Question 1

Licensing obligates a firm to provide ____, while franchising obligates a firm to provide ____.

Accepted Answer

A) a specialized sales or service strategy; its technology 
B) its technology; a specialized sales or service strategy 
C) its technology; its technology 
D) a specialized sales or service strategy; a specialized sales or service strategy 
E) its technology; an initial investment 
A) a specialized sales or service strategy; its technology 
B) its technology; a specialized sales or service strategy 
C) its technology; its technology 
D) a specialized sales or service strategy; a specialized sales or service strategy 
E) its technology; an initial investment

Question 2

An industry based on which of the following would most likely take advantage of lower costs in some less developed foreign countries?

Accepted Answer

A) assembly line production 
B) specialized professional services 
C) nuclear missile programs 
D) development of more sophisticated computer technology 
A) assembly line production 
B) specialized professional services 
C) nuclear missile programs 
D) development of more sophisticated computer technology

Question 3

International trade:​

Accepted Answer

A) is a relatively conservative approach to foreign market penetration. 
B) entails minimal risk. 
C) does not require a large amount of investment. 
D) all of the above. 
A) is a relatively conservative approach to foreign market penetration. 
B) entails minimal risk. 
C) does not require a large amount of investment. 
D) all of the above.

Question 4

The Sarbanes-Oxley Act ensures a more transparent process for managers to report on the productivity and financial condition of their firm.

Accepted Answer

A) True 
 B)False

Question 5

One form of exposure to political risk is terrorism​

Accepted Answer

A) True 
 B)False

Question 6

If a U.S. firm sets up a plant in Mexico to benefit from low-cost labor, it will likely have a comparative advantage over other firms in Mexico that sell the same product.

Accepted Answer

A) True 
 B)False

Question 7

Assume that an American firm wants to engage in international business without making a major investment in the foreign country. Which method is least appropriate in this situation?​

Accepted Answer

A) international trade 
B) licensing 
C) franchising 
D) direct foreign investment 
A) international trade 
B) licensing 
C) franchising 
D) direct foreign investment

Question 8

If markets were perfect, then labor and other costs of production would be perfectly stable (no movement across borders).

Accepted Answer

A) True 
 B)False

Question 9

Imperfect markets reflect conditions under which factors of production are immobile.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not mentioned in the text as a theory of international business?​

Accepted Answer

A) theory of comparative advantage 
B) imperfect markets theory 
C) product cycle theory 
D) globalization of business theory 
E) All of the above are mentioned in the text as theories of international business 
A) theory of comparative advantage 
B) imperfect markets theory 
C) product cycle theory 
D) globalization of business theory 
E) All of the above are mentioned in the text as theories of international business

Question 11

MNCs commonly consider establishing a new foreign subsidiary to replace their exporting business because it allows them to avoid exchange rate risk.

Accepted Answer

A) True 
 B)False

Question 12

Four MNCs generate the same level of sales. The MNC that ______________________would likely have the most direct foreign investment.

Accepted Answer

A) exports all of its products 
B) produces and sells its products locally 
C) imports products from unrelated firms in other countries and sells them locally 
D) acquires a foreign firm that produces most of its products to be sold in that foreign country 
A) exports all of its products 
B) produces and sells its products locally 
C) imports products from unrelated firms in other countries and sells them locally 
D) acquires a foreign firm that produces most of its products to be sold in that foreign country

Question 13

Which of the following is not mentioned in the text as an additional risk resulting from international business?

Accepted Answer

A) exchange rate fluctuations 
B) political risk 
C) interest rate risk 
D) exposure to foreign economies 
A) exchange rate fluctuations 
B) political risk 
C) interest rate risk 
D) exposure to foreign economies

Question 14

Under the product cycle theory, foreign demand can be initially satisfied by exporting.

Accepted Answer

A) True 
 B)False

Question 15

Assume that Boca Co. wants to expand its business to Japan and wants complete control over the operations in Japan. Which method of international business is most appropriate for Boca Co?​

Accepted Answer

A) joint venture 
B) licensing 
C) partial acquisition of an existing Japanese firm 
D) establishment of a Japanese subsidiary 
A) joint venture 
B) licensing 
C) partial acquisition of an existing Japanese firm 
D) establishment of a Japanese subsidiary

Question 16

Assume that an MNC has a subsidiary in Italy, which exports its products to various countries in Europe. Since all of the countries where it exports use the euro as their currency, this MNC is not subject to exchange rate risk.

