Exam 18: International Financial Management

If a subsidiary is not wholly owned by the parent, then intracorporate transfers of funds must be done on a fair-market basis.

What are the primary issues associated with financing international trade? How does foreign exchange risk affect financing decisions?

The ________ is the number of years it will take the firm to recover the original cash investment from the project's earnings.

International banks participate in the swap market by acting as brokers and monitoring the foreign-exchange markets.

Which currency do exporters typically prefer to use in transactions?

How do MNCs benefit from using tax havens?

Boeing has a contract with Country X for the sale of four 737 airplanes. All of the following are most likely elements included in the contract EXCEPT ________.

Which document is issued by a bank and contains its promise to pay the exporter on receiving proof that the exporter has fulfilled all requirements specified in the document?

Which payment method is appropriate when the exporter has complete trust in the importer?

Financial managers at Parker Computers, an MNC, want to decrease the tariffs paid on components imported from Parker's subsidiaries. Which of the following would most likely accomplish this goal?

The ________ is a letter of credit that cannot be altered without the written consent of both the importer and the exporter.

________ is the impact on the firm's consolidated financial statements of fluctuations in exchange rates that change the value of foreign subsidiaries as measured in the parent's currency.

After issuing the letter of credit, the importer's bank sends it and the accompanying documents to the exporter's bank, which advises the exporter of the terms of the instrument, thereby creating a(n) ________.

Which type of country relies most on countertrade?

Phil works as a centralized cash manager at Lawson Enterprises, an MNC. All of the following tasks are most likely aspects of Phil's job EXCEPT ________.

Which currency do importers typically prefer to use in transactions?

A sight draft requires payment prior to the shipment of the goods.

Which of the following is not a type of foreign-exchange exposure?

A ________ extends credit to the importer by requiring payment at some specified time after the importer receives the goods.

Fulsom Exporting prefers that customers who pay in advance use a wire transfer. What is the most likely reason for this preference?