Exam 13: Direct Foreign Investment

A country with high unemployment could best increase its employment by:

To exploit monopolistic advantages, an MNC should:

To fully benefit from economies of scale, an MNC should:

MNCs oFten attempt to set up production in locations where land and labor are expensive, because expensive factors of production indicate high demand.

Direct foreign investment is normally completed first, and then capital budgeting can be applied later.

Countries in Eastern Europe are more appealing to MNCs that seek relatively low costs of land and labor than countries in Western Europe.

Which of the following is not true regarding the efficient frontier considered by MNCs?

Direct foreign investment would typically be welcomed if:

If countries' economies are highly integrated, the correlations of their economic growth levels would likely be ____. A firm would benefit ____ by diversifying sales among these countries relative to another set of countries whose economies are less integrated.

Along the frontier of efficient project portfolios, exactly one portfolio can be singled out as "optimal" for all MNCs.

The overall variability of a firm's returns depends on the expected return of each individual project, the percentage of funds invested in each individual project, and the correlation coefficient of returns between the investments.

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 key to international diversification is selecting foreign projects whose performance levels are highly correlated over time.