Exam 18: International Financial Management

What is economic exposure?

The rate of return on working capital is high, therefore financial officers prefer to invest funds in working capital.

Which of the following is a common characteristic of a tax haven?

What is the most common form of countertrade?

An accepted time draft is called a ________.

What is the simplest form of countertrade?

Suppose that Saks Fifth Avenue agrees on April 10th to buy 5 million Swiss francs' worth of Rolex watches from Rolex's Swiss manufacturer, payable upon delivery on October 10th. Given the potential that the Swiss franc rises in value against the dollar, which partner experiences this transaction exposure?

Karcher Enterprises, an MNE, is considering building a new factory overseas but has not determined the best location. Which of the following potential locations would require Karcher Enterprises to make the largest risk adjustment?

All of the following are internal sources of investment capital for international businesses EXCEPT ________.

The net present value approach is based on a basic precept of finance theory that a dollar today is worth less than a dollar in the future.

What is a clearinghouse account? What are the benefits of using such accounts?

Credit card companies collect ________ from the merchant for assuming the costs of collecting the funds from the customer and any risks of nonpayment.

What are the two roles of the bill of lading?

Rubbermaid has set a minimum rate of return of 15 percent on all its capital investments. Fifteen percent is Rubbermaid's ________.

What is the LEAST likely reason that an international business would participate in the swap market?

Megan, a financial manager at Price Manufacturing, an MNE, strives to minimize the firm's working capital balances. Why would this most likely be important for Price Manufacturing?

Columbus Trading agrees to exchange coffee and rice to Romania in return for machinery. Which term best describes this transaction?

Bilateral netting occurs when two subsidiaries net out their mutual invoices.

Countertrade agreements forbid the use of switching arrangements, whereby countertrade obligations are transferred from one firm to another.

When acceptances are sold ________, it means that the exporter will have to reimburse the buyer of the acceptance in the case of nonpayment by the importer.