Question 1

The I in OLI refers to an advantage in a firm's home market that is an:

Accepted Answer

A)  internalization. 
B)  industry-specific advantage. 
C)  international abnormality. 
D)  none of the above 
A)  internalization. 
B)  industry-specific advantage. 
C)  international abnormality. 
D)  none of the above A

Question 2

According to your authors, MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an ________ or ________ level view.

Accepted Answer

A)  foreign; domestic 
B)  micro; macro 
C)  internal; external 
D)  local; global 
A)  foreign; domestic 
B)  micro; macro 
C)  internal; external 
D)  local; global B

Question 3

Based on observations of firms that have successfully invested abroad, we can conclude companies are more competitive when:

Accepted Answer

A)  facing sophisticated and demanding customers in the home market. 
B)  surrounded by a critical mass of related industries and suppliers. 
C)  located in countries that are naturally endowed with the appropriate factors of production. 
D)  All of the above are true. 
A)  facing sophisticated and demanding customers in the home market. 
B)  surrounded by a critical mass of related industries and suppliers. 
C)  located in countries that are naturally endowed with the appropriate factors of production. 
D)  All of the above are true. D

Question 4

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

Accepted Answer

A)  prior to investing 
B)  during operations 
C)  reinvesting in the local country when funds cannot be moved 
D)  All of the above are stages at which MNEs can react. 
A)  prior to investing 
B)  during operations 
C)  reinvesting in the local country when funds cannot be moved 
D)  All of the above are stages at which MNEs can react.

Question 5

Which of the following is NOT a form of FDI?

Accepted Answer

A)  wholly-owned affiliate 
B)  joint venture 
C)  exporting 
D)  greenfield investment 
A)  wholly-owned affiliate 
B)  joint venture 
C)  exporting 
D)  greenfield investment

Question 6

A country can react to the potential for blocked funds prior to making an investment, during operations, or by investing in the local country in assets than maintain their value.

Accepted Answer

A) True 
 B)False

Question 7

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

Accepted Answer

A greenfield investment is defined as es

Question 8

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Accepted Answer

A) True 
 B)False

Question 9

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

Accepted Answer

A) True 
 B)False

Question 10

________ is NOT one of the three main country-specific risks as outlined by your authors.

Accepted Answer

A)  Transfer risk 
B)  Cultural differences 
C)  Thin equity base 
D)  Protectionism 
A)  Transfer risk 
B)  Cultural differences 
C)  Thin equity base 
D)  Protectionism

Question 11

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

Accepted Answer

A) True 
 B)False

Question 12

The O in OLI refers to an advantage in a firm's home market that is:

Accepted Answer

A)  operator independent. 
B)  owner-specific. 
C)  open-market. 
D)  official designation. 
A)  operator independent. 
B)  owner-specific. 
C)  open-market. 
D)  official designation.

Question 13

Of the following, which would NOT be considered an issue for an investment agreement prior to investing in a foreign country?

Accepted Answer

A)  the basis for setting transfer prices 
B)  the right to export to third-country markets 
C)  provision for arbitration of disputes 
D)  All of the above could be negotiated prior to investing. 
A)  the basis for setting transfer prices 
B)  the right to export to third-country markets 
C)  provision for arbitration of disputes 
D)  All of the above could be negotiated prior to investing.

Question 14

Proactive financial strategies depend on discovering market imperfections.

Accepted Answer

A) True 
 B)False

Question 15

All of the following may be justification for a strategic alliance EXCEPT:

Accepted Answer

A)  takeover defense. 
B)  a joint venture to pool resources for research and development. 
C)  joint marketing and serving agreements. 
D)  All of the above are legitimate reasons for strategic alliances. 
A)  takeover defense. 
B)  a joint venture to pool resources for research and development. 
C)  joint marketing and serving agreements. 
D)  All of the above are legitimate reasons for strategic alliances.

Question 16

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Accepted Answer

Blocked funds are those that have been r

Question 17

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations?

Accepted Answer

A)  low cost and productive labor force 
B)  unique sources of raw materials 
C)  defensive investments 
D)  an expansive monetary policy 
A)  low cost and productive labor force 
B)  unique sources of raw materials 
C)  defensive investments 
D)  an expansive monetary policy

Question 18

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Accepted Answer

A)  vertical reinvestment by an automobile manufacturer to buy parts suppliers and showrooms 
B)  a lumber cutting company subsequently builds a paper mill with blocked funds 
C)  purchase of local money market instruments and short-term loans 
D)  all of the above 
A)  vertical reinvestment by an automobile manufacturer to buy parts suppliers and showrooms 
B)  a lumber cutting company subsequently builds a paper mill with blocked funds 
C)  purchase of local money market instruments and short-term loans 
D)  all of the above

Question 19

Which of the following is NOT an advantage to a joint venture?

Accepted Answer

A)  Possible loss of opportunity to enter the foreign market with FDI later. 
B)  The local partner understands the customs and mores of the foreign market. 
C)  The local partner can provide competent management at many levels. 
D)  May be a realistic alternative when 100% foreign ownership is not allowed. 
A)  Possible loss of opportunity to enter the foreign market with FDI later. 
B)  The local partner understands the customs and mores of the foreign market. 
C)  The local partner can provide competent management at many levels. 
D)  May be a realistic alternative when 100% foreign ownership is not allowed.

Question 20

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

Accepted Answer

A)  Inconvertibility 
B)  Expropriation 
C)  Business income risk 
D)  none of the above 
A)  Inconvertibility 
B)  Expropriation 
C)  Business income risk 
D)  none of the above

The I in OLI refers to an advantage in a firm's home market that is an:

According to your authors, MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an or level view.

Based on observations of firms that have successfully invested abroad, we can conclude companies are more competitive when:

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

Which of the following is NOT a form of FDI?

A country can react to the potential for blocked funds prior to making an investment, during operations, or by investing in the local country in assets than maintain their value.

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

________ is NOT one of the three main country-specific risks as outlined by your authors.

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

The O in OLI refers to an advantage in a firm's home market that is:

Of the following, which would NOT be considered an issue for an investment agreement prior to investing in a foreign country?

Proactive financial strategies depend on discovering market imperfections.

All of the following may be justification for a strategic alliance EXCEPT:

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations?

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Which of the following is NOT an advantage to a joint venture?

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

Multinational Financial Management: Opportunities and Challenges

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

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 17: Foreign Direct Investment and Political Risk

The I in OLI refers to an advantage in a firm's home market that is an:

According to your authors, MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an ________ or ________ level view.

Based on observations of firms that have successfully invested abroad, we can conclude companies are more competitive when:

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

Which of the following is NOT a form of FDI?

A country can react to the potential for blocked funds prior to making an investment, during operations, or by investing in the local country in assets than maintain their value.

What are the advantages and disadvantages of serving a foreign market through a greenfield foreign direct investment compared to an acquisition of a local firm in the target market?

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Reactive financial strategies can be formulated in advance by the MNE's financial managers.

________ is NOT one of the three main country-specific risks as outlined by your authors.

In practice, when expanding into other countries, firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

The O in OLI refers to an advantage in a firm's home market that is:

Of the following, which would NOT be considered an issue for an investment agreement prior to investing in a foreign country?

Proactive financial strategies depend on discovering market imperfections.

All of the following may be justification for a strategic alliance EXCEPT:

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations?

Which of the following could be considered an example of forced reinvestment if the blockage of funds was expected to be temporary?

Which of the following is NOT an advantage to a joint venture?

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

Multinational Financial Management: Opportunities and Challenges

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

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

According to your authors, MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an or level view.