Question 1

Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-profit organizations, that have operations in more than one country, and conduct their business through foreign subsidiaries, branches, or joint ventures with host country firms.

Accepted Answer

A) True 
 B)False  True

Question 2

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

Accepted Answer

A)   satisfaction of local demand in the foreign country
B)   to export to foreign markets
C)   political safety and small likelihood of government expropriation of assets
D)   All of the above are market-seeking activities. C

Question 3

Which of the following is NOT a reason governments interfere with comparative advantage?

Accepted Answer

A)   Governments attempt to achieve full employment.
B)   Governments promote economic development.
C)   national self-sufficiency in defense-related industries
D)   All are reasons governments interfere with comparative advantage. D

Question 4

Relative to MNEs, purely domestic firms tend to have GREATER political risk.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is NOT always understood by MNE management?

Accepted Answer

A)   culture, history, and institutions
B)   political risk
C)   foreign exchange risk
D)   financial instruments

Question 6

In the recent past, much of the business development in multinational firms was led by cross-functional teams, teams of professionals who are competent over a broader array of functional fields. Develop an argument as to why this is the case.

Accepted Answer

The answer of In the recent past, much of the...

Question 7

Interest spreads in the eurocurrency market are small for many reasons EXCEPT:

Accepted Answer

A)   Eurocurrency loans are secured loans.
B)   Eurocurrency deposits and loans are made in amounts of $500,000 or more on an unsecured basis.
C)   The eurocurrency is a wholesale market.
D)   Borrowers are usually large corporations or government entities.

Question 8

The securities at the heart of the global capital markets are the Mortgage Backed Securities (MBS). The health and security of the global financial system rely on the quality of these securities.

Accepted Answer

A) True 
 B)False

Question 9

The institutions of global finance are:

Accepted Answer

A)   central banks.
B)   commercial banks.
C)   investment banks.
D)   All of the above are institutions of global finance.

Question 10

Domestic firms do not have foreign exchange risk.

Accepted Answer

A) True 
 B)False

Question 11

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Accepted Answer

A) True 
 B)False

Question 12

Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.

Accepted Answer

A) True 
 B)False

Question 13

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Accepted Answer

A)   evaluation of the credit quality of foreign buyers and sellers
B)   foreign consumer method of payment preferences
C)   credit risk management
D)   evaluation of foreign exchange risk

Question 14

Large international firms are better able to exploit product differentiation than are their local competitors.

Accepted Answer

A) True 
 B)False

Question 15

The theory that suggests specialization by country can increase worldwide production is:

Accepted Answer

A)   the theory of comparative advantage.
B)   the theory of foreign direct investment.
C)   the international Fisher effect.
D)   the theory of working capital management.

Question 16

Which of the following factors of production DO NOT flow freely between countries?

Accepted Answer

A)   raw materials
B)   financial capital
C)   (non-military)  technology
D)   All of the above factors of production flow freely among countries.

Question 17

International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.

Accepted Answer

A) True 
 B)False

Question 18

Describe the structural and managerial changes and challenges experienced by a firm as it moves its operations from domestic to global (globalization process).

Accepted Answer

The answer of Describe the structural and managerial changes and...

Question 19

Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization-the privately held or family-owned business is the prevalent structure-and their goals and measures of performance differ dramatically.

Accepted Answer

A) True 
 B)False

Question 20

Several of the world's major currency exchange rates follow a specific quotation convention that is the result of tradition and history. The exchange rate between the U.S. dollar and the Japanese yen is always quoted as "dollars per Japanese yen."

Accepted Answer

A) True 
 B)False

Exam 1: Multinational Financial Management: Opportunities and Challenges

Multinational enterprises (MNEs) are firms, both for-profit companies and not-for-profit organizations, that have operations in more than one country, and conduct their business through foreign subsidiaries, branches, or joint ventures with host country firms.

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

Which of the following is NOT a reason governments interfere with comparative advantage?

Relative to MNEs, purely domestic firms tend to have GREATER political risk.

Which of the following is NOT always understood by MNE management?

In the recent past, much of the business development in multinational firms was led by cross-functional teams, teams of professionals who are competent over a broader array of functional fields. Develop an argument as to why this is the case.

Interest spreads in the eurocurrency market are small for many reasons EXCEPT:

The securities at the heart of the global capital markets are the Mortgage Backed Securities (MBS). The health and security of the global financial system rely on the quality of these securities.

The institutions of global finance are:

Domestic firms do not have foreign exchange risk.

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Large international firms are better able to exploit product differentiation than are their local competitors.

The theory that suggests specialization by country can increase worldwide production is:

Which of the following factors of production DO NOT flow freely between countries?

International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.

Describe the structural and managerial changes and challenges experienced by a firm as it moves its operations from domestic to global (globalization process).

Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization-the privately held or family-owned business is the prevalent structure-and their goals and measures of performance differ dramatically.

Several of the world's major currency exchange rates follow a specific quotation convention that is the result of tradition and history. The exchange rate between the U.S. dollar and the Japanese yen is always quoted as "dollars per Japanese yen."