNE manage these risks?

Subpart F income is ________.

The market for shares sold outside the boundaries of the issuing company's home country is the ________.

What is an offshore financial center? What are the main characteristics of OFCs?

A foreign exchange exposure that occurs because of a change in the value of exposed assets or liabilities of foreign currency financial statements is a(n)________.

Firms most likely borrow money in the international bond market to ________.

Vale,the large Brazilian mining company,is trying to decide if it wants to invest in a Canadian nickel mine. Which of the following questions is LEAST relevant to Vale's capital budgeting decision?

The OECD is concerned about transfer pricing practices because ________.

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

An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure.

How do countries differ in terms of taxation? In regards to taxation,why do some MNEs turn to offshore financial centers? Why are offshore financial centers a concern to the OECD?

A translation exposure arises because the dollar value of the exposed asset changes as the exchange rate changes.

A negotiable certificate issued by a U.S. bank to represent the underlying shares of a foreign corporation's stock is called a(n)________.

Capital budgeting is best described as the ________.

What are the major sources of external funds for an MNE's normal operations? Why do MNEs use offshore financial centers to raise funds?

One way to account for the challenge of the variability of future cash flows is to ________.

The combined effect of an exchange-rate change on the financial statements of a foreign subsidiary is neither a gain nor a loss because of accounting rules.

A city or country that provides large amounts of funds in currencies other than its own is a(n)________.

Which term refers to the potential for change in expected cash flows that arises from the pricing of products and the location of investments?

If a British company exports to a German company and the export is denominated in euros,which of the following is true?

When using a lag strategy,a company collects foreign-currency receivables before they are due when the foreign currency is expected to weaken.

What is capital budgeting? What types of risks are involved? How can an MNE manage these risks?

Subpart F income is ________.

The market for shares sold outside the boundaries of the issuing company's home country is the ________.

What is an offshore financial center? What are the main characteristics of OFCs?

A foreign exchange exposure that occurs because of a change in the value of exposed assets or liabilities of foreign currency financial statements is a(n)________.

Firms most likely borrow money in the international bond market to ________.

Vale,the large Brazilian mining company,is trying to decide if it wants to invest in a Canadian nickel mine. Which of the following questions is LEAST relevant to Vale's capital budgeting decision?

The OECD is concerned about transfer pricing practices because ________.

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