Exam 6: The International Monetary Environment and Financial Management in the Global Firm

The primary players in the global financial system include governmental and nongovernmental finance departments and ministries, stock exchanges, commercial banks, the Bank for International Settlements, the World Bank, and the International Monetary Fund.

In a short essay, describe the two main types of foreign exchange management used today. Provide examples of nations which use each type of system.

The NYSE Euronext and the NASDAQ Stock Market are the largest stock exchanges in the world.

In a short essay, describe the five major financial management tasks that are critical to firms active in international business transactions.

In a short essay, explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated, and why was it terminated?

Which of the following best describes the role that the international monetary system plays with foreign firms?

International financial managers are responsible for acquiring and allocating financial resources and for determining the long-term financial strategy of a firm's global operations.

In a short essay, describe three methods used to transfer funds within an MNE.

Financing Corporate Expansion Intensity Games is an MNE based in San Francisco that manufactures a popular line of video game consoles and accessories. Intensity owns manufacturing facilities in China and Russia where the components of the game consoles are manufactured and assembled before being shipped around the world. Intensity also owns numerous subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity managers have determined that the firm needs to expand the Chinese facility to accommodate increased demand. The firm needs to raise several million dollars to finance the expansion. The financial managers of Intensity are discussing the various financing options available to the firm. -Which of the following is most likely an advantage of Intensity accessing funds through the global capital market instead of through domestic sources?

The foreign-exchange market has locations in Switzerland, Japan, and the United States.

Capital budgeting is intended to do which of the following?

A trade surplus occurs as a result of which of the following?

In a short essay, describe four principles or organizations brought about by the Bretton Woods Agreement that remain important to international business and trade today. Why does the integration of financial and monetary activity worldwide continue to grow?

Plas-Tex Exporting Plas-Tex Plastic Company manufactures plastic storage containers of all different sizes. Plas-Tex has been exporting more storage containers to Europe recently because of the depreciation of the U.S. dollar relative to the euro. Plas-Tex CEO, Wayne Chisholm, has prepared a report for the annual shareholders meeting in which he outlines his manufacturing and sales recommendations for the upcoming year. -Which of the following supports maintaining the current production status instead of increasing production?

Which of the following is the purpose of a forward contract?

Financing Corporate Expansion Intensity Games is an MNE based in San Francisco that manufactures a popular line of video game consoles and accessories. Intensity owns manufacturing facilities in China and Russia where the components of the game consoles are manufactured and assembled before being shipped around the world. Intensity also owns numerous subsidiaries that manufacture game cartridges for Intensity game platforms. Intensity managers have determined that the firm needs to expand the Chinese facility to accommodate increased demand. The firm needs to raise several million dollars to finance the expansion. The financial managers of Intensity are discussing the various financing options available to the firm. -Which of the following questions would be more important for Intensity financial managers to evaluate when deciding the best method for the firm to raise funds?

An increase in a nation's rate of inflation leads to an oversupply of money and eventually to a decrease in the value of the nation's currency.