Question 1

When an MNC merges with a firm that is in a related industry to the acquiring firm,the merger is called a:

Accepted Answer

A) horizontal merger. 
B) equal-partner merger. 
C) vertical merger. 
D) downward merger. 
A) horizontal merger. 
B) equal-partner merger. 
C) vertical merger. 
D) downward merger. C

Question 2

An appropriate value of a target to the acquiring firm is:

Accepted Answer

A) the future value of the cash flow that the target can expect over the life of the target's assets. 
B) the present value of the cash flow that the target can expect over the life of the target's assets. 
C) the present value of the estimated cash flow of the firm over a five year period plus the present value of the salvage value of the target's assets. 
D) the future value of the expected cash flow from current and expected contracts of the target over the life of the target's assets. 
A) the future value of the cash flow that the target can expect over the life of the target's assets. 
B) the present value of the cash flow that the target can expect over the life of the target's assets. 
C) the present value of the estimated cash flow of the firm over a five year period plus the present value of the salvage value of the target's assets. 
D) the future value of the expected cash flow from current and expected contracts of the target over the life of the target's assets. C

Question 3

If a target owns significant fixed assets for which there is an active secondary market:

Accepted Answer

A) the assets will be difficult to dispose of when those assets are no longer needed in the firm that survives the merger or acquisition. 
B) the terminal value of the target will not be relevant because those assets will be used by the firm that survives the merger or acquisition. 
C) plenty of those assets are available,so the assets value will be reduced. 
D) precise estimates of the terminal value of the target can be obtained. 
A) the assets will be difficult to dispose of when those assets are no longer needed in the firm that survives the merger or acquisition. 
B) the terminal value of the target will not be relevant because those assets will be used by the firm that survives the merger or acquisition. 
C) plenty of those assets are available,so the assets value will be reduced. 
D) precise estimates of the terminal value of the target can be obtained. D

Question 4

When one firm buys another firm and the firm that was bought is absorbed by the purchasing firm,a(n)_______________________ occurs.

Accepted Answer

A) merger 
B) acquisition 
C) but-out 
D) stock swap 
A) merger 
B) acquisition 
C) but-out 
D) stock swap

Question 5

If an MNC and a local firm form a joint venture,and the MNC has the right to sell its interest in the joint venture to the local partner,the MNC is said to have a:

Accepted Answer

A) exit strategy. 
B) call option. 
C) investment opportunity. 
D) put option. 
A) exit strategy. 
B) call option. 
C) investment opportunity. 
D) put option.

Question 6

In most mergers,one firm acquires another firm or an identifiable portion of another firm either as a(n):

Accepted Answer

A) stock acquisition or an asset acquisition. 
B) asset acquisition or an out-right purchase. 
C) stock swap or an asset swap. 
D) debt swap or a long-term payout. 
A) stock acquisition or an asset acquisition. 
B) asset acquisition or an out-right purchase. 
C) stock swap or an asset swap. 
D) debt swap or a long-term payout.

Question 7

What is a "deal" in the context of international business?

Accepted Answer

A) A deal is any agreement between an MNC and a firm in another country. 
B) A deal is any transaction in which an MNC agrees to buy another firm. 
C) A deal is a shorthand term for a transaction in which there is a contract between the firms involved in a project,usually in the form of an alliance or acquisition. 
D) A deal is a transaction that involves an MNC,a governmental entity,and a firm in another country. 
A) A deal is any agreement between an MNC and a firm in another country. 
B) A deal is any transaction in which an MNC agrees to buy another firm. 
C) A deal is a shorthand term for a transaction in which there is a contract between the firms involved in a project,usually in the form of an alliance or acquisition. 
D) A deal is a transaction that involves an MNC,a governmental entity,and a firm in another country.

Question 8

The transaction value of a merger is:

Accepted Answer

A) the amount that the acquiring firm paid for the target. 
B) the value of the target to the acquiring firm. 
C) the increase in value that the acquiring firm realizes as a result of the merger or acquisition. 
D) the difference in the target's value to the acquiring firm and the price the acquiring firm paid for the target. 
A) the amount that the acquiring firm paid for the target. 
B) the value of the target to the acquiring firm. 
C) the increase in value that the acquiring firm realizes as a result of the merger or acquisition. 
D) the difference in the target's value to the acquiring firm and the price the acquiring firm paid for the target.

Question 9

What is terminal value and why is it important in evaluating the value of a potential acquisition?

Accepted Answer

Terminal value is a consideration of the

Question 10

In considering the value of a real option to the target of a merger or acquisition,the most important factor to be considered is:

Accepted Answer

A) the currency in which the real option must be exercised. 
B) whether the real option is a true option or an eventuality. 
C) the standard deviation of such factors as GNP or inflation. 
D) when the real option came into being. 
A) the currency in which the real option must be exercised. 
B) whether the real option is a true option or an eventuality. 
C) the standard deviation of such factors as GNP or inflation. 
D) when the real option came into being.

Question 11

The Sarbanes-Oxley Act:

Accepted Answer

A) restricts foreign firms from obtaining controlling interests in US energy firms. 
B) prohibits foreign firms from acquiring any interest in US defense industry firms. 
C) imposes restrictions on how much of a foreign firm's securities can be listed and sold on US security exchanges. 
D) has reduced the value of cross-listing for firms outside of the US. 
A) restricts foreign firms from obtaining controlling interests in US energy firms. 
B) prohibits foreign firms from acquiring any interest in US defense industry firms. 
C) imposes restrictions on how much of a foreign firm's securities can be listed and sold on US security exchanges. 
D) has reduced the value of cross-listing for firms outside of the US.

Question 12

What is a "greenfield" project?

Accepted Answer

A) A greenfield project is an environmentally-friendly project. 
B) A greenfield project is a project that is located in a foreign country and encouraged by that country. 
C) A greenfield project is a project that involves an MNC and a firm in another country. 
D) A greenfield project is a project that starts from scratch and produces the facility that is needed. 
A) A greenfield project is an environmentally-friendly project. 
B) A greenfield project is a project that is located in a foreign country and encouraged by that country. 
C) A greenfield project is a project that involves an MNC and a firm in another country. 
D) A greenfield project is a project that starts from scratch and produces the facility that is needed.

Question 13

Why is outsourcing often controversial?

Accepted Answer

A) Outsourcing is much more expensive than in-sourcing. 
B) Outsourcing avoids the restrictions imposed on imports. 
C) When outsourcing results in the loss of domestic jobs,outsourcing is criticized for causing the lost jobs to be transferred to other countries. 
D) When outsourcing results in an influx of foreign workers into a country,those foreign workers take jobs from domestic workers. 
A) Outsourcing is much more expensive than in-sourcing. 
B) Outsourcing avoids the restrictions imposed on imports. 
C) When outsourcing results in the loss of domestic jobs,outsourcing is criticized for causing the lost jobs to be transferred to other countries. 
D) When outsourcing results in an influx of foreign workers into a country,those foreign workers take jobs from domestic workers.

Question 14

Usually the steps that a firm takes to penetrate a new market are:

Accepted Answer

A) make an alliance with a firm already in the new market and then buy that firm. 
B) hire a firm already in that market to advise on entering the new market and then enter the market with new products. 
C) sell their products in the new market and then produce their products in the new market. 
D) sell existing products in the market and then create new products for the market. 
A) make an alliance with a firm already in the new market and then buy that firm. 
B) hire a firm already in that market to advise on entering the new market and then enter the market with new products. 
C) sell their products in the new market and then produce their products in the new market. 
D) sell existing products in the market and then create new products for the market.

Question 15

If an MNC is considering a merger or acquisition involving a target in a high-tax country,the value of that target to the MNC:

Accepted Answer

A) may be lower than the target's value in the country where it exists. 
B) will not be affected. 
C) may be higher than the target's value in the country where it exists. 
D) will not be affected unless the MNC finances the merger or acquisition in the country where the target exists. 
A) may be lower than the target's value in the country where it exists. 
B) will not be affected. 
C) may be higher than the target's value in the country where it exists. 
D) will not be affected unless the MNC finances the merger or acquisition in the country where the target exists.

Question 16

In valuing a target of a merger or acquisition:

Accepted Answer

A) the market value of its outstanding shares of stock is a valid basis for valuing the target. 
B) the cash flow from all of the target's product lines and businesses must be estimated and analyzed. 
C) the average value of the target's stock value over the last year must be determined and analyzed. 
D) the peak cash flow that the target has generated in the past is a good indication of the value of the target. 
A) the market value of its outstanding shares of stock is a valid basis for valuing the target. 
B) the cash flow from all of the target's product lines and businesses must be estimated and analyzed. 
C) the average value of the target's stock value over the last year must be determined and analyzed. 
D) the peak cash flow that the target has generated in the past is a good indication of the value of the target.

Question 17

A simple international transaction that involves the transfer,usually for a limited time,of specific technology or intellectual property from one firm to another firm is known as a:

Accepted Answer

A) patent transfer. 
B) licensing agreement. 
C) lease agreement. 
D) merger. 
A) patent transfer. 
B) licensing agreement. 
C) lease agreement. 
D) merger.

