Question 1

On blocked funds strategy is

Accepted Answer

A) transferring personnel from corporate headquarters to the subsidiary offices. 
B) using the national airlines of the host country when possible for the international travel of all MNC executives. 
C) holding business conferences of the MNC in the host country, where all expenses are paid by the local subsidiary. 
D) all of the above 
A) transferring personnel from corporate headquarters to the subsidiary offices. 
B) using the national airlines of the host country when possible for the international travel of all MNC executives. 
C) holding business conferences of the MNC in the host country, where all expenses are paid by the local subsidiary. 
D) all of the above

Question 2

Which one of the following is a false statement when engaged in bilateral netting?

Accepted Answer

A) Total interaffiliate receipts will always equal total interaffiliate disbursements. 
B) We can reduce the number of foreign exchange transactions among a MNC with N affiliates to   or less. 
C) Each affiliate nets all its interaffiliate receipts against all its disbursements.It then transfers or receives the balance, respectively, if it is a net receiver or payer respectively. 
D) All of the above 
A) Total interaffiliate receipts will always equal total interaffiliate disbursements. 
B) We can reduce the number of foreign exchange transactions among a MNC with N affiliates to   or less. 
C) Each affiliate nets all its interaffiliate receipts against all its disbursements.It then transfers or receives the balance, respectively, if it is a net receiver or payer respectively. 
D) All of the above

Question 3

Find the net cash flow in (out of)the U.S.affiliate.

Accepted Answer

A) $0 in or out 
B) $5,000 out 
C) $10,000 in 
D) $15,000 out 
E) None of the above 
A) $0 in or out 
B) $5,000 out 
C) $10,000 in 
D) $15,000 out 
E) None of the above

Question 4

Simplify the following set of intra company cash flows for this Swiss Firm.
Consider the following exchange rates.

Accepted Answer

Step 1: Convert all cash flows

Question 5

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):  
-Fill out the following figure with the initial situation shown in the table.

Accepted Answer

The answer of Your firm's interaffiliate cash receipts and disbursements...

Question 6

Multinational cash management

Accepted Answer

A) is really no different for a MNC than for a purely domestic firm in a closed economy. 
B) concerns itself with the size of cash balances, their currency denominations, and where these cash balances are located among the MNC's affiliates. 
C) concerns itself with the size of cash balances and their currency denominations, but not where these cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue. 
D) none of the above 
A) is really no different for a MNC than for a purely domestic firm in a closed economy. 
B) concerns itself with the size of cash balances, their currency denominations, and where these cash balances are located among the MNC's affiliates. 
C) concerns itself with the size of cash balances and their currency denominations, but not where these cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue. 
D) none of the above

Question 7

Simplify the following set of intra company cash flows for this Swiss Firm. Use the following exchange rates.     The fewest number of intra-affiliate cash flows is

Accepted Answer

A) Zero 
B) One 
C) Two 
D) Three 
E) Four 
A) Zero 
B) One 
C) Two 
D) Three 
E) Four

Question 8

A central cash manager has a global view of the most favorable borrowing rates and most advantageous investment rates.

Accepted Answer

A) True 
 B)False

Question 9

Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

Accepted Answer

A) $250,000 
B) $500,000 
C) $1,000,000 
D) $1,250,000 
A) $250,000 
B) $500,000 
C) $1,000,000 
D) $1,250,000

Question 10

The lower the transfer price

Accepted Answer

A) the higher the net profit reported by the MNC. 
B) the lower the gross profit of the transferring division relative to the receiving division. 
C) the higher the gross profit of the receiving division relative to the transferring division. 
D) none of the above 
A) the higher the net profit reported by the MNC. 
B) the lower the gross profit of the transferring division relative to the receiving division. 
C) the higher the gross profit of the receiving division relative to the transferring division. 
D) none of the above

Question 11

Which term correctly describes the following situation? When a country imposes exchange restrictions on its own currency,limiting conversion to other currencies,a MNC's frustrated remittance of profits from a subsidiary would be

Accepted Answer

A) blocked funds. 
B) stopped funds. 
C) constipated funds. 
D) money down the toilet. 
A) blocked funds. 
B) stopped funds. 
C) constipated funds. 
D) money down the toilet.

Question 12

Ad valorem duties are best described as

Accepted Answer

A) an ad valorem duty is a percentage tax levied at customs on the assessed value of the imported good. 
B) a value-added tax on domestic production. 
C) a percentage tax levied at customs on the value added by shipping the good. 
D) none of the above 
A) an ad valorem duty is a percentage tax levied at customs on the assessed value of the imported good. 
B) a value-added tax on domestic production. 
C) a percentage tax levied at customs on the value added by shipping the good. 
D) none of the above

Question 13

With regard to cash management systems in practice,studies suggest that the benefits of a multilateral netting system include

Accepted Answer

A) the decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for a large international transfer of foreign exchange. 
B) the savings in administrative time. 
C) the reduction in intra company float, which is frequently as high as five days, even for wire transfers. 
D) all of the above 
A) the decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for a large international transfer of foreign exchange. 
B) the savings in administrative time. 
C) the reduction in intra company float, which is frequently as high as five days, even for wire transfers. 
D) all of the above

Question 14

Find the net cash flow in (out of)the U.K.affiliate.

