Question 1

Which of the following would NOT be considered a non-tariff barrier to trade?

Accepted Answer

A)  inconsistent customs and administrative entry procedures 
B)  unduly stringent or discriminating standards imposed on imports in the name of protecting health, safety, and quality 
C)  established import procedures that make importing more difficult 
D)  All of the above are non-tariff trade barriers. 
A)  inconsistent customs and administrative entry procedures 
B)  unduly stringent or discriminating standards imposed on imports in the name of protecting health, safety, and quality 
C)  established import procedures that make importing more difficult 
D)  All of the above are non-tariff trade barriers.

Question 2

Joint ventures have significant advantages as well several disadvantages versus a wholly owned subsidiary with regard to investment abroad. Define the two types of investment opportunities and provide a comprehensive list of the advantages and disadvantages for the joint venture form of international investment.

Accepted Answer

A joint venture is here defined as share

Question 3

Of the following, which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

Accepted Answer

A)  differences in human resource norms 
B)  differences in religious heritage 
C)  differences in allowable ownership structures 
D)  All of the above must be considered. 
A)  differences in human resource norms 
B)  differences in religious heritage 
C)  differences in allowable ownership structures 
D)  All of the above must be considered.

Question 4

Which of the following is NOT an example of a country-specific risk?

Accepted Answer

A)  transfer risk 
B)  war and ethnic strife 
C)  cultural and religious heritage 
D)  All of the above are examples of country-specific risk. 
A)  transfer risk 
B)  war and ethnic strife 
C)  cultural and religious heritage 
D)  All of the above are examples of country-specific risk.

Question 5

Negotiations under the General Agreement on Tariffs and Trade (GATT) have NOT had much impact on reducing the level of tariffs over the last several decades.

Accepted Answer

A) True 
 B)False

Question 6

________ 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 7

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Accepted Answer

A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages. 
A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages.

Question 8

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 9

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Accepted Answer

A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed. 
A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed.

Question 10

Local partners in a foreign country and in a joint venture with an MNE are likely to make decisions that maximize the value of the subsidiary. Such actions probably will not maximize the value of the entire firm.

Accepted Answer

A) True 
 B)False

Question 11

A/n ________ would be an example of a location-specific advantage for an MNE.

Accepted Answer

A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information 
A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information

Question 12

Investing in production facility in a country with low cost of labor is

Accepted Answer

A)  example of location-specific advantage. 
B)  not prudent if there is no domestic market for the produced goods. 
C)  example of a market-driven advantage. 
D)  not prudent because the cost of labor will increase over time. 
A)  example of location-specific advantage. 
B)  not prudent if there is no domestic market for the produced goods. 
C)  example of a market-driven advantage. 
D)  not prudent because the cost of labor will increase over time.

Question 13

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

Question 14

Joint ventures are a more common FDI than wholly owned subsidiaries.

Accepted Answer

A) True 
 B)False

Question 15

Terrorism, cyber attacks, and the anti-globalization movement are each examples of ________ risks.

Accepted Answer

A)  firm-specific 
B)  country-specific 
C)  institutional 
D)  global-specific 
A)  firm-specific 
B)  country-specific 
C)  institutional 
D)  global-specific

Question 16

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

Accepted Answer

A)  Political risk 
B)  Portfolio risk 
C)  Interest rate risk 
D)  Governance risk 
A)  Political risk 
B)  Portfolio risk 
C)  Interest rate risk 
D)  Governance risk

Question 17

Which of the following is NOT a technique for moving blocked funds out of a country?

Accepted Answer

A)  use fronting loans 
B)  create unrelated exports 
C)  obtain a special dispensation 
D)  All of the above are techniques for moving blocked funds. 
A)  use fronting loans 
B)  create unrelated exports 
C)  obtain a special dispensation 
D)  All of the above are techniques for moving blocked funds.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A ________ is a shared ownership in a foreign business.

Accepted Answer

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

Question 20

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

Accepted Answer

The OLI Paradigm is an attempt to develo

Which of the following would NOT be considered a non-tariff barrier to trade?

Of the following, which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

Which of the following is NOT an example of a country-specific risk?

Negotiations under the General Agreement on Tariffs and Trade (GATT) have NOT had much impact on reducing the level of tariffs over the last several decades.

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

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Which of the following is NOT a form of FDI?

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Local partners in a foreign country and in a joint venture with an MNE are likely to make decisions that maximize the value of the subsidiary. Such actions probably will not maximize the value of the entire firm.

A/n ________ would be an example of a location-specific advantage for an MNE.

Investing in production facility in a country with low cost of labor is

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

Joint ventures are a more common FDI than wholly owned subsidiaries.

Terrorism, cyber attacks, and the anti-globalization movement are each examples of ________ risks.

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

Which of the following is NOT a technique for moving blocked funds out of a country?

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

A ________ is a shared ownership in a foreign business.

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

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 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

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 16: Foreign Direct Investment and Political Risk

Which of the following would NOT be considered a non-tariff barrier to trade?

Of the following, which was NOT identified by the authors as a type of cultural difference that MNEs must consider when expanding to foreign countries?

Which of the following is NOT an example of a country-specific risk?

Negotiations under the General Agreement on Tariffs and Trade (GATT) have NOT had much impact on reducing the level of tariffs over the last several decades.

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

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Which of the following is NOT a form of FDI?

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Local partners in a foreign country and in a joint venture with an MNE are likely to make decisions that maximize the value of the subsidiary. Such actions probably will not maximize the value of the entire firm.

A/n ________ would be an example of a location-specific advantage for an MNE.

Investing in production facility in a country with low cost of labor is

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

Joint ventures are a more common FDI than wholly owned subsidiaries.

Terrorism, cyber attacks, and the anti-globalization movement are each examples of ________ risks.

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political environment.

Which of the following is NOT a technique for moving blocked funds out of a country?

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

A ________ is a shared ownership in a foreign business.

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

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 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

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters