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

What are the tax advantages of fronting loans by a subsidiary located in a tax haven?

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

Investors and banks use financial statements to determine whether to invest in or loan capital to the firm.

Which of the following statements holds true for multilateral netting?

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

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

On January 1,2009,Company X signs an agreement to import 100 pounds of coffee from Company Y on April 1,2009 at a price of $5.00 per pound.On April 1,2009,the market price of coffee is $6.00 a pound.Instead of having to pay $6.00 a pound for coffee,the importer needs to pay $5.00.However,the importer's gain is the exporter's loss.The exporter must now sell 100 pounds of coffee at only $5.00 per pound even though it could have sold it in the open market for $6.00 per pound if it had not signed the agreement.The above is an example of a(n):

An American aircraft manufacturer has a subsidiary in Indonesia.The subsidiary needs funding to expand its operations.The parent company deposits the required funds in a London based international bank.The money is then transferred to the subsidiary by the bank.The above serves as an example of:

Which of the following statements holds true for transnational investment?

The advantage of the _____ agreement between the parent and foreign subsidiaries is that if the exchange rate changes,the subsidiary will be not be blamed or credited for the change.

The advantage of raising money through debt financing is that company management doesn't give up any ownership of the firm.

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

Which of the following statements holds true for equity financing?

_____ refers to using financial instruments to reduce adverse price movements by taking an offsetting position.

The disadvantage of raising capital in equity markets is that the firm has to repay the money at a specific time and at a specific interest rate.

Consolidating financial statements of subsidiaries located in different countries poses problems because of the different currencies used in different countries.

What alternatives to interest and speculative investments are approved by Sharia?

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

Which of the following statements holds true for a forward contract?

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.