Exam 20: Accounting and Finance in the International Business

Three sets of related decisions are involved in financial management in an international business. Which of these involves making decisions about how to fund the chosen activities?

The projected rate will typically be the ________ as determined by the foreign exchange market when firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency.

Using the ending rate to translate the budget is a valid practice according to the Lessard-Lorange model.

Which of the following is an observation about the cost of capital?

What are the advantages of using royalties and fees to move money across borders?

________ represent the remuneration paid to the owners of technology, patents, or trade names for the use of the technology or the right to manufacture and/or sell products under patents or trade names.

Payment of dividends is an uncommon method of transferring funds from foreign subsidiaries to the parent company.

Firms cannot use transfer prices to move funds from a subsidiary to the parent company when financial transfers in the form of dividends are blocked by host-country government policies.

Describe the three exchange rates that can be used to translate foreign currencies into the corporate currency in setting budgets and in the subsequent tracking of performance that Lessard and Lorange pointed out.