Question 1

Political risk can be evaluated by studying

Accepted Answer

A) The host country's political and government system 
B) Key economic indicators 
C) Regional security 
D) All of these 
A) The host country's political and government system 
B) Key economic indicators 
C) Regional security 
D) All of these D

Question 2

Transfer risk refers to the risk which arises from the uncertainty about:

Accepted Answer

A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these 
A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these C

Question 3

Foreign direct investment is undertaken via

Accepted Answer

A) Buying bonds in a foreign company 
B) Buying 1% of the equity capital of a foreign company 
C) Buying 100% of the equity capital of a foreign company 
D) Can only be done when a foreign subsidiary is built up from scratch 
A) Buying bonds in a foreign company 
B) Buying 1% of the equity capital of a foreign company 
C) Buying 100% of the equity capital of a foreign company 
D) Can only be done when a foreign subsidiary is built up from scratch C

Question 4

ABC Inc.,located in Vancouver,BC wants to buy XYZ Inc.,located in Seattle,WA.What does the ABC Inc.have to consider so that the acquisition will be successful?

Accepted Answer

A successful acquisition implies that sh

Question 5

The key factors that are important in a firm's decision to invest overseas are:

Accepted Answer

A) Trade barriers, imperfect labor market, and intangible assets 
B) vertical integration, product life cycle, and shareholder diversification services 
C) profit maximization, global prestige, and competition 
D) a and b 
A) Trade barriers, imperfect labor market, and intangible assets 
B) vertical integration, product life cycle, and shareholder diversification services 
C) profit maximization, global prestige, and competition 
D) a and b

Question 6

Synergistic gains refer to:

Accepted Answer

A) gains from hedging 
B) gains obtained when the value of the acquiring and target firms, combined together, is greater than the stand-alone valuations of the individual firms 
C) gains arising if the combined companies can save on the costs of production, marketing, distribution, and R&D 
D) b and c 
A) gains from hedging 
B) gains obtained when the value of the acquiring and target firms, combined together, is greater than the stand-alone valuations of the individual firms 
C) gains arising if the combined companies can save on the costs of production, marketing, distribution, and R&D 
D) b and c

Question 7

Control risk refers to the risk which arises from the uncertainty about:

Accepted Answer

A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these 
A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these

Question 8

An increase in political risk can be managed by:

Accepted Answer

A) adjusting a foreign investment project's NPV by either reducing its expected cash flows, or by increasing the cost of capital 
B) forming joint venture with a local company 
C) purchasing insurance against the hazard of political risk 
D) all of these 
A) adjusting a foreign investment project's NPV by either reducing its expected cash flows, or by increasing the cost of capital 
B) forming joint venture with a local company 
C) purchasing insurance against the hazard of political risk 
D) all of these

Question 9

How can Export Development Canada (EDC)help firms to deal with political risk?

Accepted Answer

The EDC,a crown corporation,offers insur

Question 10

Which of the following statements is true about product life cycle theory?

Accepted Answer

A) in the early stages of the product life cycle, the demand for the new product is relatively insensitive to the price and thus a pioneering firm can charge a relatively high price 
B) it predicts that over time the U.S.switches from an exporting country of new products to an importing country 
C) it has an "S" shaped curve when plotting "quantity sold" versus "time" 
D) all of these 
A) in the early stages of the product life cycle, the demand for the new product is relatively insensitive to the price and thus a pioneering firm can charge a relatively high price 
B) it predicts that over time the U.S.switches from an exporting country of new products to an importing country 
C) it has an "S" shaped curve when plotting "quantity sold" versus "time" 
D) all of these

Question 11

The most important mode of entering a foreign market via FDI in the last few years is

Accepted Answer

A) Greenfield investments 
B) Brownfield investments 
C) Mergers & acquisitions 
D) All modes are equally important 
A) Greenfield investments 
B) Brownfield investments 
C) Mergers & acquisitions 
D) All modes are equally important

Question 12

Operational risk refers to the risk which arises from the uncertainty about:

Accepted Answer

A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these 
A) the host's country's policies affecting the local operations of an MNC 
B) the host's country's policy regarding ownership and control of local operations 
C) cross-border flows of capital, payment, know-how, and the like 
D) none of these

Question 13

Political risk is classified into:

Accepted Answer

A) Macro- and micro risk 
B) Major- and minor risk 
C) Macro- and minor risk 
D) Major- and micro risk 
A) Macro- and micro risk 
B) Major- and minor risk 
C) Macro- and minor risk 
D) Major- and micro risk

Question 14

What percentage of FDI originates in developed countries?

