Question 1

Since shareholders of MNCs may indirectly benefit from corporate international diversification,

Accepted Answer

A) therefore firms are motivated to undertake FDI for the purpose of providing shareholders with diversification services. 
B) therefore firms are motivated to undertake FDI for the purpose of being part of the global minimum variance portfolio. 
C) therefore firms are motivated to undertake FDI for the purpose of staying on the efficient frontier. 
D) none of the above 
A) therefore firms are motivated to undertake FDI for the purpose of providing shareholders with diversification services. 
B) therefore firms are motivated to undertake FDI for the purpose of being part of the global minimum variance portfolio. 
C) therefore firms are motivated to undertake FDI for the purpose of staying on the efficient frontier. 
D) none of the above

Question 2

According to a recent UN survey,the world FDI stock grew at what rate relative to worldwide exports of goods and services?

Accepted Answer

A) The world FDI stock grew twice as fast as worldwide exports of goods and services. 
B) The world FDI stock grew at the same rate as worldwide exports of goods and services. 
C) The world FDI stock grew half as fast as worldwide exports of goods and services. 
D) None of the above 
A) The world FDI stock grew twice as fast as worldwide exports of goods and services. 
B) The world FDI stock grew at the same rate as worldwide exports of goods and services. 
C) The world FDI stock grew half as fast as worldwide exports of goods and services. 
D) None of the above

Question 3

The United States is the largest initiator,of FDI.The largest recipient of FDI is

Accepted Answer

A) also the United States. 
B) France. 
C) Germany. 
D) China. 
E) none of the above 
A) also the United States. 
B) France. 
C) Germany. 
D) China. 
E) none of the above

Question 4

While there is no comprehensive theory of FDI,many existing theories emphasize

Accepted Answer

A) imperfections in product markets. 
B) imperfections in capital markets. 
C) imperfections in labor markets. 
D) all of the above 
A) imperfections in product markets. 
B) imperfections in capital markets. 
C) imperfections in labor markets. 
D) all of the above

Question 5

Severe imperfections in the labor market lead to persistent wage differentials among countries.Some explanations include

Accepted Answer

A) because workers are not allowed to freely move across national boundaries to seek higher wages. 
B) because workers may choose to not move across national boundaries to seek higher wages due to the cultural differences. 
C) but these differences are offset by low productivity in low labor cost countries. 
D) both a and b 
A) because workers are not allowed to freely move across national boundaries to seek higher wages. 
B) because workers may choose to not move across national boundaries to seek higher wages due to the cultural differences. 
C) but these differences are offset by low productivity in low labor cost countries. 
D) both a and b

Question 6

Which of the following is the most disingenuous argument in favor of FDI?

Accepted Answer

A) Shareholder diversification 
B) The internalization theory of FDI 
C) The promise of synergistic gains 
D) Vertical integration 
A) Shareholder diversification 
B) The internalization theory of FDI 
C) The promise of synergistic gains 
D) Vertical integration

Question 7

The boomerang effect

Accepted Answer

A) the possibility that if the secret formula of Coca-Cola were leaked, that other firms would come up with similar products and hurt Coca-Cola's sales. 
B) the possibility that FDI in an undeveloped nation will lead to a group of workers who have enough money to afford the firm's products, leading to an increase of sales and increase of workers and so on. 
C) the possibility that FDI in an undeveloped nation will lead to a group of domestic workers no longer have enough money to afford the firm's products, leading to an decrease of sales. 
D) none of the above 
A) the possibility that if the secret formula of Coca-Cola were leaked, that other firms would come up with similar products and hurt Coca-Cola's sales. 
B) the possibility that FDI in an undeveloped nation will lead to a group of workers who have enough money to afford the firm's products, leading to an increase of sales and increase of workers and so on. 
C) the possibility that FDI in an undeveloped nation will lead to a group of domestic workers no longer have enough money to afford the firm's products, leading to an decrease of sales. 
D) none of the above

Question 8

Examples of control risk include

Accepted Answer

A) the unexpected imposition of capital controls, inbound or outbound, and withholding taxes on dividend and interest payments. 
B) unexpected changes in environmental policies, sourcing/local content requirements, minimum wage law, and restriction on access to local credit facilities. 
C) restrictions imposed on the maximum ownership share by foreigners, mandatory transfer of ownership to local firms over a certain period of time (fade-out requirements), and the nationalization of local operations of MNCs. 
D) none of the above 
A) the unexpected imposition of capital controls, inbound or outbound, and withholding taxes on dividend and interest payments. 
B) unexpected changes in environmental policies, sourcing/local content requirements, minimum wage law, and restriction on access to local credit facilities. 
C) restrictions imposed on the maximum ownership share by foreigners, mandatory transfer of ownership to local firms over a certain period of time (fade-out requirements), and the nationalization of local operations of MNCs. 
D) none of the above

Question 9

MNCs have invested in China

Accepted Answer

A) by lower material costs. 
B) by lower labor costs. 
C) by a desire to preempt the entry of rivals into China's potentially huge market. 
D) all of the above 
A) by lower material costs. 
B) by lower labor costs. 
C) by a desire to preempt the entry of rivals into China's potentially huge market. 
D) all of the above

Question 10

Examples of intangible assets include

Accepted Answer

A) technological, managerial, and marketing know-how. 
B) superior R&D capabilities. 
C) brand names. 
D) all of the above 
A) technological, managerial, and marketing know-how. 
B) superior R&D capabilities. 
C) brand names. 
D) all of the above

Question 11

OPIC is the

Accepted Answer

A) Overseas Pirate Investment Corporation. 
B) Overseas Private Investment Corporation. 
C) Organization Petroleum Importing Countries. 
D) None of the above 
A) Overseas Pirate Investment Corporation. 
B) Overseas Private Investment Corporation. 
C) Organization Petroleum Importing Countries. 
D) None of the above

Question 12

Cross-border acquisitions of businesses are a politically sensitive issue,

Accepted Answer

A) as most countries prefer to retain foreign control of domestic firms. 
B) as most countries prefer to retain local control of domestic firms. 
C) as most countries prefer to retain local control of foreign firms. 
D) none of the above 
A) as most countries prefer to retain foreign control of domestic firms. 
B) as most countries prefer to retain local control of domestic firms. 
C) as most countries prefer to retain local control of foreign firms. 
D) none of the above

Question 13

Factors of production include land,labor,capital,and entrepreneurial ability.Of all the factor markets,the MOST IMPERFECT is the

Accepted Answer

A) labor market. 
B) capital market. 
C) real estate market. 
D) market for entrepreneurial ability. 
A) labor market. 
B) capital market. 
C) real estate market. 
D) market for entrepreneurial ability.

Question 14

Labor services in a country might be underpriced relative to productivity because

Accepted Answer

A) workers are not allowed to freely move across national boundaries to seek higher wages. 
B) some countries do a bad job of educating their work force, consequently they are not very productive. 
C) in some countries there is a shortage of capital investment. 
D) all of the above are equally important 
A) workers are not allowed to freely move across national boundaries to seek higher wages. 
B) some countries do a bad job of educating their work force, consequently they are not very productive. 
C) in some countries there is a shortage of capital investment. 
D) all of the above are equally important

Question 15

A classic example for trade barrier-motivated FDI is

Accepted Answer

A) Honda's investment in Ohio. 
B) Bridgestone's investment in Japan. 
C) NAFTA. 
D) None of the above 
A) Honda's investment in Ohio. 
B) Bridgestone's investment in Japan. 
C) NAFTA. 
D) None of the above

Question 16

Coca-Cola has invested in bottling plants all over the world rather than licensing local firms

Accepted Answer

A) because the foreigners can't be trusted to follow the secret recipe. 
B) because Coca-Cola wanted to protect the formula for its famous soft drink. 
C) because of the internalization theory of FDI. 
D) both b and c 
A) because the foreigners can't be trusted to follow the secret recipe. 
B) because Coca-Cola wanted to protect the formula for its famous soft drink. 
C) because of the internalization theory of FDI. 
D) both b and c

