Exam 13: International Financial Management

T+7 refers to seven days from the date of transaction and the actual receipt of payments for the sale or purchase of a financial instrument like a bond or stock.

Political risk insurance protects firms against expropriation, currency inconvertibility, political violence, and stand-alone terrorism.

What are offshore banks and why are they useful to multinationals?

The most common method of payment for corporate international transactions is through wire transfers, which takes between one and three days.

What variables impact financial decision making when establishing an overseas subsidiary?

The following applies to the Foreign Corrupt Practices Act (FCPA) of 1977 except

A financial manager handling exports and imports of a company needs to have a good working knowledge of foreign currencies, tariffs, shipping and insurance.

The third stage of a company's expansion overseas is setting up multiple subsidiaries.

In 1981 the Federal Reserve Board allowed commercial banks to create its own offshore unit outside of the United States.

In international business it is important to have liability insurance but less so for nondelivery or delay of goods shipped overseas.

The Export-Import Bank of the United States, usually called the EX-IM Bank, provides insurance to exporters in direct competition with private insurers so to improve competition.

In the global depository market,

What U.S. agencies provide insurance coverage to encourage exports?

When a letter of credit is used as a method of payment in international transactions,

For a company that is engaged in exports and imports

When establishing a subsidiary overseas

The following is true for offshore banks except

If an overseas subsidiary can borrow from the local markets, the ability to pay back in local currencies can be a drawback.

SWIFT uses an eight- and eleven-letter bank identifier code (BIC), based on ISO (International Standards Organization) standard 9362 to identify a bank.

A subsidiary is just a legal extension of the parent company and is not treated as a separate corporate entity.