Question 1

The perfect market assumptions include each of the following EXCEPT

Accepted Answer

A)  efficient markets 
B)  equal access to costless information 
C)  equal access to market prices 
D)  frictionless markets 
E)  rational investors 
A)  efficient markets 
B)  equal access to costless information 
C)  equal access to market prices 
D)  frictionless markets 
E)  rational investors A

Question 2

Multinational business strategies for preserving or enhancing operating cash flows through multinational operations include each of the following EXCEPT

Accepted Answer

A)  follow the customer 
B)  follow the leader 
C)  go local 
D)  lead the customer 
E)  the perfect market assumptions 
A)  follow the customer 
B)  follow the leader 
C)  go local 
D)  lead the customer 
E)  the perfect market assumptions E

Question 3

An informationally efficient market is one with abundant information.

Accepted Answer

A) True 
 B)False  False

Question 4

"Currency risk" and "currency risk exposure" refer to the same thing -the possibility that currency values will differ from their expectations.

Accepted Answer

A) True 
 B)False

Question 5

Allocational efficiency refers to how efficiently a market channels capital toward its most productive uses.

Accepted Answer

A) True 
 B)False

Question 6

Assets and liabilities are exposed to currency risk when their values can change with unexpected changes in currency values.

Accepted Answer

A) True 
 B)False

Question 7

National and cultural differences manifest themselves in each of the following ways EXCEPT

Accepted Answer

A)  accounting conventions 
B)  distribution 
C)  human nature 
D)  personnel management 
E)  tax systems 
A)  accounting conventions 
B)  distribution 
C)  human nature 
D)  personnel management 
E)  tax systems

Question 8

MNCs have investment or financial operations in more than one country.

Accepted Answer

A) True 
 B)False

Question 9

Opportunities for the MNC to enhance revenues include each of the following EXCEPT

Accepted Answer

A)  advantages of scale 
B)  advantages of scope 
C)  economies of vertical integration 
D)  global branding 
E)  marketing flexibility 
A)  advantages of scale 
B)  advantages of scope 
C)  economies of vertical integration 
D)  global branding 
E)  marketing flexibility

Question 10

The terms "stakeholder" and "shareholder" are synonymous.

Accepted Answer

A) True 
 B)False

Question 11

Economies of scope are efficiencies that arise across product lines, such as when joint production results in lower per-unit costs.

Accepted Answer

A) True 
 B)False

Question 12

Economies of scale are efficiencies that arise across product lines, such as when joint production results in lower per-unit costs.

Accepted Answer

A) True 
 B)False

Question 13

Corporate stakeholders include each of a) through d) EXCEPT

Accepted Answer

A)  creditors 
B)  customers 
C)  managers 
D)  shareholders 
E)  Each of the above is a stakeholder in the firm 
A)  creditors 
B)  customers 
C)  managers 
D)  shareholders 
E)  Each of the above is a stakeholder in the firm

Question 14

The domestic financial manager must be knowledgeable in several areas within finance, whereas the multinational financial manager usually specializes in a single area, such as corporate finance, investments, or financial markets.

Accepted Answer

A) True 
 B)False

Question 15

Markets in which prices reflect value are said to be ________ .

Accepted Answer

A)  allocationally efficient 
B)  free of agency conflicts 
C)  informationally efficient 
D)  operationally efficient 
E)  prone to arbitrage 
A)  allocationally efficient 
B)  free of agency conflicts 
C)  informationally efficient 
D)  operationally efficient 
E)  prone to arbitrage

Question 16

The MNC faces greater constraints than the domestic corporation in the timing and location of its investments.

Accepted Answer

A) True 
 B)False

Question 17

The investment opportunity set is the set of investments available to the corporation; that is, the set from which the company must select.

Accepted Answer

A) True 
 B)False

Question 18

Allocational efficiency refers to whether a market allocates capital to those investments deemed most worthy by a host government.

Accepted Answer

A) True 
 B)False

Question 19

Economies of scale arise as fixed development or production costs are spread over a larger output.

Accepted Answer

A) True 
 B)False

Question 20

Opportunities for the MNC to reduce operating expenses include each of the following EXCEPT

Accepted Answer

A)  economies of scale 
B)  economies of scope 
C)  flexibility in global site selection 
D)  global branding 
E)  low-cost labor 
A)  economies of scale 
B)  economies of scope 
C)  flexibility in global site selection 
D)  global branding 
E)  low-cost labor

Exam 1: An Introduction to Multinational Finance

The perfect market assumptions include each of the following EXCEPT

Multinational business strategies for preserving or enhancing operating cash flows through multinational operations include each of the following EXCEPT

An informationally efficient market is one with abundant information.

"Currency risk" and "currency risk exposure" refer to the same thing -the possibility that currency values will differ from their expectations.

Allocational efficiency refers to how efficiently a market channels capital toward its most productive uses.

Assets and liabilities are exposed to currency risk when their values can change with unexpected changes in currency values.

National and cultural differences manifest themselves in each of the following ways EXCEPT

MNCs have investment or financial operations in more than one country.

Opportunities for the MNC to enhance revenues include each of the following EXCEPT

The terms "stakeholder" and "shareholder" are synonymous.

Economies of scope are efficiencies that arise across product lines, such as when joint production results in lower per-unit costs.

Economies of scale are efficiencies that arise across product lines, such as when joint production results in lower per-unit costs.

Corporate stakeholders include each of a) through d) EXCEPT

The domestic financial manager must be knowledgeable in several areas within finance, whereas the multinational financial manager usually specializes in a single area, such as corporate finance, investments, or financial markets.

Markets in which prices reflect value are said to be ________ .

The MNC faces greater constraints than the domestic corporation in the timing and location of its investments.

The investment opportunity set is the set of investments available to the corporation; that is, the set from which the company must select.

Allocational efficiency refers to whether a market allocates capital to those investments deemed most worthy by a host government.

Economies of scale arise as fixed development or production costs are spread over a larger output.

Opportunities for the MNC to reduce operating expenses include each of the following EXCEPT

World Trade and the International Monetary System

Foreign Exchange and Eurocurrency Markets

The International Parity Conditions and Their Consequences

Extension: the International Parity Conditions and Their Consequences

Currency Futures and Futures Markets

Currency Options and Options Markets

Currency Swaps and Swaps Markets

Multinational Treasury Management

Extension: Multinational Treasury Management

Managing Transaction Exposure to Currency Risk

Managing Operating Exposure to Currency Risk

Managing Translation Exposure and Accounting for Financial Transactions

Foreign Market Entry and Country Risk Management

Multinational Capital Budgeting

Multinational Capital Structure and Cost of Capital

Taxes and Multinational Corporate Strategy

Real Options and Cross-Border Investment Strategy

Corporate Governance and the International Market for Corporate Control

International Capital Markets

International Portfolio Diversification

International Asset Pricing

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