Question 1

Blocked funds are cash flows that:

Accepted Answer

A)  come in regular intervals in standardized amounts or blocks. 
B)  have been restricted in transfer out of a local country. 
C)  come from a certain sector or region of the world. 
D)  none of the above 
A)  come in regular intervals in standardized amounts or blocks. 
B)  have been restricted in transfer out of a local country. 
C)  come from a certain sector or region of the world. 
D)  none of the above

Question 2

In practice,when expanding into other countries,firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

Accepted Answer

A) True 
 B)False

Question 3

Transnationals are firms that have operations in more than one country and conduct their business through branches,foreign subsidiaries,or joint ventures with host country firms.

Accepted Answer

A) True 
 B)False

Question 4

A ________ is a shared ownership in a foreign business.

Accepted Answer

A)  licensing agreement 
B)  greenfield investment 
C)  joint venture 
D)  wholly-owned affiliate 
A)  licensing agreement 
B)  greenfield investment 
C)  joint venture 
D)  wholly-owned affiliate

Question 5

Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.

Accepted Answer

A) True 
 B)False

Question 6

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Accepted Answer

A)  fewer agency costs 
B)  fewer direct advantages from research and development 
C)  a greater risk of losing markets to copycat goods producers 
D)  an inability to exploit R&D as effectively as if also invested abroad 
A)  fewer agency costs 
B)  fewer direct advantages from research and development 
C)  a greater risk of losing markets to copycat goods producers 
D)  an inability to exploit R&D as effectively as if also invested abroad

Question 8

________ industries are NOT typically "protected" by government policy.

Accepted Answer

A)  Textiles 
B)  Defense 
C)  Agriculture 
D)  "Infant" industries 
A)  Textiles 
B)  Defense 
C)  Agriculture 
D)  "Infant" industries

Question 9

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

Accepted Answer

A)  prior to investing 
B)  during operations 
C)  reinvesting in the local country when funds cannot be moved 
D)  all of the above are stages at which MNEs can react 
A)  prior to investing 
B)  during operations 
C)  reinvesting in the local country when funds cannot be moved 
D)  all of the above are stages at which MNEs can react

Question 10

As a general rule,the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

Accepted Answer

A) True 
 B)False

Question 11

The speed at which inventory moves through a manufacturing process is known as:

Accepted Answer

A)  supply chain management. 
B)  working capital management. 
C)  inventory velocity. 
D)  warp speed. 
A)  supply chain management. 
B)  working capital management. 
C)  inventory velocity. 
D)  warp speed.

Question 12

A/An ________ would be an example of a location-specific 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 13

According to your authors,MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an ________ or ________ level view.

Accepted Answer

A)  foreign; domestic 
B)  micro; macro 
C)  internal; external 
D)  local; global 
A)  foreign; domestic 
B)  micro; macro 
C)  internal; external 
D)  local; global

Question 14

Which of the following is NOT an advantage to a joint venture?

Accepted Answer

A)  Possible loss of opportunity to enter the foreign market with FDI later. 
B)  The local partner understands the customs and mores of the foreign market. 
C)  The local partner can provide competent management at many levels. 
D)  May be a realistic alternative when 100% foreign ownership is not allowed. 
A)  Possible loss of opportunity to enter the foreign market with FDI later. 
B)  The local partner understands the customs and mores of the foreign market. 
C)  The local partner can provide competent management at many levels. 
D)  May be a realistic alternative when 100% foreign ownership is not allowed.

Question 15

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds,and political risk is often minimized.

Accepted Answer

A) True 
 B)False

Question 16

List and explain three strategic motives why firms become multinationals and give an example of each.

Accepted Answer

The authors provide 5 strategic motives

Question 17

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

Accepted Answer

A)  Inconvertibility 
B)  Expropriation 
C)  Business income risk 
D)  none of the above 
A)  Inconvertibility 
B)  Expropriation 
C)  Business income risk 
D)  none of the above

Question 18

In deciding whether to invest abroad,management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home market.The competitive advantage must be:

Accepted Answer

A)  firm specific. 
B)  not easily copied. 
C)  in a transferable form. 
D)  all of the above 
A)  firm specific. 
B)  not easily copied. 
C)  in a transferable form. 
D)  all of the above

Question 19

An investment agreement spells out specific rights and responsibilities of both the foreign firm and the host government.What are the main financial policies that should be included in an investment agreement?

Accepted Answer

An investment agreement spells out speci

Question 20

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

Accepted Answer

Blocked funds are those that have been r

Blocked funds are cash flows that:

In practice,when expanding into other countries,firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

Transnationals are firms that have operations in more than one country and conduct their business through branches,foreign subsidiaries,or joint ventures with host country firms.

A ________ is a shared ownership in a foreign business.

Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

________ industries are NOT typically "protected" by government policy.

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

As a general rule,the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

The speed at which inventory moves through a manufacturing process is known as:

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

According to your authors,MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an or level view.

Which of the following is NOT an advantage to a joint venture?

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds,and political risk is often minimized.

List and explain three strategic motives why firms become multinationals and give an example of each.

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

In deciding whether to invest abroad,management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home market.The competitive advantage must be:

An investment agreement spells out specific rights and responsibilities of both the foreign firm and the host government.What are the main financial policies that should be included in an investment agreement?

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

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

Blocked funds are cash flows that:

In practice,when expanding into other countries,firms have been observed to follow a sequential search pattern as described in the behavioral theory of the firm.

Transnationals are firms that have operations in more than one country and conduct their business through branches,foreign subsidiaries,or joint ventures with host country firms.

A ________ is a shared ownership in a foreign business.

Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

________ industries are NOT typically "protected" by government policy.

Which of the following is NOT one of the stages at which MNEs can react to the potential for blocked funds?

As a general rule,the decision about where to invest abroad for the first time is the same as the decision about where to reinvest abroad.

The speed at which inventory moves through a manufacturing process is known as:

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

According to your authors,MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an ________ or ________ level view.

Which of the following is NOT an advantage to a joint venture?

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds,and political risk is often minimized.

List and explain three strategic motives why firms become multinationals and give an example of each.

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising control over the firm's assets.

In deciding whether to invest abroad,management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home market.The competitive advantage must be:

An investment agreement spells out specific rights and responsibilities of both the foreign firm and the host government.What are the main financial policies that should be included in an investment agreement?

What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.

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

According to your authors,MNEs can anticipate government regulations that are discriminatory or wealth depriving from a/an or level view.