Question 1

The system of corporate governance employed by companies in a given country

Accepted Answer

A)  Defines the financial and legal framework for regulating the relationship between a company's management and its shareholders. 
B)  Can be either "outsider" or bank-based as in Japan and Europe, or "insider" or stockholder-based as in the U.S. 
C)  Defines the financial and legal framework for regulating the relationship between a company's management and its creditors. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct. 
A)  Defines the financial and legal framework for regulating the relationship between a company's management and its shareholders. 
B)  Can be either "outsider" or bank-based as in Japan and Europe, or "insider" or stockholder-based as in the U.S. 
C)  Defines the financial and legal framework for regulating the relationship between a company's management and its creditors. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct. A

Question 2

The modern economic phenomenon called globalization in the textbook and in the popular press

Accepted Answer

A)  Is very important for global MNEs but does not affect smaller companies with a purely domestic focus. 
B)  Affects domestic companies if they outsource elements of their production or back-office operations, or if they sell significant amounts of goods or services abroad; however, if they do not engage in these activities they are largely immune from the effects of globalization. 
C)  Has the potential to affect domestic companies with no international involvement through competition with other firms that are involved in the global marketplace. 
D)  Only statements a and b are correct. 
E)  All of the statements above are correct. 
A)  Is very important for global MNEs but does not affect smaller companies with a purely domestic focus. 
B)  Affects domestic companies if they outsource elements of their production or back-office operations, or if they sell significant amounts of goods or services abroad; however, if they do not engage in these activities they are largely immune from the effects of globalization. 
C)  Has the potential to affect domestic companies with no international involvement through competition with other firms that are involved in the global marketplace. 
D)  Only statements a and b are correct. 
E)  All of the statements above are correct. C

Question 3

Why is it important that firms have a strong corporate governance system in place, particularly for multinational firms?

Accepted Answer

It is important that firms have a strong corporate governance system in place to better monitor and address the various agency conflicts that arise within firms. Corporate governance mechanisms provide the financial and legal framework for regulating the relationship between a company's management and its shareholders. These mechanisms are particularly important when operating across countries where there is a wide variation in the legal protection of shareholders.

Question 4

Stockholder wealth maximization, as the primary objective of the firm,

Accepted Answer

A)  Ignores the impact of corporate decisions on groups such as employees, consumers, and society in general because decisions that increase profits almost always reduce the benefits going to these other groups. 
B)  Is considered to be appropriate in the U.S., U.K., and Japan, but not in other European countries. 
C)  Ensures that shareholders get nothing unless all other direct stakeholders receive their full and fair contracted compensation. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct. 
A)  Ignores the impact of corporate decisions on groups such as employees, consumers, and society in general because decisions that increase profits almost always reduce the benefits going to these other groups. 
B)  Is considered to be appropriate in the U.S., U.K., and Japan, but not in other European countries. 
C)  Ensures that shareholders get nothing unless all other direct stakeholders receive their full and fair contracted compensation. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct.

Question 5

Which of the following statements is most correct?

Accepted Answer

A)  Globalization affects domestic companies if they outsource elements of their production or back-office operations, or if they sell significant amounts of goods or services abroad; however, if they do not engage in these activities they are largely immune from the effects of globalization. 
B)  Because foreign markets may not be in the same stage of the product life cycle as the home market, and because the economies of other countries may be in different phases of the business cycle, companies that operate in several different countries may be able to reduce their risk through diversification of their operations globally. 
C)  Stockholder wealth maximization as the primary objective of the firm ignores the impact of corporate decisions on groups such as employees, consumers, and society in general because decisions that increase profits almost always reduce the benefits going to the other groups. 
D)  The system of corporate governance employed by companies in a given country defines the financial and legal framework for regulating the relationship between a company's management and its creditors. 
E)  Globalization is largely regulated by treaties and other multilateral agreements under the direction of the United Nations' project on transnational corporations. 
A)  Globalization affects domestic companies if they outsource elements of their production or back-office operations, or if they sell significant amounts of goods or services abroad; however, if they do not engage in these activities they are largely immune from the effects of globalization. 
B)  Because foreign markets may not be in the same stage of the product life cycle as the home market, and because the economies of other countries may be in different phases of the business cycle, companies that operate in several different countries may be able to reduce their risk through diversification of their operations globally. 
C)  Stockholder wealth maximization as the primary objective of the firm ignores the impact of corporate decisions on groups such as employees, consumers, and society in general because decisions that increase profits almost always reduce the benefits going to the other groups. 
D)  The system of corporate governance employed by companies in a given country defines the financial and legal framework for regulating the relationship between a company's management and its creditors. 
E)  Globalization is largely regulated by treaties and other multilateral agreements under the direction of the United Nations' project on transnational corporations.

