Question 1

The deliberation of the of the process demonstrated in the European-Japanese system of corporate governance has sometimes been termed ________.

Accepted Answer

A)  socialism 
B)  impatient capital 
C)  patient capital 
D)  communism 
A)  socialism 
B)  impatient capital 
C)  patient capital 
D)  communism

Question 2

The goal of all international corporations is to maximize shareholder wealth.

Accepted Answer

A) True 
 B)False

Question 3

In finance, an efficient market is one in which

Accepted Answer

A)  prices are assumed to be correct. 
B)  prices adjust quickly and accurately to new information. 
C)  prices are the best allocators of capital in the macro economy. 
D)  all of the above. 
A)  prices are assumed to be correct. 
B)  prices adjust quickly and accurately to new information. 
C)  prices are the best allocators of capital in the macro economy. 
D)  all of the above.

Question 4

Accountants and lawyers have found the costs to corporations to meet Sarbanes-Oxley regulatory requirements to be disappointingly small and less than anticipated when the legislation was enacted in 2002.

Accepted Answer

A) True 
 B)False

Question 5

Corporate wealth maximization, also known as the stakeholder capitalism model, holds that total risk (operational and financial) is more important than just systematic risk.

Accepted Answer

A) True 
 B)False

Question 6

Anglo-American is defined to mean

Accepted Answer

A)  North, Central, and South America. 
B)  the United States, Canada, and Western Europe. 
C)  the United States, United Kingdom, Canada, Australia and New Zealand. 
D)  the United States, France, Britain, and Germany. 
A)  North, Central, and South America. 
B)  the United States, Canada, and Western Europe. 
C)  the United States, United Kingdom, Canada, Australia and New Zealand. 
D)  the United States, France, Britain, and Germany.

Question 7

Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?

Accepted Answer

A)  the use of stock options to align the goals of shareholders and managers 
B)  the market for corporate control that allows for outside takeover of the firm 
C)  performance based compensation for executive management 
D)  all of the above 
A)  the use of stock options to align the goals of shareholders and managers 
B)  the market for corporate control that allows for outside takeover of the firm 
C)  performance based compensation for executive management 
D)  all of the above

Question 8

Which of the following is a common operational financial objective for MNEs?

Accepted Answer

A)  maximization of interest expense 
B)  minimization of the firm's effective global tax burden 
C)  minimization of revenues from other countries 
D)  minimization of total assets held in foreign locations 
A)  maximization of interest expense 
B)  minimization of the firm's effective global tax burden 
C)  minimization of revenues from other countries 
D)  minimization of total assets held in foreign locations

Question 9

Which of the following was NOT identified by the authors as a knowledge asset?

Accepted Answer

A)  customer care 
B)  foreign macroeconomic issues 
C)  brand value 
D)  management skill 
A)  customer care 
B)  foreign macroeconomic issues 
C)  brand value 
D)  management skill

Question 10

Systematic risk can be eliminated through portfolio diversification.

Accepted Answer

A) True 
 B)False

Question 11

With shareholder wealth maximization as the manager's goal, capital may be termed ________.

Accepted Answer

A)  impatient 
B)  patient 
C)  borrowed 
D)  bought 
A)  impatient 
B)  patient 
C)  borrowed 
D)  bought

Question 12

The primary operational goal for the firm is to

Accepted Answer

A)  maximize after-tax profits in each country where the firm is operating. 
B)  minimize the total financial risk to the firm. 
C)  maximize the consolidated after-tax profits of the firm. 
D)  maximize the total risk to the firm. 
A)  maximize after-tax profits in each country where the firm is operating. 
B)  minimize the total financial risk to the firm. 
C)  maximize the consolidated after-tax profits of the firm. 
D)  maximize the total risk to the firm.

Question 13

When discussing the structure of corporate governance, the authors distinguish between internal and external factors. ________ is an example of an internal factor, and ________ is an example of an external factor.

