Question 1

MNCs may use _______ arbitrage to resist government price controls or union wage pressures.

Accepted Answer

A) tax 
B) financial system 
C) regulatory 
D) triangular 
A) tax 
B) financial system 
C) regulatory 
D) triangular

Question 2

Arco ships 15 million barrels of refined oil monthly from Arco-Canada to Arco-U.S.Arco-U.S.has to pay a U.S.ad valorem tariff of 6%.Tax accountants advise Arco that it can set the transfer price in the range of $15-$18 per barrel of product.The current price is set at $16 a barrel.If Arco-Canada's tax rate is 50% the U.S.rate is 46%. ,what is the incremental cash flow per month associated with using the optimal transfer price?

Accepted Answer

A) $236,000 
B) $1,343,000 
C) $1,086,000 
D) $32,670 
A) $236,000 
B) $1,343,000 
C) $1,086,000 
D) $32,670

Question 3

The type of tariff that levies import duties that are set as a percentage of the value of the imported goods is known as the

Accepted Answer

A) ad valorem tariff 
B) protective tariff 
C) revenue tariff 
D) flat-rate tariff 
A) ad valorem tariff 
B) protective tariff 
C) revenue tariff 
D) flat-rate tariff

Question 4

Which one of the following is NOT an information factor in developing a global remittance policy?

Accepted Answer

A) subsidiary financing requirements 
B) costs of external capital 
C) financial channels available 
D) inventory stocking policies 
A) subsidiary financing requirements 
B) costs of external capital 
C) financial channels available 
D) inventory stocking policies

Question 5

One disadvantage of a reinvoicing center is _______ .

Accepted Answer

A) less chance of local government suspicion 
B) less communication costs 
C) more communications costs 
D) more exchange rate risk 
A) less chance of local government suspicion 
B) less communication costs 
C) more communications costs 
D) more exchange rate risk

Question 6

Leading and lagging is primarily of value because of

Accepted Answer

A) tax regulations 
B) foreign exchange risk 
C) expropriation risk 
D) exchange and capital controls 
A) tax regulations 
B) foreign exchange risk 
C) expropriation risk 
D) exchange and capital controls

Question 7

Which one of the following would government taxing authorities NOT use to establish arm's length pricing?

Accepted Answer

A) comparable uncontrolled price method 
B) resale price method 
C) cost-plus method 
D) the law of one price 
A) comparable uncontrolled price method 
B) resale price method 
C) cost-plus method 
D) the law of one price

Question 8

The value of the multinational financial system is NOT based on the ability to take advantage of

Accepted Answer

A) tax arbitrage 
B) financial market arbitrage 
C) regulatory system arbitrage 
D) differing political systems between subsidiaries 
A) tax arbitrage 
B) financial market arbitrage 
C) regulatory system arbitrage 
D) differing political systems between subsidiaries

Question 9

One advantage of the use of fees or royalties to manage the MNC's cash flow is ____.

Accepted Answer

A) less communications costs 
B) less exchange rate risk 
C) more favorable tax treatment by the parent country's government 
D) less suspicion by the host government 
A) less communications costs 
B) less exchange rate risk 
C) more favorable tax treatment by the parent country's government 
D) less suspicion by the host government

Question 10

Which one of the following is a real rather than a financial flow?

Accepted Answer

A) capital goods 
B) dividends 
C) equity investment 
D) credit on goods and services 
A) capital goods 
B) dividends 
C) equity investment 
D) credit on goods and services

Question 11

Which one of the following would NOT be an important use of transfer pricing by a MNC?

Accepted Answer

A) avoiding customs inspections 
B) avoiding exchange controls 
C) reducing taxes 
D) reducing tariffs. 
A) avoiding customs inspections 
B) avoiding exchange controls 
C) reducing taxes 
D) reducing tariffs.

Question 12

Leading and lagging strategies have several advantages EXCEPT

Accepted Answer

A) no formal note of indebtedness is needed 
B) governments are less like to interfere with payments on intercompany accounts 
C) interest must be charged on all intercompany accounts 
D) intercompany accounts up to six months are interest free 
A) no formal note of indebtedness is needed 
B) governments are less like to interfere with payments on intercompany accounts 
C) interest must be charged on all intercompany accounts 
D) intercompany accounts up to six months are interest free

Question 13

______ is the pricing of internally traded goods for the purpose of moving profits to a more tax-friendly nation.

Accepted Answer

A) Transfer pricing 
B) Leading and lagging 
C) Arm's length pricing 
D) Advanced pricing 
A) Transfer pricing 
B) Leading and lagging 
C) Arm's length pricing 
D) Advanced pricing

Question 14

Reinvoicing centers are usually set up in __________ jurisdictions.

Accepted Answer

A) economically secure 
B) politically stable 
C) high-tax 
D) low-tax 
A) economically secure 
B) politically stable 
C) high-tax 
D) low-tax

Question 15

The best ways to increase the present value of after-tax remittances from overseas is are to

Accepted Answer

A) invest parent funds as debt rather than equity 
B) borrow in the local currency 
C) hedge exchange risk 
D) speed up the payment of dividends 
A) invest parent funds as debt rather than equity 
B) borrow in the local currency 
C) hedge exchange risk 
D) speed up the payment of dividends

MNCs may use _______ arbitrage to resist government price controls or union wage pressures.

The type of tariff that levies import duties that are set as a percentage of the value of the imported goods is known as the

Which one of the following is NOT an information factor in developing a global remittance policy?

One disadvantage of a reinvoicing center is _______ .

Leading and lagging is primarily of value because of

Which one of the following would government taxing authorities NOT use to establish arm's length pricing?

The value of the multinational financial system is NOT based on the ability to take advantage of

One advantage of the use of fees or royalties to manage the MNC's cash flow is ____.

Which one of the following is a real rather than a financial flow?

Which one of the following would NOT be an important use of transfer pricing by a MNC?

Leading and lagging strategies have several advantages EXCEPT

______ is the pricing of internally traded goods for the purpose of moving profits to a more tax-friendly nation.

Reinvoicing centers are usually set up in __________ jurisdictions.

The best ways to increase the present value of after-tax remittances from overseas is are to

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Filters

Exam 20: Managing the Multinational Financial System

MNCs may use _______ arbitrage to resist government price controls or union wage pressures.

The type of tariff that levies import duties that are set as a percentage of the value of the imported goods is known as the

Which one of the following is NOT an information factor in developing a global remittance policy?

One disadvantage of a reinvoicing center is _______ .

Leading and lagging is primarily of value because of

Which one of the following would government taxing authorities NOT use to establish arm's length pricing?

The value of the multinational financial system is NOT based on the ability to take advantage of

One advantage of the use of fees or royalties to manage the MNC's cash flow is ____.

Which one of the following is a real rather than a financial flow?

Which one of the following would NOT be an important use of transfer pricing by a MNC?

Leading and lagging strategies have several advantages EXCEPT

______ is the pricing of internally traded goods for the purpose of moving profits to a more tax-friendly nation.

Reinvoicing centers are usually set up in __________ jurisdictions.

The best ways to increase the present value of after-tax remittances from overseas is are to

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

Functions of Euromarkets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Filters