Question 6

Which of the following differentiates financial management in the U.S. from that practiced in many other countries?

Accepted Answer

A)  The need to work with multiple currencies. 
B)  Different views about the appropriate objective of management. 
C)  The existence of different legal philosophies and systems (civil law instead of common law). 
D)  All of the above factors fundamentally affect the practice of finance in different countries. 
E)  Only statements a and b are correct. 
A)  The need to work with multiple currencies. 
B)  Different views about the appropriate objective of management. 
C)  The existence of different legal philosophies and systems (civil law instead of common law). 
D)  All of the above factors fundamentally affect the practice of finance in different countries. 
E)  Only statements a and b are correct.

Question 7

What are some mechanisms used in the United States to ease agency problems?

Accepted Answer

Some specific mechanisms used in the Uni

Question 8

Which of the following definitions best describes the term business ethics?

Accepted Answer

A)  A company's attitude and conduct toward its employees, customers, community, and stockholders. 
B)  A company's conduct toward its employees. 
C)  A company's attitude toward its customers. 
D)  The gain from specialization and trade, which results in a positive-sum game. 
E)  A country's social, political, and economic environment. 
A)  A company's attitude and conduct toward its employees, customers, community, and stockholders. 
B)  A company's conduct toward its employees. 
C)  A company's attitude toward its customers. 
D)  The gain from specialization and trade, which results in a positive-sum game. 
E)  A country's social, political, and economic environment.

Question 9

What is an agency relationship and, within a financial management context, what are the primary agency relationships?

Accepted Answer

An agency relationship arises whenever o

Question 10

Which of the following individuals benefit from firms pursuing stock price maximization?

Accepted Answer

A)  A firm's employees. 
B)  Consumers. 
C)  Members of society-even those who have no direct or indirect ownership interest in the stock market. 
D)  All of the above benefit from management concentrating on maximizing their firm's stock price. 
E)  None of the above benefit from management concentrating on maximizing their firm's stock price. 
A)  A firm's employees. 
B)  Consumers. 
C)  Members of society-even those who have no direct or indirect ownership interest in the stock market. 
D)  All of the above benefit from management concentrating on maximizing their firm's stock price. 
E)  None of the above benefit from management concentrating on maximizing their firm's stock price.

Question 11

Which of the following developments was not mentioned in the textbook as a driving force behind recent changes in the international financial environment?

Accepted Answer

A)  Deregulation of many types of capital flows among nations. 
B)  Creation of an inexpensive and efficient global financial trading system under the direction of the Bank for International Settlements. 
C)  Creation of new markets for international commerce. 
D)  Development of new technologies for increasing the speed, security, and efficiency of international financial transactions. 
E)  Development of regional trading blocs with large internal markets and fewer restrictions on trade. 
A)  Deregulation of many types of capital flows among nations. 
B)  Creation of an inexpensive and efficient global financial trading system under the direction of the Bank for International Settlements. 
C)  Creation of new markets for international commerce. 
D)  Development of new technologies for increasing the speed, security, and efficiency of international financial transactions. 
E)  Development of regional trading blocs with large internal markets and fewer restrictions on trade.

Question 12

Which of the following is not a stakeholder?

Accepted Answer

A)  A firm's employees. 
B)  A firm's stockholders. 
C)  A firm's customers. 
D)  The community in which the firm is headquartered. 
E)  All of the above are stakeholders of the firm. 
A)  A firm's employees. 
B)  A firm's stockholders. 
C)  A firm's customers. 
D)  The community in which the firm is headquartered. 
E)  All of the above are stakeholders of the firm.

Question 13

Which of the following mechanisms are used in the United States to motivate managers to act in shareholders' best interests?

Accepted Answer

A)  Managerial compensation plans. 
B)  Promoting good ethical behavior in the firm. 
C)  Direct shareholder intervention. 
D)  Statements a and c are used to motivate managers to act in shareholders' best interests. 
E)  Statements a, b, and c are used to motivate managers to act in shareholders' best interests. 
A)  Managerial compensation plans. 
B)  Promoting good ethical behavior in the firm. 
C)  Direct shareholder intervention. 
D)  Statements a and c are used to motivate managers to act in shareholders' best interests. 
E)  Statements a, b, and c are used to motivate managers to act in shareholders' best interests.

Question 14

It is often argued that stock price maximization results in short-sighted decisions that are bad for employees, bad for consumers, and ultimately bad for society. State whether this statement is true or false, and support your argument.

Accepted Answer

This statement is false. Many of the act

Question 15

Which of the following best characterizes globalization?

Accepted Answer

A)  Increases competition and global economic efficiency, thereby having the potential to increase the standard of living in both developing nations and highly industrialized countries. 
B)  Can threaten the economic independence of nations and their cultural traditions. 
C)  Is largely regulated by treaties and other multilateral agreements under the direction of the United Nations' project on transnational corporations. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct. 
A)  Increases competition and global economic efficiency, thereby having the potential to increase the standard of living in both developing nations and highly industrialized countries. 
B)  Can threaten the economic independence of nations and their cultural traditions. 
C)  Is largely regulated by treaties and other multilateral agreements under the direction of the United Nations' project on transnational corporations. 
D)  All of the statements above are correct. 
E)  Only statements a and b are correct.

Question 16

Give three reasons domestic firms are not immune to the complexities of globalization.

Accepted Answer

Even companies that consider themselves

Question 17

Stockholder wealth maximization is generally accepted as the ultimate goal of financial management in countries such as Australia, Canada, the United Kingdom, and the United States. However, French and German firms focus on maximizing the welfare of a firm's stakeholders. Explain the problems with stakeholder welfare maximization and their unintended result on the goals of firms operating abroad today.

Accepted Answer

While stakeholder or business group maxi

Question 18

Which of the following definitions best describes a multinational enterprise?

Accepted Answer

A)  A corporation owned by a few individuals who are typically associated with the firm's management. 
B)  Collaborative arrangements that involve independent companies in related or supporting fields that band together to solidify a collaboration contract and make it harder to break. 
C)  A firm that operates in an integrated fashion in a number of countries. 
D)  A foreign company that raises most of its subsidiary's capital in the local market. 
E)  A specialized financial firm that facilitates the transfer of funds from savers to demanders of capital. 
A)  A corporation owned by a few individuals who are typically associated with the firm's management. 
B)  Collaborative arrangements that involve independent companies in related or supporting fields that band together to solidify a collaboration contract and make it harder to break. 
C)  A firm that operates in an integrated fashion in a number of countries. 
D)  A foreign company that raises most of its subsidiary's capital in the local market. 
E)  A specialized financial firm that facilitates the transfer of funds from savers to demanders of capital.

Question 19

Identify five major reasons that explain why U.S. and foreign firms go global.

Accepted Answer

Various reasons have been put forth to e

Question 20

The basic overriding goal of any firm, domestic or multinational, should be to

Accepted Answer

A)  Create value for all stakeholders by maximizing expected total corporate profit. 
B)  Create value for stockholders by maximizing the firm's stock price. 
C)  Create value for stockholders by maximizing expected earnings per share. 
D)  Minimize the firm's chances of losses. 
E)  Create value for all stakeholders by maximizing the firm's revenues. 
A)  Create value for all stakeholders by maximizing expected total corporate profit. 
B)  Create value for stockholders by maximizing the firm's stock price. 
C)  Create value for stockholders by maximizing expected earnings per share. 
D)  Minimize the firm's chances of losses. 
E)  Create value for all stakeholders by maximizing the firm's revenues.

The system of corporate governance employed by companies in a given country

The modern economic phenomenon called globalization in the textbook and in the popular press

Why is it important that firms have a strong corporate governance system in place, particularly for multinational firms?

Stockholder wealth maximization, as the primary objective of the firm,

Which of the following statements is most correct?

Which of the following differentiates financial management in the U.S. from that practiced in many other countries?

What are some mechanisms used in the United States to ease agency problems?

Which of the following definitions best describes the term business ethics?

What is an agency relationship and, within a financial management context, what are the primary agency relationships?

Which of the following individuals benefit from firms pursuing stock price maximization?

Which of the following developments was not mentioned in the textbook as a driving force behind recent changes in the international financial environment?

Which of the following is not a stakeholder?

Which of the following mechanisms are used in the United States to motivate managers to act in shareholders' best interests?

It is often argued that stock price maximization results in short-sighted decisions that are bad for employees, bad for consumers, and ultimately bad for society. State whether this statement is true or false, and support your argument.

Which of the following best characterizes globalization?

Give three reasons domestic firms are not immune to the complexities of globalization.

Which of the following definitions best describes a multinational enterprise?

Identify five major reasons that explain why U.S. and foreign firms go global.

The basic overriding goal of any firm, domestic or multinational, should be to

The Global Financial Environment: Markets, Institutions, Interest Rates, and Exchange Rates

Exchange Rate Analysis

International Trade and Foreign Direct Investment

Risk and Return

Financial Statement Analysis

Translating and Consolidating Subsidiary Financial Statements

Debt Instruments and Markets

Stocks and Stock Markets

The Cost of Capital

Capital Budgeting: The Basics

Capital Budgeting: Risk Analysis and Real Options

Capital Structure and Distribution Policy

Working Capital Management and Global Cash Flow Integration

Derivatives and Risk Management

International Tax Planning

Filters

Exam 1: An Introduction to International Financial Management

The system of corporate governance employed by companies in a given country

The modern economic phenomenon called globalization in the textbook and in the popular press

Why is it important that firms have a strong corporate governance system in place, particularly for multinational firms?

Stockholder wealth maximization, as the primary objective of the firm,

Which of the following statements is most correct?

Which of the following differentiates financial management in the U.S. from that practiced in many other countries?

What are some mechanisms used in the United States to ease agency problems?

Which of the following definitions best describes the term business ethics?

What is an agency relationship and, within a financial management context, what are the primary agency relationships?

Which of the following individuals benefit from firms pursuing stock price maximization?

Which of the following developments was not mentioned in the textbook as a driving force behind recent changes in the international financial environment?

Which of the following is not a stakeholder?

Which of the following mechanisms are used in the United States to motivate managers to act in shareholders' best interests?

It is often argued that stock price maximization results in short-sighted decisions that are bad for employees, bad for consumers, and ultimately bad for society. State whether this statement is true or false, and support your argument.

Which of the following best characterizes globalization?

Give three reasons domestic firms are not immune to the complexities of globalization.

Which of the following definitions best describes a multinational enterprise?

Identify five major reasons that explain why U.S. and foreign firms go global.

The basic overriding goal of any firm, domestic or multinational, should be to

The Global Financial Environment: Markets, Institutions, Interest Rates, and Exchange Rates

Exchange Rate Analysis

International Trade and Foreign Direct Investment

Risk and Return

Financial Statement Analysis

Translating and Consolidating Subsidiary Financial Statements

Debt Instruments and Markets

Stocks and Stock Markets

The Cost of Capital

Capital Budgeting: The Basics

Capital Budgeting: Risk Analysis and Real Options

Capital Structure and Distribution Policy

Working Capital Management and Global Cash Flow Integration

Derivatives and Risk Management

International Tax Planning

Filters