Question 1

Even if production costs are higher in a foreign country,a U.S.firm may establish a manufacturing plant in the foreign country now if:

Accepted Answer

A)  the host government of that country eliminates all quotas. 
B)  the host government of that country reduces all quotas. 
C)  the host government of that country increases all quotas. 
D)  the host government of that country eliminates all tariffs. 
A)  the host government of that country eliminates all quotas. 
B)  the host government of that country reduces all quotas. 
C)  the host government of that country increases all quotas. 
D)  the host government of that country eliminates all tariffs.

Question 2

When a firm perceives that a foreign currency is _________,the firm may attempt direct foreign investment in that country,as the initial outlay should be relatively _______.

Accepted Answer

A)  overvalued;high 
B)  overvalued;low 
C)  undervalued;high 
D)  undervalued;low 
A)  overvalued;high 
B)  overvalued;low 
C)  undervalued;high 
D)  undervalued;low

Question 3

The best means to accomplish the revenue-related motive of attracting new sources of demand is to:

Accepted Answer

A)  acquire a competitor that has controlled its local market. 
B)  establish a subsidiary or acquire a competitor in a new market. 
C)  establish a subsidiary in a market where tougher trade restrictions will adversely affect the firm's export volume. 
D)  establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based. 
A)  acquire a competitor that has controlled its local market. 
B)  establish a subsidiary or acquire a competitor in a new market. 
C)  establish a subsidiary in a market where tougher trade restrictions will adversely affect the firm's export volume. 
D)  establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based.

Question 4

____________ is not a disadvantage of direct foreign investment.

Accepted Answer

A)  The expense of establishing a foreign subsidiary 
B)  The uncertainty of inflation and exchange rate movements 
C)  Political risk 
D)  All of the above are disadvantages of direct foreign investment 
A)  The expense of establishing a foreign subsidiary 
B)  The uncertainty of inflation and exchange rate movements 
C)  Political risk 
D)  All of the above are disadvantages of direct foreign investment

Question 5

____________ is not a cost-related motive for direct foreign investment.

Accepted Answer

A)  Exploiting monopolistic advantages 
B)  Fully benefiting from economies of scale 
C)  Uses foreign factors of production 
D)  Using foreign raw materials 
A)  Exploiting monopolistic advantages 
B)  Fully benefiting from economies of scale 
C)  Uses foreign factors of production 
D)  Using foreign raw materials

Even if production costs are higher in a foreign country,a U.S.firm may establish a manufacturing plant in the foreign country now if:

When a firm perceives that a foreign currency is ___,the firm may attempt direct foreign investment in that country,as the initial outlay should be relatively _.

The best means to accomplish the revenue-related motive of attracting new sources of demand is to:

____________ is not a disadvantage of direct foreign investment.

____________ is not a cost-related motive for direct foreign investment.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation,Interest Rates,and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Multinational Capital Budgeting

Multinational Restructuring

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 13: Direct Foreign Investment

Even if production costs are higher in a foreign country,a U.S.firm may establish a manufacturing plant in the foreign country now if:

When a firm perceives that a foreign currency is _________,the firm may attempt direct foreign investment in that country,as the initial outlay should be relatively _______.

The best means to accomplish the revenue-related motive of attracting new sources of demand is to:

____________ is not a disadvantage of direct foreign investment.

____________ is not a cost-related motive for direct foreign investment.

Multinational Financial Management: An Overview

International Flow of Funds

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation,Interest Rates,and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Multinational Capital Budgeting

Multinational Restructuring

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

When a firm perceives that a foreign currency is ___,the firm may attempt direct foreign investment in that country,as the initial outlay should be relatively _.