Question 1

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

Accepted Answer

A) True 
 B)False

Question 2

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

Accepted Answer

A)  rulers of sovereign states and unsavory customs officials 
B)  corporate insiders and attorneys 
C)  corporate insiders and rulers of sovereign states 
D)  attorneys and unsavory customs officials 
A)  rulers of sovereign states and unsavory customs officials 
B)  corporate insiders and attorneys 
C)  corporate insiders and rulers of sovereign states 
D)  attorneys and unsavory customs officials

Question 3

LIBOR is

Accepted Answer

A)  insignificant interest rate for global financial markets' operation. 
B)  Madrid and Paris Interbank Offered Rate. 
C)  published by British Bankers Association (BB
A)  once per year. 
D)  adjusted average of estimated borrowing rates in the unsecured interbank market. 
A)  insignificant interest rate for global financial markets' operation. 
B)  Madrid and Paris Interbank Offered Rate. 
C)  published by British Bankers Association (BB
A)  once per year. 
D)  adjusted average of estimated borrowing rates in the unsecured interbank market.

Question 4

Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if they have operations in more than one country?

Accepted Answer

A)  for-profit companies 
B)  non-for-profit organizations 
C)  non-government organizations (NGOs) 
D)  all of the above may be considered MNEs 
A)  for-profit companies 
B)  non-for-profit organizations 
C)  non-government organizations (NGOs) 
D)  all of the above may be considered MNEs

Question 5

TABLE 1.1
Use the information in the table to answer the following question(s).
  
-Refer to Table 1.1. A production unit in Austria has a/an ________ over a production unit in Russia in ________.

Accepted Answer

A)  absolute disadvantage; digital cameras 
B)  absolute disadvantage; snowboards 
C)  absolute advantage; both cameras and snowboards 
D)  none of the above 
A)  absolute disadvantage; digital cameras 
B)  absolute disadvantage; snowboards 
C)  absolute advantage; both cameras and snowboards 
D)  none of the above

Question 6

"BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic development. The BRIC countries are

Accepted Answer

A)  Belgium, Romania, Italy, and Canada. 
B)  Brazil, Russia, India, and China. 
C)  Britain, Romania, Israel, and Colombia. 
D)  Brazil, Russia, Italy, and Chile. 
A)  Belgium, Romania, Italy, and Canada. 
B)  Brazil, Russia, India, and China. 
C)  Britain, Romania, Israel, and Colombia. 
D)  Brazil, Russia, Italy, and Chile.

Question 7

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

Accepted Answer

A)  the theory of comparative advantage. 
B)  the theory of foreign direct investment. 
C)  the international Fisher effect. 
D)  the theory of working capital management. 
A)  the theory of comparative advantage. 
B)  the theory of foreign direct investment. 
C)  the international Fisher effect. 
D)  the theory of working capital management.

Question 8

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

Accepted Answer

A) True 
 B)False

Question 9

List and explain three strategic motives why firms become multinationals and give an example of each.

Accepted Answer

The authors provide 5 strategic motives

Question 10

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 11

The Eurocurrency loan market is characterized by narrow interest rate spreads between deposit and loan rates. This is due in part to which of the following factors?

Accepted Answer

A)  The Eurocurrency market is a "wholesale" market. 
B)  Loan amounts are very large, often in excess of $500,000. 
C)  Eurocurrency borrowers are typically large, low-risk corporations or government entities. 
D)  All of the above are legitimate reasons for the narrow spread in the Eurocurrency market. 
A)  The Eurocurrency market is a "wholesale" market. 
B)  Loan amounts are very large, often in excess of $500,000. 
C)  Eurocurrency borrowers are typically large, low-risk corporations or government entities. 
D)  All of the above are legitimate reasons for the narrow spread in the Eurocurrency market.

Question 12

MNEs look to exploit ________ in national markets for products, factors of production, and/or financial assets.

Accepted Answer

A)  imperfections 
B)  perfect capital markets 
C)  corrupt governments 
D)  none of the above 
A)  imperfections 
B)  perfect capital markets 
C)  corrupt governments 
D)  none of the above

Question 13

Although the world is a long way from the classical trade model, the general principle of comparative advantage is still valid.

