Exam 15: Understanding the Roles of Finance and Accounting in Global Competitive Advantage

_____ is the risk of a change in the exchange rate that will adversely affect the company.

Which of the following statements holds true for cost of capital?

An organization wants to raise cash in order to fund its expansion plans.The company that currently has 500,000 ordinary shares decides to issue 125,000 new shares to raise cash.The above is an example of:

Public share ownership in China remains complex.Explain.

Which of the following statements holds true for "musharakah," an investment partnership approved by the Sharia?

Adherence to the IFRS' standards is mandatory in the United States.

Subsidiaries purchase assets at different times throughout the year and therefore the balance sheet of a multinational firm may not balance if the current-rate method is used.

A company needs to buy US dollars in 90 days time.Therefore it signs a contract with a US bank to buy US dollars in exchange for euros 90 days from now at a specified exchange rate.The company would most likely use the _____ as a way to reduce exchange-rate risk if the value of the euro decreases substantially relative to the US dollar.

_____ refers to a method of foreign currency translation that uses exchange rates based on the rate at which the assets and liabilities were originally acquired or incurred.

In countries like Switzerland, Germany, and Japan, accounting rules are designed to help individual investors.

The fourteen IASB representatives formulate the international reporting standards.For a standard to be approved, 85 percent of the board members must agree.

Which of the following statements about the GAAP rules and IFRS is true?

When a subsidiary obtains funding through a _____ it allows both the subsidiary and the parent eliminate paying transaction costs to an outside entity such as a bank, which would charge fees to make the transaction.

Generally, compliance with local tax regulations means setting prices such that they satisfy the "_____." That is, the prices must be consistent with third-party market results.

Why do some firms choose a decentralized financial organization structure?

In 2006, China revised its law and moved towardsChinese accounting standards which are more in line with IASB.

What is the role of government in terms of international business and finance?

_____ refers to Islamic law which, in terms of finance, prohibits charging interest on money and other common business activities, including short selling.

Why do multinational firms choose to raise money in foreign markets?

A _____ is a payment on behalf of a payer that is guaranteed by the issuing bank - a common method in Asia, but much less common in the United States.