International Financial Management 13th Edition Test Bank

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Chapter01:MultinationalFinancialManagement:AnOverview1.ThecommonlyacceptedgoalofanMNCisto:a.maximizeshort-termearnings.b.maximizeshareholderwealth.c.minimizerisk.d.AandC.e.maximizeinternationalsales.ANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge2.Withregardtocorporategoals,anMNCismostlyconcernedwithmaximizing____,andapurelydomesticfirmismostlyconcernedwithmaximizing____.a.shareholderwealth;short-termearningsb.shareholderwealth;shareholderwealthc.short-termearnings;salesvolumed.short-termearnings;shareholderwealthANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge3.ForanMNC,agencycostsaretypically:a.nonexistentb.largerthanagencycostsofasmallpurelydomesticfirm.c.smallerthanagencycostsofasmallpurelydomesticfirm.d.thesameasagencycostsofasmallpurelydomesticfirm.ANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview4.WhichofthefollowingcouldreduceagencyproblemsforanMNC?a.stockoptionsasmanagerialcompensationb.hostiletakeoverthreatc.investormonitoringd.alloftheaboveareformsofcorporatecontrolthatcouldreduceagencyproblemsforanMNC.ANSWER:dDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension5.ThevaluationofanMNCshouldrisewhenaneventcausestheexpectedcashflowsfromforeignsubsidiariesto____andwhentheforeigncurrenciesdenominatingthesecashflowsareexpectedto____.a.decrease;appreciateb.increase;appreciatec.decrease;depreciated.increase;depreciateANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension6.Whichofthefollowingtheoriesidentifiesspecializationasareasonforinternationalbusiness?a.theoryofcomparativeadvantageb.imperfectmarketstheoryc.productcycletheoryd.noneoftheaboveANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview7.Whichofthefollowingtheoriesidentifiesthenontransferabilityofresourcesasareasonforinternationalbusiness?a.theoryofcomparativeadvantageb.imperfectmarketstheoryc.productcycletheoryd.noneoftheaboveANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge8.Whichofthefollowingtheoriessuggeststhatfirmsseektopenetratenewmarketsovertime?a.theoryofcomparativeadvantageb.imperfectmarketstheoryc.productcycletheoryd.noneoftheaboveANSWER:cDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge9.Anindustrybasedonwhichofthefollowingwouldmostlikelytakeadvantageoflowercostsinsomelessdevelopedforeigncountries?a.assemblylineproductionb.specializedprofessionalservicesc.nuclearmissileprogramsd.developmentofmoresophisticatedcomputertechnologyANSWER:aDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application

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Chapter01:MultinationalFinancialManagement:AnOverview10.Duetotherisksinvolvedininternationalbusiness,firmsshould:a.onlyconsiderinternationalbusinessinmajorcountries.b.maintaininternationalbusinesstonomorethan20%oftotalbusiness.c.maintaininternationalbusinesstonomorethan35%oftotalbusiness.d.noneoftheaboveANSWER:dDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension11.Aproductcycleistheprocessbywhichafirmprovidesaspecializedsalesorservicestrategy,supportassistance,andpossiblyaninitialinvestmentinafranchiseinexchangeforperiodicfees.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge12.Licensingistheprocessbywhichafirmprovidesitstechnology(copyrights,patents,trademarks,ortradenames)inexchangeforfeesorsomeotherspecifiedbenefits.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge13.TheagencycostsofanMNCarelikelytobelowerifit:a.scattersitssubsidiariesacrossmanyforeigncountries.b.increasesitsvolumeofinternationalbusiness.c.usesacentralizedmanagementstyle.d.AandB.ANSWER:cDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview14.AnMNCmaybemoreexposedtoagencyproblemsifmostofitssharesareheldby:a.afewmutualfunds.b.awidelydispersedsetofindividualinvestors.c.afewpensionfunds.d.alloftheabovewouldpreventagencyproblems.ANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension15.TheSarbanes-OxleyActimprovedcorporategovernanceofMNCsbecauseit:a.madeexecutivesmoreaccountableforverifyingfinancialstatements.b.eliminatedstockoptionsasaformofcompensation.c.tiedexecutivecompensationtofirmperformance.d.placedalimitontheamountoffundsthatmanagerscanspend.ANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension16.MNCscanimprovetheirinternalcontrolprocessbyallofthefollowing,except:a.establishingacentralizeddatabaseofinformation.b.ensuringthatalldataarereportedconsistentlyamongsubsidiaries.c.ensuringthattheMNCalwaysborrowsfromcountrieswhereinterestratesarelowest.d.usingasystemthatchecksinternaldataforunusualdiscrepancies.ANSWER:cDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge17.Franchisingistheprocessbywhichnationalgovernmentssellstate-ownedoperationstocorporationsandotherinvestors.