Question 18

Valuation asymmetries - different values for a target in a merger or acquisition from the viewpoints of different parties to the transaction - can arise from:

Accepted Answer

A) the failure of each party to take the same factors into consideration. 
B) violations of the International Fisher Effect. 
C) the application of the one price rule. 
D) valuation of the target in different currencies. 
A) the failure of each party to take the same factors into consideration. 
B) violations of the International Fisher Effect. 
C) the application of the one price rule. 
D) valuation of the target in different currencies.

Question 19

What is the difference between a vertical merger and a horizontal merger?

Accepted Answer

When a firm merges in or acquires a firm

Question 20

How can MNCs preemptively deflect the enactment of adverse regulations in a foreign country?

Accepted Answer

A) An MNC can invest in or align itself with a domestic firm in the foreign country and thereby try to avoid the adverse regulation or the application of the adverse regulation because of the potential for an adverse effect on the domestic firm. 
B) An MNC can move its funds and its moveable assets out of the country before the adverse regulations are placed into effect. 
C) An MNC can buy insurance to protect it against adverse regulations put into effect after the MNC has made an investment in the foreign country. 
D) An MNC can employ high government officials in the country that will impose the adverse regulations and use their connections with those officials to defeat the regulations or arrange that the regulations not apply to the MNC. 
A) An MNC can invest in or align itself with a domestic firm in the foreign country and thereby try to avoid the adverse regulation or the application of the adverse regulation because of the potential for an adverse effect on the domestic firm. 
B) An MNC can move its funds and its moveable assets out of the country before the adverse regulations are placed into effect. 
C) An MNC can buy insurance to protect it against adverse regulations put into effect after the MNC has made an investment in the foreign country. 
D) An MNC can employ high government officials in the country that will impose the adverse regulations and use their connections with those officials to defeat the regulations or arrange that the regulations not apply to the MNC.

When an MNC merges with a firm that is in a related industry to the acquiring firm,the merger is called a:

An appropriate value of a target to the acquiring firm is:

If a target owns significant fixed assets for which there is an active secondary market:

When one firm buys another firm and the firm that was bought is absorbed by the purchasing firm,a(n)_______________________ occurs.

If an MNC and a local firm form a joint venture,and the MNC has the right to sell its interest in the joint venture to the local partner,the MNC is said to have a:

In most mergers,one firm acquires another firm or an identifiable portion of another firm either as a(n):

What is a "deal" in the context of international business?

The transaction value of a merger is:

What is terminal value and why is it important in evaluating the value of a potential acquisition?

In considering the value of a real option to the target of a merger or acquisition,the most important factor to be considered is:

The Sarbanes-Oxley Act:

What is a "greenfield" project?

Why is outsourcing often controversial?

Usually the steps that a firm takes to penetrate a new market are:

If an MNC is considering a merger or acquisition involving a target in a high-tax country,the value of that target to the MNC:

In valuing a target of a merger or acquisition:

A simple international transaction that involves the transfer,usually for a limited time,of specific technology or intellectual property from one firm to another firm is known as a:

Valuation asymmetries - different values for a target in a merger or acquisition from the viewpoints of different parties to the transaction - can arise from:

What is the difference between a vertical merger and a horizontal merger?

How can MNCs preemptively deflect the enactment of adverse regulations in a foreign country?

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters

Exam 12: International Alliances and Acquisitions

When an MNC merges with a firm that is in a related industry to the acquiring firm,the merger is called a:

An appropriate value of a target to the acquiring firm is:

If a target owns significant fixed assets for which there is an active secondary market:

When one firm buys another firm and the firm that was bought is absorbed by the purchasing firm,a(n)_______________________ occurs.

If an MNC and a local firm form a joint venture,and the MNC has the right to sell its interest in the joint venture to the local partner,the MNC is said to have a:

In most mergers,one firm acquires another firm or an identifiable portion of another firm either as a(n):

What is a "deal" in the context of international business?

The transaction value of a merger is:

What is terminal value and why is it important in evaluating the value of a potential acquisition?

In considering the value of a real option to the target of a merger or acquisition,the most important factor to be considered is:

The Sarbanes-Oxley Act:

What is a "greenfield" project?

Why is outsourcing often controversial?

Usually the steps that a firm takes to penetrate a new market are:

If an MNC is considering a merger or acquisition involving a target in a high-tax country,the value of that target to the MNC:

In valuing a target of a merger or acquisition:

A simple international transaction that involves the transfer,usually for a limited time,of specific technology or intellectual property from one firm to another firm is known as a:

Valuation asymmetries - different values for a target in a merger or acquisition from the viewpoints of different parties to the transaction - can arise from:

What is the difference between a vertical merger and a horizontal merger?

How can MNCs preemptively deflect the enactment of adverse regulations in a foreign country?

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters