Question 1

What is meant by the statement that international projects are often "strategic" in nature?

Accepted Answer

A) Firms often undertake a small project in a foreign country to learn about the foreign country and market before making a larger commitment to that country and market. 
B) A foreign investment has to be part of a firm's larger business strategy. 
C) Firms often consider projects in other countries from a strategic or broad view rather than concentrating on the tactical or detailed aspects of the project. 
D) Firms that do not have a strategy before undertaking a project in a foreign market cannot be successful. 
A) Firms often undertake a small project in a foreign country to learn about the foreign country and market before making a larger commitment to that country and market. 
B) A foreign investment has to be part of a firm's larger business strategy. 
C) Firms often consider projects in other countries from a strategic or broad view rather than concentrating on the tactical or detailed aspects of the project. 
D) Firms that do not have a strategy before undertaking a project in a foreign market cannot be successful.

Question 2

In analyzing a foreign project,which is easier to estimate,costs or revenue?

Accepted Answer

A) Revenue 
B) It depends on the project 
C) Cost 
D) Both are equally easy to estimate 
A) Revenue 
B) It depends on the project 
C) Cost 
D) Both are equally easy to estimate

Question 3

In many cases,firms considering projects in foreign countries will:

Accepted Answer

A) produce and sell its product in the foreign country as its first operation in that foreign country. 
B) negotiate contracts with the government of the foreign country before conducting any operations in the foreign country. 
C) sell its product in a foreign country first and then consider starting production of its product in that foreign country. 
D) produce its product in a foreign country and then consider selling its product in that foreign country. 
A) produce and sell its product in the foreign country as its first operation in that foreign country. 
B) negotiate contracts with the government of the foreign country before conducting any operations in the foreign country. 
C) sell its product in a foreign country first and then consider starting production of its product in that foreign country. 
D) produce its product in a foreign country and then consider selling its product in that foreign country.

Question 4

In most projects,the typical unit sales forecast will:

Accepted Answer

A) increase initially and decrease toward the end of the project. 
B) remain constant throughout the project. 
C) increase initially and then remain constant until the end of the project. 
D) increase steadily until the end of the project. 
A) increase initially and decrease toward the end of the project. 
B) remain constant throughout the project. 
C) increase initially and then remain constant until the end of the project. 
D) increase steadily until the end of the project.

Question 5

What is the difference between "off shoring" and "outsourcing"?

Accepted Answer

A) Off shoring refers to manufacturing in others countries,while outsourcing refers to buying raw materials in other countries. 
B) Off shoring is an activity of MNCs,while outsourcing is an activity of purely domestic firms. 
C) Off shoring refers to obtaining foreign labor to work on domestic projects,while outsourcing refers to using contract domestic labor for domestic projects. 
D) There is no difference,they are interchangeable terms. 
A) Off shoring refers to manufacturing in others countries,while outsourcing refers to buying raw materials in other countries. 
B) Off shoring is an activity of MNCs,while outsourcing is an activity of purely domestic firms. 
C) Off shoring refers to obtaining foreign labor to work on domestic projects,while outsourcing refers to using contract domestic labor for domestic projects. 
D) There is no difference,they are interchangeable terms.

Question 6

What three taxes might be incurred when an MNC conducts a project through a foreign subsidiary?

Accepted Answer

A foreign subsidiary is a separate organ

Question 7

_____________________ are the taxes that a subsidiary must pay to its host country when the subsidiary pays dividends to its parent MNC.

Accepted Answer

A) Reparation taxes 
B) Excess profit taxes 
C) Income taxes 
D) Withholding taxes 
A) Reparation taxes 
B) Excess profit taxes 
C) Income taxes 
D) Withholding taxes

Question 8

What is decentralization and what does it mean for MNCs?

Accepted Answer

Decentralization refers to how firms mak

Question 9

The least difficult aspect of the cash flow calculation is:

Accepted Answer

A) determining the profit that the firm can expect from the project. 
B) determining the tax consequences of the project to the firm. 
C) estimating the direct operating expenses that the project will require. 
D) estimating the initial investment that the firm has to make in the project. 
A) determining the profit that the firm can expect from the project. 
B) determining the tax consequences of the project to the firm. 
C) estimating the direct operating expenses that the project will require. 
D) estimating the initial investment that the firm has to make in the project.

Question 10

What are the trends in outsourcing?

Accepted Answer

A) The scope of outsourcing is declining. 
B) The scope of outsourcing is expanding. 
C) The scope of outsourcing is remaining constant. 
D) Outsourcing is being replaced by off shoring. 
A) The scope of outsourcing is declining. 
B) The scope of outsourcing is expanding. 
C) The scope of outsourcing is remaining constant. 
D) Outsourcing is being replaced by off shoring.