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview18.TheparentofanMNCcanimplementcompensationplansthatdirectlyrewardthesubsidiarymanagersforenhancingthevalueoftheMNC.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension19.IfapubliclytradedMNC'smanagersmakepoordecisionsthatreduceitsvalue,thatmayencourageotherfirmstoacquiretheMNC.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge20.InstitutionalinvestorssuchasmutualfundsorpensionfundsthathavelargeholdingsofanMNC'sstockdonotnormallywanttotakecontrolofitandthereforehavenoinfluenceovermanagementoftheMNC.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge21.FourMNCsgeneratethesamelevelofsales.TheMNCthat______________________wouldlikelyhavethemostdirectforeigninvestment.a.exportsallofitsproductsb.producesandsellsitsproductslocallyc.importsproductsfromunrelatedfirmsinothercountriesandsellsthemlocallyd.acquiresaforeignfirmthatproducesmostofitsproductstobesoldinthatforeigncountryANSWER:dDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview22.Whichofthefollowingisanexampleofdirectforeigninvestment?a.exportingtoacountryb.establishinglicensingarrangementsinacountryc.purchasingexistingcompaniesinacountryd.investingdirectly(withoutbrokers)inforeignstocksANSWER:cDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application23.Accordingtothetext,licensingallowsafirmto:a.importwithoutbeingsubjecttogovernmentrestrictions.b.provideitstechnologyforafee.c.exportwithoutgovernmentrestrictions.d.noneoftheaboveANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension24.AssumethatanMNCpurchasesaforeignbuilding,andthenleasesthebuildingtoanotherpartyandallowsthatpartytooperatethebusinessinthebuildingfor30yearsifthepartyfollowsstandardssetbytheMNC.Thisprocessisreferredtoas:a.Aforeignacquisition.b.franchising.c.alicensingagreement.d.exporting.ANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview25.Imperfectmarketsreflectconditionsunderwhichfactorsofproductionareimmobile.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge26.TheSarbanes-OxleyAct(SOX),whichwasenactedin2002,requiredMNCsandotherfirmstoimplementaninternalreportingprocessthatcouldbeeasilymonitoredbyexecutivesandtheboardofdirectors.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge27.Ifmarketswereperfect,thenlaborandothercostsofproductionwouldbeperfectlystable(nomovementacrossborders).a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension28.ThevaluationofanMNCisreducediftherequiredrateofreturnonitsinvestmentsinforeigncountriesisreduced.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview29.Whichofthefollowingisnotmentionedinthetextasanadditionalriskresultingfrominternationalbusiness?a.exchangeratefluctuationsb.politicalriskc.interestrateriskd.exposuretoforeigneconomiesANSWER:cDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge30.Licensingobligatesafirmtoprovide____,whilefranchisingobligatesafirmtoprovide____.a.aspecializedsalesorservicestrategy;itstechnologyb.itstechnology;aspecializedsalesorservicestrategyc.itstechnology;itstechnologyd.aspecializedsalesorservicestrategy;aspecializedsalesorservicestrategye.itstechnology;aninitialinvestmentANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge31.Whichofthefollowingisnotawayinwhichagencyproblemscanbereducedthroughcorporatecontrol?a.executivecompensationb.threatofhostiletakeoverc.acquisitionofaforeignsubsidiaryd.monitoringbylargeshareholdersANSWER:cDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview32.Thegoalofamultinationalcorporation(MNC)isthemaximizationofshareholderwealth.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge33.Acentralizedmanagementstyle,wheremajordecisionsaboutaforeignsubsidiaryaremadebytheparentcompany,resultsinanincreaseinagencycosts.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension34.IfaU.S.firmsetsupaplantinMexicotobenefitfromlow-costlabor,itwilllikelyhaveacomparativeadvantageoverotherfirmsinMexicothatsellthesameproduct.a.Trueb.FalseANSWER:bDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application35.AlthoughMNCsmayneedtoconvertcurrenciesoccasionally,theydonotfaceanyexchangeraterisk,asexchangeratesarestableovertime.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview36.OneofthemostprevalentfactorsconflictingwiththerealizationofthegoalofanMNCistheexistenceofagencyproblems.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge37.AcentralizedmanagementstyleforanMNCresultsinrelativelyhighagencycosts.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge38.Theimperfectmarketstheorystatesthatfactorsofproductionaresomewhatimmobile,allowingfirmstocapitalizeonaforeigncountry'sresources.a.Trueb.FalseANSWER:aDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge39.IfaU.S.-basedMNCfocusedentirelyonimporting,thenitsvaluationwouldlikelybeadverselyaffectedifmostcurrencieswereexpectedtoappreciateagainstthedollarovertime.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview40.MNCscommonlyconsideracquiringanexistingforeignoperationbecausethecostislessexpensivethanestablishinganewsubsidiaryofthesamesize.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension41.IfaU.S.-basedMNCfocusedentirelyonexporting,thenitsvaluationwouldlikelybeadverselyaffectedifmostcurrencieswereexpectedtoappreciateagainstthedollarovertime.a.Trueb.FalseANSWER:bDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application42.Ifmarketswereperfect,thenlaborandothercostsofproductionwouldbeeasilytransferable.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.02NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge43.Internationaltrade:a.isarelativelyconservativeapproachtoforeignmarketpenetration.b.entailsminimalrisk.c.doesnotrequirealargeamountofinvestment.d.alloftheabove.ANSWER:dDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview44.AssumethatanAmericanfirmwantstoengageininternationalbusinesswithoutmakingamajorinvestmentintheforeigncountry.Whichmethodisleastappropriateinthissituation?a.internationaltradeb.licensingc.franchisingd.directforeigninvestmentANSWER:dDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application45.ThevaluationofanMNCaccountsforallthecashflowsreceivedbytheforeignsubsidiariesplusallthecashflowsremittedbythesubsidiaries.a.Trueb.FalseANSWER:bDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge46.AnMNC'svaluedependsonallofthefollowing,except:a.theMNC'srequiredrateofreturn.b.theamountoftheMNC'scashflowsinaparticularcurrency.c.theexchangerateatwhichcashflowsareconvertedtodollars.d.alloftheabovefactorsANSWER:dDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge

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Chapter01:MultinationalFinancialManagement:AnOverview47.Whichofthefollowingisnotanexampleofpoliticalrisk?a.Governmentmayimposetaxesonasubsidiary.b.Governmentmayimposebarriersonasubsidiary.c.ConsumersmayboycotttheMNC.d.Consumers'incomelevelsmaydecrease,thusdecreasingconsumption.ANSWER:dDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge48.AmicroeconomicperspectivefocusesonexternalforcessuchaseconomicconditionsthatcanaffectthevalueofanMNCa.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.05.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge49.AssumethatanMNChasasubsidiaryinItaly,whichexportsitsproductstovariouscountriesinEurope.Sinceallofthecountrieswhereitexportsusetheeuroastheircurrency,thisMNCisnotsubjecttoexchangeraterisk.a.Trueb.FalseANSWER:bDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application50.Comparedtoothermethodsofinternationalbusiness,internationaltradegenerallyresultsin____exposuretointernationalpoliticalriskand____exposuretointernationaleconomicconditions.a.higher;lowerb.higher;higherc.lower;higherd.lower;lowerANSWER:dDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.04NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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Chapter01:MultinationalFinancialManagement:AnOverview51.AssumethatBocaCo.wantstoexpanditsbusinesstoJapanandwantscompletecontrolovertheoperationsinJapan.WhichmethodofinternationalbusinessismostappropriateforBocaCo?a.jointventureb.licensingc.partialacquisitionofanexistingJapanesefirmd.establishmentofaJapanesesubsidiaryANSWER:bDIFFICULTY:ModerateLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Application52.AdecentralizedmanagementstyleresultsinrelativelyhighagencycostsforanMNC.a.Trueb.FalseANSWER:aDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.01NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Knowledge53.MNCscommonlyconsiderestablishinganewforeignsubsidiarytoreplacetheirexportingbusinessbecauseitallowsthemtoavoidexchangeraterisk.a.Trueb.FalseANSWER:bDIFFICULTY:EasyLEARNINGOBJECTIVES:INFM.MADU.15.01.03NATIONALSTANDARDS:UnitedStates-BUSPROG.INFM.MADU.15.03STATESTANDARDS:UnitedStates-OH-DISC.INFM.MADU.15.02KEYWORDS:Bloom's:Comprehension

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