Exam 1: Multinational Financial Management: Opportunities and Challenges

Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-profit organizations, that have operations in more than one country, and conduct their business through foreign subsidiaries, branches, or joint ventures with host country firms.

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

Which of the following is NOT a reason governments interfere with comparative advantage?

Relative to MNEs, purely domestic firms tend to have GREATER political risk.

Which of the following is NOT always understood by MNE management?

In the recent past, much of the business development in multinational firms was led by cross-functional teams, teams of professionals who are competent over a broader array of functional fields. Develop an argument as to why this is the case.

Interest spreads in the eurocurrency market are small for many reasons EXCEPT:

The securities at the heart of the global capital markets are the Mortgage Backed Securities (MBS). The health and security of the global financial system rely on the quality of these securities.

The institutions of global finance are:

Domestic firms do not have foreign exchange risk.

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Large international firms are better able to exploit product differentiation than are their local competitors.

The theory that suggests specialization by country can increase worldwide production is:

Which of the following factors of production DO NOT flow freely between countries?

International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.

Describe the structural and managerial changes and challenges experienced by a firm as it moves its operations from domestic to global (globalization process).

Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization-the privately held or family-owned business is the prevalent structure-and their goals and measures of performance differ dramatically.

Several of the world's major currency exchange rates follow a specific quotation convention that is the result of tradition and history. The exchange rate between the U.S. dollar and the Japanese yen is always quoted as "dollars per Japanese yen."