Exam 14: Financial Management for Global Operations

As MNEs continue to expand globally, their assets are increasingly widely dispersed and specialized.

Working capital is the net position whereby a firm's current liability is added to its current assets.

A ____________ L/C exists where the exporter, as beneficiary of the first L/C, offers its credit as security to finance the opening of a second credit in favor of the exporter's own supplier of the goods needed for shipment under the first or original credit from the advising bank.

The knowledge of international financial management helps a global business by helping the manager to anticipate events and to make profitable decisions before the events occur.

If a U.S. exporter expects to receive a payment of £200,000 from a London importer in two months after the products are shipped. With the current rate it would be worth $300,000. Two months later the rate changes and reduces the actual dollar avenue to $260,000. Therefore, the U.S. exporter will suffer a $40,000___________________.

An example of _____________ is depicted through, a US firm focusing on exports to Canada to acquire its debt in Canadian dollar markets and use the Canadian dollar cash inflows from export sales to service loan payments on Canadian dollar.

Increasing global competition is causing Chief Financial Officers to review the cost structure, orientation and strategic role of the finance function.

Which of the following affords the exporter the greatest protection because payment is received either before shipment or upon arrival of the goods?

The bankers acceptance is a two-armed instrument with one branch in financing and the other in ________________________.

A ___________ L/C is issued by one bank and confirmed by another, obligating both banks to honor any drafts drawn in compliance.

Which of the following is often used in a country where there is political instability or where the buyer's credit is shaky?

A firm's ability to raise its foreign currency selling price sufficiently to preserve its home currency profit margin in the case of foreign currency depreciation is considered to be

Widely-used payment methods in international trade include

An MNEs equity financing can take the form of

Foreign bonds that are sold in Japan are called Samurai bonds.

The Euronote is generally a more expensive source of short-term funds that syndicated loans, since the notes are place directly with the investor public.

Export financing is important because many export projects require

A revolving L/C exists where the tenor (maturity) or amount of the L/C is required permission for every transaction.

L/C eliminates credit risk if the bank that opens it is of good standing. It also increases the risk that payment will be delayed or withheld owing to exchange controls or other political acts.

Using L/C heightens the importer's bargaining power and allows the importer to ask for a price reduction from the exporter.