Accepted Answer

A) $55,000 in 
B) $15,000 out 
C) $0 in or out 
D) $40,000 out 
E) None of the above 
A) $55,000 in 
B) $15,000 out 
C) $0 in or out 
D) $40,000 out 
E) None of the above

Question 15

Some countries allow interaffiliate transactions to be settled only on a gross basis.That is,

Accepted Answer

A) all receipts for a settlement period must be grouped into a single large receipt and all disbursements must be grouped into a single large payment. 
B) all receipts and disbursements for a settlement period must be handled individually. 
C) all receipts and disbursements for a settlement period must be netted against each other and then a single large payment is made. 
D) each affiliate nets all its interaffiliate receipts against all its disbursements.It then transfers or receives the balance, respectively, if it is a net payer or receiver. 
A) all receipts for a settlement period must be grouped into a single large receipt and all disbursements must be grouped into a single large payment. 
B) all receipts and disbursements for a settlement period must be handled individually. 
C) all receipts and disbursements for a settlement period must be netted against each other and then a single large payment is made. 
D) each affiliate nets all its interaffiliate receipts against all its disbursements.It then transfers or receives the balance, respectively, if it is a net payer or receiver.

Question 16

Find the net cash flow in (out of)the U.K.affiliate.

Accepted Answer

A) $5,000 in 
B) $5,000 out 
C) $30,000 out 
D) $30,000 in 
E) None of the above 
A) $5,000 in 
B) $5,000 out 
C) $30,000 out 
D) $30,000 in 
E) None of the above

Question 17

Find the net cash flow in (out of)the German affiliate.

Accepted Answer

A) $5,000 in 
B) $5,000 out 
C) $30,000 out 
D) $30,000 in 
E) None of the above 
A) $5,000 in 
B) $5,000 out 
C) $30,000 out 
D) $30,000 in 
E) None of the above

Question 18

Find the net cash flow in (out of)the U.S.affiliate.

Accepted Answer

A) $55,000 in 
B) $15,000 out 
C) $0 in or out 
D) $40,000 out 
E) None of the above 
A) $55,000 in 
B) $15,000 out 
C) $0 in or out 
D) $40,000 out 
E) None of the above

Question 19

For a recent month,the following payments matrix of interaffiliate cash flows was forecasted:   The spot exchange rates are $1.20 = €1.00 and $2.00 = £1.00; affiliates get paid in home currency.Use multilateral netting to find the net payments to an from all parties. Which of the following is an accurate chart of their current situation?

Accepted Answer

A)    
B)    
C)    
D) None of the others. 
A)    
B)    
C)    
D) None of the others.

Question 20

The formula for the standard deviation of cash held by the centralized depository for N affiliates is

Accepted Answer

A) The formula assumes that interaffiliate cash flows have a correlation coefficient of -1. 
B) The formula assumes that interaffiliate cash flows have a correlation coefficient of +1. 
C) The formula assumes that interaffiliate cash flows have a correlation coefficient of 0. 
D) None of the above 
A) The formula assumes that interaffiliate cash flows have a correlation coefficient of -1. 
B) The formula assumes that interaffiliate cash flows have a correlation coefficient of +1. 
C) The formula assumes that interaffiliate cash flows have a correlation coefficient of 0. 
D) None of the above

On blocked funds strategy is

Which one of the following is a false statement when engaged in bilateral netting?

Find the net cash flow in (out of)the U.S.affiliate.

Simplify the following set of intra company cash flows for this Swiss Firm. Consider the following exchange rates.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000): -Fill out the following figure with the initial situation shown in the table.

Multinational cash management

Simplify the following set of intra company cash flows for this Swiss Firm. Use the following exchange rates. The fewest number of intra-affiliate cash flows is

A central cash manager has a global view of the most favorable borrowing rates and most advantageous investment rates.

Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

The lower the transfer price

Which term correctly describes the following situation? When a country imposes exchange restrictions on its own currency,limiting conversion to other currencies,a MNC's frustrated remittance of profits from a subsidiary would be

Ad valorem duties are best described as

With regard to cash management systems in practice,studies suggest that the benefits of a multilateral netting system include

Find the net cash flow in (out of)the U.K.affiliate.

Some countries allow interaffiliate transactions to be settled only on a gross basis.That is,

Find the net cash flow in (out of)the U.K.affiliate.

Find the net cash flow in (out of)the German affiliate.

Find the net cash flow in (out of)the U.S.affiliate.

The formula for the standard deviation of cash held by the centralized depository for N affiliates is

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 19: Multinational Cash Management

On blocked funds strategy is

Which one of the following is a false statement when engaged in bilateral netting?

Find the net cash flow in (out of)the U.S.affiliate.

Simplify the following set of intra company cash flows for this Swiss Firm. Consider the following exchange rates.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000): -Fill out the following figure with the initial situation shown in the table.

Multinational cash management

Simplify the following set of intra company cash flows for this Swiss Firm. Use the following exchange rates. The fewest number of intra-affiliate cash flows is

A central cash manager has a global view of the most favorable borrowing rates and most advantageous investment rates.

Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

The lower the transfer price

Which term correctly describes the following situation? When a country imposes exchange restrictions on its own currency,limiting conversion to other currencies,a MNC's frustrated remittance of profits from a subsidiary would be

Ad valorem duties are best described as

With regard to cash management systems in practice,studies suggest that the benefits of a multilateral netting system include

Find the net cash flow in (out of)the U.K.affiliate.

Some countries allow interaffiliate transactions to be settled only on a gross basis.That is,

Find the net cash flow in (out of)the U.K.affiliate.

Find the net cash flow in (out of)the German affiliate.

Find the net cash flow in (out of)the U.S.affiliate.

The formula for the standard deviation of cash held by the centralized depository for N affiliates is

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

International Trade Finance

International Tax Environment and Transfer Pricing

Filters