Accepted Answer

A) True 
 B)False

Question 17

When conducting international business, firms generally face the most risk when they:

Accepted Answer

A) engage in franchising. 
B) make acquisitions of existing operations. 
C) establish new subsidiaries. 
D) engage of international trade. 
E) B and C 
A) engage in franchising. 
B) make acquisitions of existing operations. 
C) establish new subsidiaries. 
D) engage of international trade. 
E) B and C

Question 18

Livingston Co. has a subsidiary in Korea. The subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Livingston's expected cash flows from domestic business are $100,000, and the Korean subsidiary is expected to generate 100 million Korean won at the end of the year. The expected value of the won is $.0012. What are the expected dollar cash flows of Livingston Co.?​

Accepted Answer

A) $100,000 
B) $200,000 
C) $160,000 
D) $60,000 
A) $100,000 
B) $200,000 
C) $160,000 
D) $60,000

Question 19

Which of the following could reduce agency problems for an MNC?

Accepted Answer

A) stock options as managerial compensation 
B) hostile takeover threat 
C) investor monitoring 
D) all of the above are forms of corporate control that could reduce agency problems for an MNC. 
A) stock options as managerial compensation 
B) hostile takeover threat 
C) investor monitoring 
D) all of the above are forms of corporate control that could reduce agency problems for an MNC.

Question 20

When the parent's home currency is weak, remitted funds from foreign subsidiaries will convert to a smaller amount of the home currency.

Accepted Answer

A) True 
 B)False

Licensing obligates a firm to provide , while franchising obligates a firm to provide .

An industry based on which of the following would most likely take advantage of lower costs in some less developed foreign countries?

International trade:

The Sarbanes-Oxley Act ensures a more transparent process for managers to report on the productivity and financial condition of their firm.

One form of exposure to political risk is terrorism

If a U.S. firm sets up a plant in Mexico to benefit from low-cost labor, it will likely have a comparative advantage over other firms in Mexico that sell the same product.

Assume that an American firm wants to engage in international business without making a major investment in the foreign country. Which method is least appropriate in this situation?

If markets were perfect, then labor and other costs of production would be perfectly stable (no movement across borders).

Imperfect markets reflect conditions under which factors of production are immobile.

Which of the following is not mentioned in the text as a theory of international business?

MNCs commonly consider establishing a new foreign subsidiary to replace their exporting business because it allows them to avoid exchange rate risk.

Four MNCs generate the same level of sales. The MNC that ______________________would likely have the most direct foreign investment.

Which of the following is not mentioned in the text as an additional risk resulting from international business?

Under the product cycle theory, foreign demand can be initially satisfied by exporting.

Assume that Boca Co. wants to expand its business to Japan and wants complete control over the operations in Japan. Which method of international business is most appropriate for Boca Co?

Assume that an MNC has a subsidiary in Italy, which exports its products to various countries in Europe. Since all of the countries where it exports use the euro as their currency, this MNC is not subject to exchange rate risk.

When conducting international business, firms generally face the most risk when they:

Which of the following could reduce agency problems for an MNC?

When the parent's home currency is weak, remitted funds from foreign subsidiaries will convert to a smaller amount of the home currency.

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

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 1: Multinational Financial Management: An Overview

Licensing obligates a firm to provide ____, while franchising obligates a firm to provide ____.

An industry based on which of the following would most likely take advantage of lower costs in some less developed foreign countries?

International trade:​

The Sarbanes-Oxley Act ensures a more transparent process for managers to report on the productivity and financial condition of their firm.

One form of exposure to political risk is terrorism​

If a U.S. firm sets up a plant in Mexico to benefit from low-cost labor, it will likely have a comparative advantage over other firms in Mexico that sell the same product.

Assume that an American firm wants to engage in international business without making a major investment in the foreign country. Which method is least appropriate in this situation?​

If markets were perfect, then labor and other costs of production would be perfectly stable (no movement across borders).

Imperfect markets reflect conditions under which factors of production are immobile.

Which of the following is not mentioned in the text as a theory of international business?​

MNCs commonly consider establishing a new foreign subsidiary to replace their exporting business because it allows them to avoid exchange rate risk.

Four MNCs generate the same level of sales. The MNC that ______________________would likely have the most direct foreign investment.

Which of the following is not mentioned in the text as an additional risk resulting from international business?

Under the product cycle theory, foreign demand can be initially satisfied by exporting.

Assume that Boca Co. wants to expand its business to Japan and wants complete control over the operations in Japan. Which method of international business is most appropriate for Boca Co?​

Assume that an MNC has a subsidiary in Italy, which exports its products to various countries in Europe. Since all of the countries where it exports use the euro as their currency, this MNC is not subject to exchange rate risk.

When conducting international business, firms generally face the most risk when they:

Which of the following could reduce agency problems for an MNC?

When the parent's home currency is weak, remitted funds from foreign subsidiaries will convert to a smaller amount of the home currency.

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

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Licensing obligates a firm to provide , while franchising obligates a firm to provide .

International trade:

One form of exposure to political risk is terrorism

Assume that an American firm wants to engage in international business without making a major investment in the foreign country. Which method is least appropriate in this situation?

Which of the following is not mentioned in the text as a theory of international business?

Assume that Boca Co. wants to expand its business to Japan and wants complete control over the operations in Japan. Which method of international business is most appropriate for Boca Co?