Question 11

What effect does the cash flow from foreign projects have on the NPV calculation?

Accepted Answer

A) NPV calculations are not possible if the cash flow is to be received in a foreign currency. 
B) NPV calculations are not affected by the currency in which the cash flow is received. 
C) NPV calculations for foreign projects have to consider currency values at the times that cash flow from the projects will be received. 
D) The discount rate used in NPV calculations takes into account the value of currencies in which cash flow is received. 
A) NPV calculations are not possible if the cash flow is to be received in a foreign currency. 
B) NPV calculations are not affected by the currency in which the cash flow is received. 
C) NPV calculations for foreign projects have to consider currency values at the times that cash flow from the projects will be received. 
D) The discount rate used in NPV calculations takes into account the value of currencies in which cash flow is received.

Question 12

Typically,______________________ are arrangements in which an MNC agrees to undertake a project in a foreign country in conjunction with local firms and to share both the responsibilities and profits involved in the project.

Accepted Answer

A) partnerships 
B) joint venture agreements 
C) trade agreements 
D) sale and manufacture agreements 
A) partnerships 
B) joint venture agreements 
C) trade agreements 
D) sale and manufacture agreements

Question 13

The cost associated with a project in a foreign country involves not only the labor rates but also:

Accepted Answer

A) legal restrictions on labor in the country where the project will take place. 
B) how long the project will last. 
C) whether the firm has already spent some money on the project. 
D) the employment policies of the firm. 
A) legal restrictions on labor in the country where the project will take place. 
B) how long the project will last. 
C) whether the firm has already spent some money on the project. 
D) the employment policies of the firm.

Question 14

Why is there generally more variation in organizational form in foreign projects compared to domestic projects?

Accepted Answer

A) Firms are freer to experiment with organizational forms in dealing with foreign projects than they are with domestic projects. 
B) Since most international projects are in the form of joint ventures,the joint venture agreements dictate the organizational form of the foreign project. 
C) Host-country business regulations and tax laws in both home-countries and host-countries result in more variation in the organization of foreign projects. 
D) Host-countries generally dictate that the organizational form of the foreign project has to be different from the organizational form of the firm that is operating the foreign project. 
A) Firms are freer to experiment with organizational forms in dealing with foreign projects than they are with domestic projects. 
B) Since most international projects are in the form of joint ventures,the joint venture agreements dictate the organizational form of the foreign project. 
C) Host-country business regulations and tax laws in both home-countries and host-countries result in more variation in the organization of foreign projects. 
D) Host-countries generally dictate that the organizational form of the foreign project has to be different from the organizational form of the firm that is operating the foreign project.

Question 15

Expanding sales to new markets in foreign countries can benefit MNCs not only by increasing revenues,but also by:

Accepted Answer

A) increasing the selection of products offered. 
B) decreasing the need to expand domestic markets. 
C) increasing access to foreign subsidies for new production facilities. 
D) decreasing costs as a result of economies of scale. 
A) increasing the selection of products offered. 
B) decreasing the need to expand domestic markets. 
C) increasing access to foreign subsidies for new production facilities. 
D) decreasing costs as a result of economies of scale.

Question 16

In conducting cash flow analysis,information about production and supply chain are needed to:

Accepted Answer

A) determine when the expected revenues will be received. 
B) select the suppliers who will be used for the project being considered. 
C) compute the cost of goods sold. 
D) decide where production facilities will be located. 
A) determine when the expected revenues will be received. 
B) select the suppliers who will be used for the project being considered. 
C) compute the cost of goods sold. 
D) decide where production facilities will be located.

Question 17

In an NPV calculation,the final cash flow is typically the:

Accepted Answer

A) final payment on the investment in the assets used in the project. 
B) proceeds from the sale of the last products produced by the project. 
C) salvage value obtained by the firm by selling the remaining assets of the project. 
D) tax credits that the firm earns through the investment in the project. 
A) final payment on the investment in the assets used in the project. 
B) proceeds from the sale of the last products produced by the project. 
C) salvage value obtained by the firm by selling the remaining assets of the project. 
D) tax credits that the firm earns through the investment in the project.

Question 18

From the standpoint of cash flow,what is the most obvious difference between domestic and foreign projects?

Accepted Answer

A) The cash flow from domestic projects is much more certain than it is from foreign projects. 
B) Cash flow from foreign projects is usually much larger than it is from domestic projects. 
C) Cash flow from domestic projects is received much quicker than cash flow from foreign projects is received. 
D) Domestic projects typically produce cash flow in the domestic currency,while foreign projects produce cash flow in the currency of the foreign country and may even produce cash flow in multiple currencies. 
A) The cash flow from domestic projects is much more certain than it is from foreign projects. 
B) Cash flow from foreign projects is usually much larger than it is from domestic projects. 
C) Cash flow from domestic projects is received much quicker than cash flow from foreign projects is received. 
D) Domestic projects typically produce cash flow in the domestic currency,while foreign projects produce cash flow in the currency of the foreign country and may even produce cash flow in multiple currencies.

Question 19

Buying currency options with strike prices that approximate the break-even value of currencies for a project is an appropriate currency risk management tool,but:

Accepted Answer

A) option strike prices are often not available for the break-even value of currencies. 
B) option strike prices cannot be established before the option date arrives. 
C) option premiums for such options may be prohibitively high. 
D) option premiums are only determined after the options are obtained,so the cost of options are variable. 
A) option strike prices are often not available for the break-even value of currencies. 
B) option strike prices cannot be established before the option date arrives. 
C) option premiums for such options may be prohibitively high. 
D) option premiums are only determined after the options are obtained,so the cost of options are variable.

Question 20

Regulatory actions that impose additional costs on MNCs are considered to be:

Accepted Answer

A) economic risks. 
B) macro-level country risks. 
C) industry-specific risks. 
D) political risks. 
A) economic risks. 
B) macro-level country risks. 
C) industry-specific risks. 
D) political risks.

What is meant by the statement that international projects are often "strategic" in nature?

In analyzing a foreign project,which is easier to estimate,costs or revenue?

In many cases,firms considering projects in foreign countries will:

In most projects,the typical unit sales forecast will:

What is the difference between "off shoring" and "outsourcing"?

What three taxes might be incurred when an MNC conducts a project through a foreign subsidiary?

_____________________ are the taxes that a subsidiary must pay to its host country when the subsidiary pays dividends to its parent MNC.

What is decentralization and what does it mean for MNCs?

The least difficult aspect of the cash flow calculation is:

What are the trends in outsourcing?

What effect does the cash flow from foreign projects have on the NPV calculation?

Typically,______________________ are arrangements in which an MNC agrees to undertake a project in a foreign country in conjunction with local firms and to share both the responsibilities and profits involved in the project.

The cost associated with a project in a foreign country involves not only the labor rates but also:

Why is there generally more variation in organizational form in foreign projects compared to domestic projects?

Expanding sales to new markets in foreign countries can benefit MNCs not only by increasing revenues,but also by:

In conducting cash flow analysis,information about production and supply chain are needed to:

In an NPV calculation,the final cash flow is typically the:

From the standpoint of cash flow,what is the most obvious difference between domestic and foreign projects?

Buying currency options with strike prices that approximate the break-even value of currencies for a project is an appropriate currency risk management tool,but:

Regulatory actions that impose additional costs on MNCs are considered to be:

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

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters

Exam 8: Capital Budgeting

What is meant by the statement that international projects are often "strategic" in nature?

In analyzing a foreign project,which is easier to estimate,costs or revenue?

In many cases,firms considering projects in foreign countries will:

In most projects,the typical unit sales forecast will:

What is the difference between "off shoring" and "outsourcing"?

What three taxes might be incurred when an MNC conducts a project through a foreign subsidiary?

_____________________ are the taxes that a subsidiary must pay to its host country when the subsidiary pays dividends to its parent MNC.

What is decentralization and what does it mean for MNCs?

The least difficult aspect of the cash flow calculation is:

What are the trends in outsourcing?

What effect does the cash flow from foreign projects have on the NPV calculation?

Typically,______________________ are arrangements in which an MNC agrees to undertake a project in a foreign country in conjunction with local firms and to share both the responsibilities and profits involved in the project.

The cost associated with a project in a foreign country involves not only the labor rates but also:

Why is there generally more variation in organizational form in foreign projects compared to domestic projects?

Expanding sales to new markets in foreign countries can benefit MNCs not only by increasing revenues,but also by:

In conducting cash flow analysis,information about production and supply chain are needed to:

In an NPV calculation,the final cash flow is typically the:

From the standpoint of cash flow,what is the most obvious difference between domestic and foreign projects?

Buying currency options with strike prices that approximate the break-even value of currencies for a project is an appropriate currency risk management tool,but:

Regulatory actions that impose additional costs on MNCs are considered to be:

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

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters