Question 1

MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

Accepted Answer

A) True 
 B)False

Question 2

Today it is widely assumed that there are NO LIMITS to financial globalization.

Accepted Answer

A) True 
 B)False

Question 3

A number of financial instruments that are used in domestic financial management have been modified for use in international financial management. Examples are foreign currency options and futures, interest rate and currency swaps, and letters of credit.

Accepted Answer

A) True 
 B)False

Question 4

The concept of relative comparative advantage's origins lie in:

Accepted Answer

A)  Adam Smith's work of 1776. 
B)  David Ricardo's work of 1776. 
C)  The Wealth of Nations book, published in 1887. 
D)  On the Principles of Political Economy and Taxation book, published in 1817. 
A)  Adam Smith's work of 1776. 
B)  David Ricardo's work of 1776. 
C)  The Wealth of Nations book, published in 1887. 
D)  On the Principles of Political Economy and Taxation book, published in 1817.

Question 5

For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.

Accepted Answer

A) True 
 B)False

Question 6

When discussing comparative advantage, it is apparent that today at least two of the factors of production, capital and technology, now flow directly and easily between countries, rather than only indirectly through traded goods and services.

Accepted Answer

A) True 
 B)False

Question 7

Financial globalization has NOT resulted in:

Accepted Answer

A)  continuing imbalances of balance of payments. 
B)  an increase in quantity and speed in the flow of capital across the world. 
C)  capital markets more open and an increase in the availability of capital for many organizations. 
D)  an increase in the flow of capital into and out of industrialized markets. 
A)  continuing imbalances of balance of payments. 
B)  an increase in quantity and speed in the flow of capital across the world. 
C)  capital markets more open and an increase in the availability of capital for many organizations. 
D)  an increase in the flow of capital into and out of industrialized markets.

Question 8

Eurocurrencies are domestic currencies of one country on deposit in a second country.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would NOT be a way to implement comparative advantage?

Accepted Answer

A)  IBM exports computers to Egypt. 
B)  Computer hardware is designed in the United States but manufactured and assembled in Korea. 
C)  Water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide. 
D)  All of the above are examples of ways to implement comparative advantage. 
A)  IBM exports computers to Egypt. 
B)  Computer hardware is designed in the United States but manufactured and assembled in Korea. 
C)  Water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide. 
D)  All of the above are examples of ways to implement comparative advantage.

Question 10

Defensive measures are designed to enhance growth and profitability of the firm itself.

Accepted Answer

A) True 
 B)False

Question 11

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 euro is always quoted as "dollars per euro."

Accepted Answer

A) True 
 B)False

Question 12

A well-established, large, China-based MNE will probably be most adversely affected by which of the following elements of firm value?

Accepted Answer

A)  an open marketplace 
B)  high-quality strategic management 
C)  access to capital 
D)  access to qualified labor pool 
A)  an open marketplace 
B)  high-quality strategic management 
C)  access to capital 
D)  access to qualified labor pool

Question 13

A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?

Accepted Answer

A)  an open marketplace 
B)  high-quality strategic management 
C)  access to capital 
D)  access to qualified labor pool 
A)  an open marketplace 
B)  high-quality strategic management 
C)  access to capital 
D)  access to qualified labor pool

Question 14

Comparative advantage is one of the underlying principles driving the growth of global business.

Accepted Answer

A) True 
 B)False

Question 15

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:

Accepted Answer

A)  domestic phase. 
B)  multinational phase. 
C)  international trade phase. 
D)  import-export banking phase. 
A)  domestic phase. 
B)  multinational phase. 
C)  international trade phase. 
D)  import-export banking phase.

Question 16

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

Accepted Answer

A) True 
 B)False

Question 17

A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:

Accepted Answer

A)  Federal Deposit Insurance Corporation - FDIC. 
B)  Office of the Comptroller of the Currency - OCC. 
C)  International Monetary Fund - IMF. 
D)  World Bank - WB. 
A)  Federal Deposit Insurance Corporation - FDIC. 
B)  Office of the Comptroller of the Currency - OCC. 
C)  International Monetary Fund - IMF. 
D)  World Bank - WB.

Question 18

The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.

Accepted Answer

A) True 
 B)False

Question 19

________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.

Accepted Answer

A)  Conservative; Aggressive 
B)  Defensive; Proactive 
C)  Proactive; Defensive 
D)  Aggressive; Proactive 
A)  Conservative; Aggressive 
B)  Defensive; Proactive 
C)  Proactive; Defensive 
D)  Aggressive; Proactive

Question 20

A firm in the International Trade Phase of Globalization:

Accepted Answer

A)  makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units. 
B)  receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units. 
C)  bears direct foreign exchange risk. 
D)  none of the above 
A)  makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units. 
B)  receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units. 
C)  bears direct foreign exchange risk. 
D)  none of the above

MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

Today it is widely assumed that there are NO LIMITS to financial globalization.

A number of financial instruments that are used in domestic financial management have been modified for use in international financial management. Examples are foreign currency options and futures, interest rate and currency swaps, and letters of credit.

The concept of relative comparative advantage's origins lie in:

For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.

When discussing comparative advantage, it is apparent that today at least two of the factors of production, capital and technology, now flow directly and easily between countries, rather than only indirectly through traded goods and services.

Financial globalization has NOT resulted in:

Eurocurrencies are domestic currencies of one country on deposit in a second country.

Which of the following would NOT be a way to implement comparative advantage?

Defensive measures are designed to enhance growth and profitability of the firm itself.

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 euro is always quoted as "dollars per euro."

A well-established, large, China-based MNE will probably be most adversely affected by which of the following elements of firm value?

A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?

Comparative advantage is one of the underlying principles driving the growth of global business.

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:

The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.

investments are designed to promote and enhance the growth and profitability of the firm. investments are designed to deny those same opportunities to the firm's competitors.

A firm in the International Trade Phase of Globalization:

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Funding the Multinational Firm

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 1: Multinational Financial Management: Opportunities and Challenges

MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

Today it is widely assumed that there are NO LIMITS to financial globalization.

A number of financial instruments that are used in domestic financial management have been modified for use in international financial management. Examples are foreign currency options and futures, interest rate and currency swaps, and letters of credit.

The concept of relative comparative advantage's origins lie in:

For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.

When discussing comparative advantage, it is apparent that today at least two of the factors of production, capital and technology, now flow directly and easily between countries, rather than only indirectly through traded goods and services.

Financial globalization has NOT resulted in:

Eurocurrencies are domestic currencies of one country on deposit in a second country.

Which of the following would NOT be a way to implement comparative advantage?

Defensive measures are designed to enhance growth and profitability of the firm itself.

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 euro is always quoted as "dollars per euro."

A well-established, large, China-based MNE will probably be most adversely affected by which of the following elements of firm value?

A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?

Comparative advantage is one of the underlying principles driving the growth of global business.

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:

The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.

________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.

A firm in the International Trade Phase of Globalization:

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Funding the Multinational Firm

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

investments are designed to promote and enhance the growth and profitability of the firm. investments are designed to deny those same opportunities to the firm's competitors.