Accepted Answer

A) 60% 
B) 80% 
C) 90% 
D) 95% 
A) 60% 
B) 80% 
C) 90% 
D) 95%

Question 15

Some of the risks that a Canadian based MNC can encounter in its foreign investments are:
(i)- an increase in the cost of borrowing due to a rise in interest rates
(ii)- increase in inflation rates
(iii)- dumping
(iv)- unfair competition by local companies
(v)- inconvertibility of foreign currencies
(vi)- expropriation
(vii)- destruction of properties due to war,revolution,and other violent political events in foreign countries
(viii)- loss of business income due to political violence
In Canada,the Export Development Canada (EDC)offers insurance against which of the above:

Accepted Answer

A) (i), (ii), (iii), and (iv) 
B) (v), (vi), (vii), and (viii) 
C) a and b 
D) none of these 
A) (i), (ii), (iii), and (iv) 
B) (v), (vi), (vii), and (viii) 
C) a and b 
D) none of these

Question 16

The following are barriers to trade except:

Accepted Answer

A) Tariffs 
B) Transportation costs 
C) Telecommunications 
D) Import taxes 
A) Tariffs 
B) Transportation costs 
C) Telecommunications 
D) Import taxes

Question 17

Country risk refers to:

Accepted Answer

A) political risk 
B) credit risk and other economic performances 
C) a and b 
D) every risk except political risk 
A) political risk 
B) credit risk and other economic performances 
C) a and b 
D) every risk except political risk

Question 18

Which of the following statements is true?

Accepted Answer

A) There are no ownership and control limitations to foreign ownership in Canada. 
B) Foreign investors cannot own more than 25% of a firm in commercial aircraft aviation in Canada. 
C) Foreign investors cannot own more than 50% of a firm in commercial aircraft aviation in Canada. 
D) Foreign investors cannot own more than 75% of a firm in commercial aircraft aviation in Canada. 
A) There are no ownership and control limitations to foreign ownership in Canada. 
B) Foreign investors cannot own more than 25% of a firm in commercial aircraft aviation in Canada. 
C) Foreign investors cannot own more than 50% of a firm in commercial aircraft aviation in Canada. 
D) Foreign investors cannot own more than 75% of a firm in commercial aircraft aviation in Canada.

Question 19

Political risk refers to:

Accepted Answer

A) the potential losses to the parent firm of an MNC resulting from adverse political developments in the host country 
B) macro-economic risks 
C) micro-economic risks 
D) bankruptcy or high inflation rates 
A) the potential losses to the parent firm of an MNC resulting from adverse political developments in the host country 
B) macro-economic risks 
C) micro-economic risks 
D) bankruptcy or high inflation rates

Question 20

How can firms establish a wholly owned subsidiary in a foreign country?
 What are the advantages and disadvantages of each method?

Accepted Answer

Firms can engage in greenfield investmen

Political risk can be evaluated by studying

Transfer risk refers to the risk which arises from the uncertainty about:

Foreign direct investment is undertaken via

ABC Inc.,located in Vancouver,BC wants to buy XYZ Inc.,located in Seattle,WA.What does the ABC Inc.have to consider so that the acquisition will be successful?

The key factors that are important in a firm's decision to invest overseas are:

Synergistic gains refer to:

Control risk refers to the risk which arises from the uncertainty about:

An increase in political risk can be managed by:

How can Export Development Canada (EDC)help firms to deal with political risk?

Which of the following statements is true about product life cycle theory?

The most important mode of entering a foreign market via FDI in the last few years is

Operational risk refers to the risk which arises from the uncertainty about:

Political risk is classified into:

What percentage of FDI originates in developed countries?

The following are barriers to trade except:

Country risk refers to:

Which of the following statements is true?

Political risk refers to:

How can firms establish a wholly owned subsidiary in a foreign country? What are the advantages and disadvantages of each method?

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

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 15: International Portfolio Investment

Political risk can be evaluated by studying

Transfer risk refers to the risk which arises from the uncertainty about:

Foreign direct investment is undertaken via

ABC Inc.,located in Vancouver,BC wants to buy XYZ Inc.,located in Seattle,WA.What does the ABC Inc.have to consider so that the acquisition will be successful?

The key factors that are important in a firm's decision to invest overseas are:

Synergistic gains refer to:

Control risk refers to the risk which arises from the uncertainty about:

An increase in political risk can be managed by:

How can Export Development Canada (EDC)help firms to deal with political risk?

Which of the following statements is true about product life cycle theory?

The most important mode of entering a foreign market via FDI in the last few years is

Operational risk refers to the risk which arises from the uncertainty about:

Political risk is classified into:

What percentage of FDI originates in developed countries?

The following are barriers to trade except:

Country risk refers to:

Which of the following statements is true?

Political risk refers to:

How can firms establish a wholly owned subsidiary in a foreign country? What are the advantages and disadvantages of each method?

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

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters