Question 1

A multilateral netting system is beneficial in reducing the number of and the expense associated with interaffiliate foreign exchange transactions.

Accepted Answer

A) True 
 B)False  True

Question 2

Using your results to the last question, use bilateral netting.

Accepted Answer

The answer of Using your results to the last question,...

Question 3

Simplify the following set of intra company cash flows for this U.S. 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. C

Question 4

The U.S. IRS allows transfer prices to be set using Comparable uncontrolled price method. This method requires

Accepted Answer

A) finding the price that an unrelated willing seller would accept from an unrelated willing buyer. 
B) the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to cover overhead costs and a reasonable profit. 
C) an appropriate profit is added to the cost of the manufacturing affiliate. 
D) financial models and econometric techniques. 
A) finding the price that an unrelated willing seller would accept from an unrelated willing buyer. 
B) the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to cover overhead costs and a reasonable profit. 
C) an appropriate profit is added to the cost of the manufacturing affiliate. 
D) financial models and econometric techniques.

Question 5

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 6

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A €2,000 when the exchange rate is $1.50 = €1.00. The net payment between A and B should be closest to

Accepted Answer

A)  $2,000 from B to A. 
B)  €2,000 from A to B. 
C)  $1,000 from B to A. 
D)  none of the above 
A)  $2,000 from B to A. 
B)  €2,000 from A to B. 
C)  $1,000 from B to A. 
D)  none of the above

Question 7

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

Accepted Answer

A) $0 in or out 
B) $20,000 out 
C) $15,000 in 
D) $30,000 out 
E) None of the above 
A) $0 in or out 
B) $20,000 out 
C) $15,000 in 
D) $30,000 out 
E) None of the above

Question 8

Fill out the following figure with the initial situation shown in the table.

Accepted Answer

The answer of Fill out the following figure with the...

Question 9

Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise. Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

Accepted Answer

A) $50,000 
B) $100,000 
C) $125,000 
D) $250,000 
A) $50,000 
B) $100,000 
C) $125,000 
D) $250,000

Question 10

Using your results to the last question, use bilateral netting to simplify.

Accepted Answer

Leaving this blank g

Question 11

Using your results to the last question, use multilateral netting to simplify.

Accepted Answer

Notice that the $5 t

Question 12

Find the net cash flow for the entire firm

Accepted Answer

A) $0 in or out 
B) $5,000 out 
C) $30,000 in 
D) $30,000 out 
E) None of the above 
A) $0 in or out 
B) $5,000 out 
C) $30,000 in 
D) $30,000 out 
E) None of the above

Question 13

The U.S. IRS allows transfer prices to be set using the cost plus approach

Accepted Answer

A) finding the price that an unrelated willing seller would accept from an unrelated willing buyer. 
B) the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to cover overhead costs and a reasonable profit. 
C) an appropriate profit is added to the cost of the manufacturing affiliate. 
D) financial models and econometric techniques. 
A) finding the price that an unrelated willing seller would accept from an unrelated willing buyer. 
B) the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to cover overhead costs and a reasonable profit. 
C) an appropriate profit is added to the cost of the manufacturing affiliate. 
D) financial models and econometric techniques.

Question 14

With a CENTRALIZED CASH DEPOSITORY

Accepted Answer

A) a MNC can facilitate fund mobilization. 
B) system-wide excess cash are invested at the most advantageous rates. 
C) system-wide cash shortages are borrowed at the most advantageous rates. 
D) all of the above 
A) a MNC can facilitate fund mobilization. 
B) system-wide excess cash are invested at the most advantageous rates. 
C) system-wide cash shortages are borrowed at the most advantageous rates. 
D) all of the above

Question 15

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 payer or receiver. 
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 payer or receiver. 
D) all of the above

Question 16

Good cash management boils down to

Accepted Answer

A) investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is a temporary cash shortage. 
B) investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary cash shortage. 
C) hedging currency exposure with judicious use of futures, forwards, and currency option contracts. 
D) none of the above 
A) investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is a temporary cash shortage. 
B) investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary cash shortage. 
C) hedging currency exposure with judicious use of futures, forwards, and currency option contracts. 
D) none of the above

Question 17

Reasons for a country to impose exchange restrictions on its own currency, limiting conversion to other currencies include

Accepted Answer

A) enticing more foreign investment from MNCs. 
B) for a variety of reasons, the country may find itself short of foreign currency reserves. 
C) creating a home-grown business climate. 
D) all of the above 
A) enticing more foreign investment from MNCs. 
B) for a variety of reasons, the country may find itself short of foreign currency reserves. 
C) creating a home-grown business climate. 
D) all of the above

Question 18

Fill out the following figure with the initial situation shown in the table.

Accepted Answer

The answer of Fill out the following figure with the...

Question 19

Fill out the following figure with the initial situation shown in the table.

Accepted Answer

The answer of Fill out the following figure with the...

Question 20

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

Accepted Answer

A) $0 in or out 
B) $5,000 out 
C) $30,000 in 
D) $30,000 out 
E) None of the above 
A) $0 in or out 
B) $5,000 out 
C) $30,000 in 
D) $30,000 out 
E) None of the above

Exam 19: Multinational Cash Management

A multilateral netting system is beneficial in reducing the number of and the expense associated with interaffiliate foreign exchange transactions.

Using your results to the last question, use bilateral netting.

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

The U.S. IRS allows transfer prices to be set using Comparable uncontrolled price method. This method requires

On blocked funds strategy is

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A €2,000 when the exchange rate is $1.50 = €1.00. The net payment between A and B should be closest to

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

Fill out the following figure with the initial situation shown in the table.

Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise. Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

Using your results to the last question, use bilateral netting to simplify.

Using your results to the last question, use multilateral netting to simplify.

Find the net cash flow for the entire firm

The U.S. IRS allows transfer prices to be set using the cost plus approach

With a CENTRALIZED CASH DEPOSITORY

When engaged in bilateral netting

Good cash management boils down to

Reasons for a country to impose exchange restrictions on its own currency, limiting conversion to other currencies include

Fill out the following figure with the initial situation shown in the table.

Fill out the following figure with the initial situation shown in the table.

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

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

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