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

Which of the following statements holds true for a consolidated financial statement?

Multinational firms often organize as separate legal entities (i.e.,companies) in different countries to gain advantages,such as limiting liability or taking advantage of local corporate tax regulations.

The _____ is the most widely used currency-translation method.

Adopting different accounting standards makes it easier for investors or lenders to compare the financial health of two companies.

Which of the following statements holds true for capital budgeting?

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

What are the advantages of centralized depositories?

The consolidated financial statement must reconcile all the investment and capital accounts as well as the firms' assets,liabilities,and operating accounts.

In countries where companies tend to rely more on banks for funding,accounting rules are framed such that assets are valued conservatively to protect a bank's investment.

Most IASB statements provide three acceptable alternatives since it is difficult to get an agreement while formulating the international reporting standards.

Which of the following statements holds true for a spot exchange rate?

Some large Chinese companies report results in both Chinese accounting standards and the IASB's standards to facilitate the easy financial assessment of the companies by the investors.

Some governments court foreign borrowers by offering low-interest loans or by offering lower corporate income tax to attract investment in their countries.

An Indonesian importer needs U.S.dollars to pay for the shipment that he has just received.He will have to purchase the dollars to pay for the shipment.He exchanges rupiah for U.S.dollars which he pays to the foreign exporter.The rate at which he buys US dollars in the market is known as the _____.

What repercussions did the US CFOs anticipate when the Chinese government decided to allow the Yuan to float more freely in relation to other international currencies in 2010?

Which of the following statements holds true for forward exchange rates?

Which of the following statements holds true for hedging?

_____ financial statements demonstrate that firms,although legally separate from the parent and each other,are in fact economically interdependent.

How is Indonesia making itself attractive to foreign investors?

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.