Accepted Answer

A) True 
 B)False

Question 14

The source of a nation's comparative advantage

Accepted Answer

A)  is created from the mixture of its own labor skills, access to capital, and technology. 
B)  is determined by its military capability. 
C)  remains constant over time. 
D)  is an outdated concept for the 21st century because of the process of globalization. 
A)  is created from the mixture of its own labor skills, access to capital, and technology. 
B)  is determined by its military capability. 
C)  remains constant over time. 
D)  is an outdated concept for the 21st century because of the process of globalization.

Question 15

TABLE 1.1
Use the information in the table to answer the following question(s).
  
-Refer to Table 1.1. Assume no trade between Russia and Austria. If each country put 25% of their production units into each product, the total number of snowboards and digital cameras produced by the two countries combined are ________ and ________.

Accepted Answer

A)  15,000 snowboards; 3,000 digital cameras 
B)  6,000 snowboards; 4,000 digital cameras 
C)  2,750 digital cameras; 6,750 snowboards 
D)  15,000 digital cameras; 1,000 snowboards 
A)  15,000 snowboards; 3,000 digital cameras 
B)  6,000 snowboards; 4,000 digital cameras 
C)  2,750 digital cameras; 6,750 snowboards 
D)  15,000 digital cameras; 1,000 snowboards

Question 16

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

Accepted Answer

A)  tariffs 
B)  managerial skills 
C)  quotas 
D)  other non-tariff restrictions 
A)  tariffs 
B)  managerial skills 
C)  quotas 
D)  other non-tariff restrictions

Question 17

Despite the underlying advantages of the Theory of Comparative Advantage, countries do not appear to specialize in producing only those goods and services that could most efficiently be produced domestically. Provide at least three reasons why governments interfere with comparative advantage and the techniques they may use to enforce their objectives.

Accepted Answer

Governments interfere for several reason

Question 18

The authors describe the multinational phase of globalization for a firm as one characterized by the

Accepted Answer

A)  ownership of assets and enterprises in foreign countries. 
B)  potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars. 
C)  imports from foreign suppliers and exports to foreign buyers. 
D)  requirement that all employees be multilingual. 
A)  ownership of assets and enterprises in foreign countries. 
B)  potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars. 
C)  imports from foreign suppliers and exports to foreign buyers. 
D)  requirement that all employees be multilingual.

Question 19

According to the authors, which of the following groups or securities are at the "heart" to the global capital markets?

Accepted Answer

A)  debt securities issued by governments 
B)  bank loans and corporate bons 
C)  equity securities 
D)  derivative securities 
A)  debt securities issued by governments 
B)  bank loans and corporate bons 
C)  equity securities 
D)  derivative securities

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

LIBOR is

Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if they have operations in more than one country?

TABLE 1.1 Use the information in the table to answer the following question(s). -Refer to Table 1.1. A production unit in Austria has a/an over a production unit in Russia in .

"BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic development. The BRIC countries are

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

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

List and explain three strategic motives why firms become multinationals and give an example of each.

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

The Eurocurrency loan market is characterized by narrow interest rate spreads between deposit and loan rates. This is due in part to which of the following factors?

MNEs look to exploit ________ in national markets for products, factors of production, and/or financial assets.

Although the world is a long way from the classical trade model, the general principle of comparative advantage is still valid.

The source of a nation's comparative advantage

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

The authors describe the multinational phase of globalization for a firm as one characterized by the

According to the authors, which of the following groups or securities are at the "heart" to the global capital markets?

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

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

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

LIBOR is

Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if they have operations in more than one country?

TABLE 1.1 Use the information in the table to answer the following question(s). -Refer to Table 1.1. A production unit in Austria has a/an ________ over a production unit in Russia in ________.

"BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic development. The BRIC countries are

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

Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.

List and explain three strategic motives why firms become multinationals and give an example of each.

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

The Eurocurrency loan market is characterized by narrow interest rate spreads between deposit and loan rates. This is due in part to which of the following factors?

MNEs look to exploit ________ in national markets for products, factors of production, and/or financial assets.

Although the world is a long way from the classical trade model, the general principle of comparative advantage is still valid.

The source of a nation's comparative advantage

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

The authors describe the multinational phase of globalization for a firm as one characterized by the

According to the authors, which of the following groups or securities are at the "heart" to the global capital markets?

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

TABLE 1.1 Use the information in the table to answer the following question(s). -Refer to Table 1.1. A production unit in Austria has a/an over a production unit in Russia in .