Accepted Answer

A)  Equity markets; executive management 
B)  Debt markets; board of directors 
C)  Executive management; auditors 
D)  Auditors; regulators 
A)  Equity markets; executive management 
B)  Debt markets; board of directors 
C)  Executive management; auditors 
D)  Auditors; regulators

Question 14

Under the shareholder wealth maximization model of corporate governance it is assumed that the long-term or "loyal" stockholders should influence corporate strategy more than the transient portfolio investor.

Accepted Answer

A) True 
 B)False

Question 15

According to a recent Forrester survey, which of the following categories is the single most important cause of losses of stock value?

Accepted Answer

A)  operational mistakes 
B)  business hazard 
C)  strategic mistakes 
D)  financial mistakes 
A)  operational mistakes 
B)  business hazard 
C)  strategic mistakes 
D)  financial mistakes

Question 16

Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.

Accepted Answer

A) True 
 B)False

Question 17

In the Anglo-American model of corporate governance, the primary goal of management is to

Accepted Answer

A)  maximize the wealth of all stakeholders. 
B)  maximize shareholder wealth. 
C)  minimize costs. 
D)  minimize risk. 
A)  maximize the wealth of all stakeholders. 
B)  maximize shareholder wealth. 
C)  minimize costs. 
D)  minimize risk.

Question 18

Which of the following is an operational process that can destroy firm value?

Accepted Answer

A)  interest rate fluctuations 
B)  competitive pressures 
C)  natural disasters 
D)  accounting irregularities 
A)  interest rate fluctuations 
B)  competitive pressures 
C)  natural disasters 
D)  accounting irregularities

Question 19

Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executive management.

Accepted Answer

Shareholder wealth maximization attempts

Question 20

Which of the following is a common operational financial objective for MNEs?

Accepted Answer

A)  maximization of consolidated after-tax income 
B)  maximization of interest expense 
C)  minimization of revenues from other countries 
D)  minimization of total assets held in foreign locations 
A)  maximization of consolidated after-tax income 
B)  maximization of interest expense 
C)  minimization of revenues from other countries 
D)  minimization of total assets held in foreign locations

Exam 2: Financial Goals and Corporate Governance

The deliberation of the of the process demonstrated in the European-Japanese system of corporate governance has sometimes been termed ________.

The goal of all international corporations is to maximize shareholder wealth.

In finance, an efficient market is one in which

Accountants and lawyers have found the costs to corporations to meet Sarbanes-Oxley regulatory requirements to be disappointingly small and less than anticipated when the legislation was enacted in 2002.

Corporate wealth maximization, also known as the stakeholder capitalism model, holds that total risk (operational and financial) is more important than just systematic risk.

Anglo-American is defined to mean

Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?

Which of the following is a common operational financial objective for MNEs?

Which of the following was NOT identified by the authors as a knowledge asset?

Systematic risk can be eliminated through portfolio diversification.

With shareholder wealth maximization as the manager's goal, capital may be termed ________.

The primary operational goal for the firm is to

When discussing the structure of corporate governance, the authors distinguish between internal and external factors. ________ is an example of an internal factor, and ________ is an example of an external factor.

Under the shareholder wealth maximization model of corporate governance it is assumed that the long-term or "loyal" stockholders should influence corporate strategy more than the transient portfolio investor.

According to a recent Forrester survey, which of the following categories is the single most important cause of losses of stock value?

Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.

In the Anglo-American model of corporate governance, the primary goal of management is to

Which of the following is an operational process that can destroy firm value?

Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executive management.

Which of the following is a common operational financial objective for MNEs?

Globalization and the Multinational Enterprise

The International Monetary System

The Balance of Payments

The Foreign Exchange Market

International Parity Conditions

Foreign Exchange Rate Determination and Forecasting

Foreign Currency Derivatives

Transaction Exposure

Operating Exposure

Translation Exposure

Global Cost and Availability of Capital

Sourcing Equity Capital Globally

Financial Structure and International Debt

Interest Rate and Currency Swaps

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Strategy

Political Risk Assessment and Management

Multinational Capital Budgeting

International Trade Finance

Multinational Tax Management

Working Capital Management

Filters

When discussing the structure of corporate governance, the authors distinguish between internal and external factors. is an example of an internal factor, and is an example of an external factor.