Question 17

During the five-year period 2004-2008,total annual worldwide FDI outflows amounted to

Accepted Answer

A) About $1,423 million on average. 
B) About $1,423 billion on average. 
C) About $1,423 trillion on average. 
D) None of the above 
A) About $1,423 million on average. 
B) About $1,423 billion on average. 
C) About $1,423 trillion on average. 
D) None of the above

Question 18

FDI vertical integration is backward

Accepted Answer

A) when FDI involves an industry abroad that produces inputs for MNCs. 
B) when FDI involves an industry abroad that sells the MNC's outputs. 
C) none of the above 
A) when FDI involves an industry abroad that produces inputs for MNCs. 
B) when FDI involves an industry abroad that sells the MNC's outputs. 
C) none of the above

Question 19

Japan plays a major role as an exporter of FDI.As a recipient of FDI,

Accepted Answer

A) Japan receives as much FDI as it exports, making it a major player on both fronts. 
B) Japan plays a relatively minor role, reflecting a variety of legal, economic, and cultural barriers to FDI. 
C) Japan's receipts of FDI are third in the world. 
D) None of the above 
A) Japan receives as much FDI as it exports, making it a major player on both fronts. 
B) Japan plays a relatively minor role, reflecting a variety of legal, economic, and cultural barriers to FDI. 
C) Japan's receipts of FDI are third in the world. 
D) None of the above

Question 20

Some of the risks that a U.S.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 the U.S.,the Overseas Private Investment Corporation (OPIC)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 the above 
A) (i), (ii), (iii), and (iv) 
B) (v), (vi), (vii), and (viii) 
C) a and b 
D) none of the above

Since shareholders of MNCs may indirectly benefit from corporate international diversification,

According to a recent UN survey,the world FDI stock grew at what rate relative to worldwide exports of goods and services?

The United States is the largest initiator,of FDI.The largest recipient of FDI is

While there is no comprehensive theory of FDI,many existing theories emphasize

Severe imperfections in the labor market lead to persistent wage differentials among countries.Some explanations include

Which of the following is the most disingenuous argument in favor of FDI?

The boomerang effect

Examples of control risk include

MNCs have invested in China

Examples of intangible assets include

OPIC is the

Cross-border acquisitions of businesses are a politically sensitive issue,

Factors of production include land,labor,capital,and entrepreneurial ability.Of all the factor markets,the MOST IMPERFECT is the

Labor services in a country might be underpriced relative to productivity because

A classic example for trade barrier-motivated FDI is

Coca-Cola has invested in bottling plants all over the world rather than licensing local firms

During the five-year period 2004-2008,total annual worldwide FDI outflows amounted to

FDI vertical integration is backward

Japan plays a major role as an exporter of FDI.As a recipient of FDI,

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

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 16: Foreign Direct Investment and Cross-Border Acquisitions

Since shareholders of MNCs may indirectly benefit from corporate international diversification,

According to a recent UN survey,the world FDI stock grew at what rate relative to worldwide exports of goods and services?

The United States is the largest initiator,of FDI.The largest recipient of FDI is

While there is no comprehensive theory of FDI,many existing theories emphasize

Severe imperfections in the labor market lead to persistent wage differentials among countries.Some explanations include

Which of the following is the most disingenuous argument in favor of FDI?

The boomerang effect

Examples of control risk include

MNCs have invested in China

Examples of intangible assets include

OPIC is the

Cross-border acquisitions of businesses are a politically sensitive issue,

Factors of production include land,labor,capital,and entrepreneurial ability.Of all the factor markets,the MOST IMPERFECT is the

Labor services in a country might be underpriced relative to productivity because

A classic example for trade barrier-motivated FDI is

Coca-Cola has invested in bottling plants all over the world rather than licensing local firms

During the five-year period 2004-2008,total annual worldwide FDI outflows amounted to

FDI vertical integration is backward

Japan plays a major role as an exporter of FDI.As a recipient of FDI,

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

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters