Question 1

A/An ________ would be an example of an owner-specific advantage for an MNE.

Accepted Answer

A)  patent 
B)  economy of scale 
C)  economy of scope 
D)  all of the above 
A)  patent 
B)  economy of scale 
C)  economy of scope 
D)  all of the above

Question 2

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Accepted Answer

A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed. 
A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed.

Question 3

A/An ________ would be an example of an internalization advantage for an MNE.

Accepted Answer

A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information 
A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information

Question 4

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

Accepted Answer

A)  factor conditions 
B)  demand conditions 
C)  related and supporting industries 
D)  All of the above are factors of the diamond of national advantage. 
A)  factor conditions 
B)  demand conditions 
C)  related and supporting industries 
D)  All of the above are factors of the diamond of national advantage.

Question 5

A ________ loan,also known as ________ is a parent-to-affiliate loan channeled through a financial intermediary such as a large commercial bank.

Accepted Answer

A)  fronting; link financing 
B)  parallel; a back-to-back loan 
C)  fronting; a back-to-back loan 
D)  link financing; parallel loan 
A)  fronting; link financing 
B)  parallel; a back-to-back loan 
C)  fronting; a back-to-back loan 
D)  link financing; parallel loan

Question 6

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

Accepted Answer

The OLI Paradigm is an attempt to develo

Question 7

Greenfield investments are typically ________ and ________ than cross-border acquisition.

Accepted Answer

A)  slower; more uncertain 
B)  faster; of greater certainty 
C)  slower; of greater certainty 
D)  faster; more uncertain 
A)  slower; more uncertain 
B)  faster; of greater certainty 
C)  slower; of greater certainty 
D)  faster; more uncertain

Question 8

Governance risk due to goal conflict between an MNE and its host government is the main political ________ risk.

Accepted Answer

A)  firm-specific 
B)  country-specific 
C)  global-specific 
D)  cultural-specific 
A)  firm-specific 
B)  country-specific 
C)  global-specific 
D)  cultural-specific

Question 9

OPIC stands for:

Accepted Answer

A)  Organization for the Prevention of Insufficient Capitalization. 
B)  Organization of Petroleum Importing Countries. 
C)  Overseas Private Investment Corporation. 
D)  Overseas Public Insurance Commission. 
A)  Organization for the Prevention of Insufficient Capitalization. 
B)  Organization of Petroleum Importing Countries. 
C)  Overseas Private Investment Corporation. 
D)  Overseas Public Insurance Commission.

Question 10

A country can react to the potential for blocked funds prior to making an investment,during operations,or by investing in the local country in assets than maintain their value.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations:

Accepted Answer

A)  low cost and productive labor force. 
B)  unique sources of raw materials. 
C)  defensive investments. 
D)  an expansive monetary policy. 
A)  low cost and productive labor force. 
B)  unique sources of raw materials. 
C)  defensive investments. 
D)  an expansive monetary policy.

Question 12

The owner-specific advantages of OLI must be:

Accepted Answer

A)  firm-specific. 
B)  not easily copied. 
C)  transferable to foreign subsidiaries. 
D)  all of the above 
A)  firm-specific. 
B)  not easily copied. 
C)  transferable to foreign subsidiaries. 
D)  all of the above

Question 13

Based on observations of firms that have successfully invested abroad,we can conclude that one of the competitive advantages enjoyed by MNEs is:

Accepted Answer

A)  managerial expertise. 
B)  financial strength. 
C)  competitiveness of their home markets. 
D)  all of the above are competitive advantages. 
A)  managerial expertise. 
B)  financial strength. 
C)  competitiveness of their home markets. 
D)  all of the above are competitive advantages.

Question 14

Economists have observed that firms tend to invest first in countries that are too far distant in psychic distance (similar cultural,legal,and institutional environment).

Accepted Answer

A) True 
 B)False

Question 15

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

Accepted Answer

A) True 
 B)False

Question 16

The decision about where to invest abroad is influenced by behavioral factors.Explain the behavioral approach to FDI.

Accepted Answer

The behavioral approach to analyzing the

Question 17

Small- and medium-size firms often attract foreign investors and achieve a global cost of capital.

Accepted Answer

A) True 
 B)False

Question 18

An example of economies of scale in financing include:

Accepted Answer

A)  being able to access the Euroequity, Eurobond, and Eurocurrency markets. 
B)  being able to ship product in shiploads or carloads. 
C)  being able to use large-scale plant and equipment. 
D)  all of the above 
A)  being able to access the Euroequity, Eurobond, and Eurocurrency markets. 
B)  being able to ship product in shiploads or carloads. 
C)  being able to use large-scale plant and equipment. 
D)  all of the above

Question 19

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Accepted Answer

A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages. 
A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages.

Question 20

Many problems such as poverty,environmental concerns,and cyber attacks are beyond the capabilities of MNEs alone to correct and require government participation as well.

Accepted Answer

A) True 
 B)False

A/An ________ would be an example of an owner-specific advantage for an MNE.

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

A/An ________ would be an example of an internalization advantage for an MNE.

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

A loan,also known as is a parent-to-affiliate loan channeled through a financial intermediary such as a large commercial bank.

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

Greenfield investments are typically and than cross-border acquisition.

Governance risk due to goal conflict between an MNE and its host government is the main political ________ risk.

OPIC stands for:

A country can react to the potential for blocked funds prior to making an investment,during operations,or by investing in the local country in assets than maintain their value.

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations:

The owner-specific advantages of OLI must be:

Based on observations of firms that have successfully invested abroad,we can conclude that one of the competitive advantages enjoyed by MNEs is:

Economists have observed that firms tend to invest first in countries that are too far distant in psychic distance (similar cultural,legal,and institutional environment).

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

The decision about where to invest abroad is influenced by behavioral factors.Explain the behavioral approach to FDI.

Small- and medium-size firms often attract foreign investors and achieve a global cost of capital.

An example of economies of scale in financing include:

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Many problems such as poverty,environmental concerns,and cyber attacks are beyond the capabilities of MNEs alone to correct and require government participation as well.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 17: Foreign Direct Investment and Political Risk

A/An ________ would be an example of an owner-specific advantage for an MNE.

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

A/An ________ would be an example of an internalization advantage for an MNE.

Which of the following is NOT a factor of Porter's "diamond of national advantage"?

A ________ loan,also known as ________ is a parent-to-affiliate loan channeled through a financial intermediary such as a large commercial bank.

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

Greenfield investments are typically ________ and ________ than cross-border acquisition.

Governance risk due to goal conflict between an MNE and its host government is the main political ________ risk.

OPIC stands for:

A country can react to the potential for blocked funds prior to making an investment,during operations,or by investing in the local country in assets than maintain their value.

Which of the following is NOT a market imperfection or genuine comparative advantage that attracts FDI to particular locations:

The owner-specific advantages of OLI must be:

Based on observations of firms that have successfully invested abroad,we can conclude that one of the competitive advantages enjoyed by MNEs is:

Economists have observed that firms tend to invest first in countries that are too far distant in psychic distance (similar cultural,legal,and institutional environment).

The authors were unable to identify in lesser developed countries specific firms that are nearing the status of global MNE.

The decision about where to invest abroad is influenced by behavioral factors.Explain the behavioral approach to FDI.

Small- and medium-size firms often attract foreign investors and achieve a global cost of capital.

An example of economies of scale in financing include:

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Many problems such as poverty,environmental concerns,and cyber attacks are beyond the capabilities of MNEs alone to correct and require government participation as well.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

A loan,also known as is a parent-to-affiliate loan channeled through a financial intermediary such as a large commercial bank.

Greenfield investments are typically and than cross-border acquisition.