Question 1

The more visible costs of a merger,such as professional fees,are classified as:

Accepted Answer

A) sunk costs. 
B) merger transaction costs. 
C) conversion costs. 
D) merger direct costs. 
A) sunk costs. 
B) merger transaction costs. 
C) conversion costs. 
D) merger direct costs.

Question 2

Specific technologies that an MNC may need are not always available everywhere.This uneven dispersion of technologies is due to factors such as:

Accepted Answer

A) cross-border investment restrictions and remittance restrictions. 
B) capital requirements and political restrictions. 
C) communications and country risk. 
D) tradition,education and availability of raw materials. 
A) cross-border investment restrictions and remittance restrictions. 
B) capital requirements and political restrictions. 
C) communications and country risk. 
D) tradition,education and availability of raw materials.

Question 3

What is the primary difference between outsourcing agreements and procurement agreements?

Accepted Answer

A) Outsourcing agreements provide for the purchase of finished goods while procurement agreements provide for the purchase of raw materials. 
B) Outsourcing agreements are generally broader in scope than procurement agreements. 
C) Procurement agreements must be approved by the government of the country where the procurements are to be made,but outsourcing agreements do not require approval. 
D) Procurement agreements seek to obtain tangible goods while outsourcing agreements are limited to services. 
A) Outsourcing agreements provide for the purchase of finished goods while procurement agreements provide for the purchase of raw materials. 
B) Outsourcing agreements are generally broader in scope than procurement agreements. 
C) Procurement agreements must be approved by the government of the country where the procurements are to be made,but outsourcing agreements do not require approval. 
D) Procurement agreements seek to obtain tangible goods while outsourcing agreements are limited to services.

Question 4

Disruptions in commodity prices and inflation are referred to as:

Accepted Answer

A) macroeconomic downturns. 
B) economic corrections. 
C) economic shocks. 
D) economic adjustments. 
A) macroeconomic downturns. 
B) economic corrections. 
C) economic shocks. 
D) economic adjustments.

Question 5

_____________________ are separate entities created by two or more existing entities to accomplish a specific business purpose.

Accepted Answer

A) Strategic alliances 
B) Acquisitions 
C) Joint ventures 
D) MNCs 
A) Strategic alliances 
B) Acquisitions 
C) Joint ventures 
D) MNCs

Question 6

A primary difference in private equity funds and hedge funds is that:

Accepted Answer

A) private equity funds invest for the short-term while hedge funds invest and intend to stay invested in a firm for the long-term. 
B) hedge funds only loan money to firms while private equity finds seek to take an equity stake in firms. 
C) hedge funds are controlled by non-traditional financial entities like insurance companies and private equity finds generate most of their funds internally. 
D) private equity funds often seek control of the firms they invest in while hedge funds generally are not interested in control. 
A) private equity funds invest for the short-term while hedge funds invest and intend to stay invested in a firm for the long-term. 
B) hedge funds only loan money to firms while private equity finds seek to take an equity stake in firms. 
C) hedge funds are controlled by non-traditional financial entities like insurance companies and private equity finds generate most of their funds internally. 
D) private equity funds often seek control of the firms they invest in while hedge funds generally are not interested in control.

Question 7

What is the difference between private equity funds and hedge funds?

Accepted Answer

Private equity funds and hedge funds usu

Question 8

Why are terminal values important in valuing the target in a merger or acquisition?

Accepted Answer

A) Terminal values,the salvage value of the assets acquired in a merger or acquisition,can constitute a significant part of a target's total value. 
B) Terminal value is the amount that the acquiring company will have to pay to get rid of a firm acquired in a merger or acquisition that does not work. 
C) Terminal value is the final price that it will cost to acquire a target in a merger or acquisition. 
D) Terminal value is the ex post cost of acquiring a target in a merger or acquisition. 
A) Terminal values,the salvage value of the assets acquired in a merger or acquisition,can constitute a significant part of a target's total value. 
B) Terminal value is the amount that the acquiring company will have to pay to get rid of a firm acquired in a merger or acquisition that does not work. 
C) Terminal value is the final price that it will cost to acquire a target in a merger or acquisition. 
D) Terminal value is the ex post cost of acquiring a target in a merger or acquisition.

Question 9

What category of merger costs are typically incurred post-merger?

Accepted Answer

A) Transaction costs 
B) Merger costs 
C) Transition costs 
D) Explicit costs 
A) Transaction costs 
B) Merger costs 
C) Transition costs 
D) Explicit costs

Question 10

Most large mergers today use _____________ to finance the transaction.

Accepted Answer

A) bank financing 
B) stock 
C) bonds 
D) private equity funds 
A) bank financing 
B) stock 
C) bonds 
D) private equity funds

Question 11

In a joint venture where the local firm has the right to buy the MNC's interest in the joint venture,the MNC is said to be:

Accepted Answer

A) In a short position. 
B) In a long position. 
C) Exposed. 
D) Over-invested. 
A) In a short position. 
B) In a long position. 
C) Exposed. 
D) Over-invested.

Question 12

Real options can affect the value of a potential target in a merger or acquisition.The acquiring firm,in determining how real options affect the value of the target must,most importantly,consider:

Accepted Answer

A) whether the real options belong to the target or to a subsidiary of the target. 
B) how restrictions on remittances affect the real options. 
C) whether the real option requires additional investments. 
D) when the real options will be exercised. 
A) whether the real options belong to the target or to a subsidiary of the target. 
B) how restrictions on remittances affect the real options. 
C) whether the real option requires additional investments. 
D) when the real options will be exercised.

Question 13

Why is overcapacity sometimes a negative condition for a firm?

Accepted Answer

Overcapacity occurs when a firm has more

Question 14

What is the primary difference between a strategic alliance and a joint venture?

Accepted Answer

A) A joint venture results in the formation of a new entity that is separate from the participating firms. 
B) A strategic alliance is a more permanent and binding arrangement than a joint venture. 
C) Strategic alliances are of more value to the participating firms than joint ventures. 
D) Joint ventures can be used for cross-border alliances but strategic alliances cannot. 
A) A joint venture results in the formation of a new entity that is separate from the participating firms. 
B) A strategic alliance is a more permanent and binding arrangement than a joint venture. 
C) Strategic alliances are of more value to the participating firms than joint ventures. 
D) Joint ventures can be used for cross-border alliances but strategic alliances cannot.

Question 15

The per share value of a target in a merger or acquisition is determined by:

Accepted Answer

A) dividing the equity value of the target by the number of shares outstanding. 
B) dividing the total value of the target by the number of shares that the target is authorized to issue. 
C) multiplying the number of shares outstanding by the market price of the shares. 
D) adding the equity value of the firm and the market price of its shares and dividing by the number of shares outstanding. 
A) dividing the equity value of the target by the number of shares outstanding. 
B) dividing the total value of the target by the number of shares that the target is authorized to issue. 
C) multiplying the number of shares outstanding by the market price of the shares. 
D) adding the equity value of the firm and the market price of its shares and dividing by the number of shares outstanding.

Question 16

In evaluating a target in a merger or acquisition,if the target has outstanding debt:

Accepted Answer

A) the debt will probably discourage the acquiring firm from pursuing the merger or acquisition. 
B) that debt must be added to the estimated value of the target to determine the target's equity value. 
C) that debt must be subtracted from the estimated value of the target to determine the target's equity value. 
D) that debt must be retired before the merger or acquisition can proceed. 
A) the debt will probably discourage the acquiring firm from pursuing the merger or acquisition. 
B) that debt must be added to the estimated value of the target to determine the target's equity value. 
C) that debt must be subtracted from the estimated value of the target to determine the target's equity value. 
D) that debt must be retired before the merger or acquisition can proceed.

Question 17

An arrangement in which firms share resources or develop or market products,is generally referred to as a:

Accepted Answer

A) joint venture. 
B) strategic alliance. 
C) distribution agreement. 
D) merger. 
A) joint venture. 
B) strategic alliance. 
C) distribution agreement. 
D) merger.

Question 18

Large financial entities and very wealthy individuals who have funds to invest are the primary source of:

Accepted Answer

A) private equity funds. 
B) cross-border M&A funds. 
C) hedge funds. 
D) globalized funds. 
A) private equity funds. 
B) cross-border M&A funds. 
C) hedge funds. 
D) globalized funds.

Question 19

An important use of joint ventures in cross-border situations is:

Accepted Answer

A) to avoid double taxation. 
B) to create a joint venture to take advantage of local financing or incentives. 
C) to keep the investment by foreign entities in a country secret from officials in that country. 
D) to avoid local remittance restrictions. 
A) to avoid double taxation. 
B) to create a joint venture to take advantage of local financing or incentives. 
C) to keep the investment by foreign entities in a country secret from officials in that country. 
D) to avoid local remittance restrictions.

Question 20

One of the primary obstacles for cross-border mergers and acquisitions is:

Accepted Answer

A) the regulatory requirements that must be met in each country that is the domicile of a firm involved in the merger or acquisition. 
B) deciding which currency that two firms that do not use the same currency will use after the merger or acquisition is completed. 
C) consolidating the separate identities of the firms involved in the merger or acquisition into a single identity. 
D) integrating the overlapping product lines of the firms involved in the merger or acquisition. 
A) the regulatory requirements that must be met in each country that is the domicile of a firm involved in the merger or acquisition. 
B) deciding which currency that two firms that do not use the same currency will use after the merger or acquisition is completed. 
C) consolidating the separate identities of the firms involved in the merger or acquisition into a single identity. 
D) integrating the overlapping product lines of the firms involved in the merger or acquisition.

The more visible costs of a merger,such as professional fees,are classified as:

Specific technologies that an MNC may need are not always available everywhere.This uneven dispersion of technologies is due to factors such as:

What is the primary difference between outsourcing agreements and procurement agreements?

Disruptions in commodity prices and inflation are referred to as:

_____________________ are separate entities created by two or more existing entities to accomplish a specific business purpose.

A primary difference in private equity funds and hedge funds is that:

What is the difference between private equity funds and hedge funds?

Why are terminal values important in valuing the target in a merger or acquisition?

What category of merger costs are typically incurred post-merger?

Most large mergers today use _____________ to finance the transaction.

In a joint venture where the local firm has the right to buy the MNC's interest in the joint venture,the MNC is said to be:

Real options can affect the value of a potential target in a merger or acquisition.The acquiring firm,in determining how real options affect the value of the target must,most importantly,consider:

Why is overcapacity sometimes a negative condition for a firm?

What is the primary difference between a strategic alliance and a joint venture?

The per share value of a target in a merger or acquisition is determined by:

In evaluating a target in a merger or acquisition,if the target has outstanding debt:

An arrangement in which firms share resources or develop or market products,is generally referred to as a:

Large financial entities and very wealthy individuals who have funds to invest are the primary source of:

An important use of joint ventures in cross-border situations is:

One of the primary obstacles for cross-border mergers and acquisitions is:

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

The more visible costs of a merger,such as professional fees,are classified as:

Specific technologies that an MNC may need are not always available everywhere.This uneven dispersion of technologies is due to factors such as:

What is the primary difference between outsourcing agreements and procurement agreements?

Disruptions in commodity prices and inflation are referred to as:

_____________________ are separate entities created by two or more existing entities to accomplish a specific business purpose.

A primary difference in private equity funds and hedge funds is that:

What is the difference between private equity funds and hedge funds?

Why are terminal values important in valuing the target in a merger or acquisition?

What category of merger costs are typically incurred post-merger?

Most large mergers today use _____________ to finance the transaction.

In a joint venture where the local firm has the right to buy the MNC's interest in the joint venture,the MNC is said to be:

Real options can affect the value of a potential target in a merger or acquisition.The acquiring firm,in determining how real options affect the value of the target must,most importantly,consider:

Why is overcapacity sometimes a negative condition for a firm?

What is the primary difference between a strategic alliance and a joint venture?

The per share value of a target in a merger or acquisition is determined by:

In evaluating a target in a merger or acquisition,if the target has outstanding debt:

An arrangement in which firms share resources or develop or market products,is generally referred to as a:

Large financial entities and very wealthy individuals who have funds to invest are the primary source of:

An important use of joint ventures in cross-border situations is:

One of the primary obstacles for cross-border mergers and acquisitions is:

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