Question 1

A multinational firm can be defined as a firm that

Accepted Answer

A) invests short-term cash inflows in more than one currency. 
B) has sales affiliates in several countries. 
C) is incorporated in more than one country. 
D) incorporated in one country that has production and sales operations in several other countries. 
A) invests short-term cash inflows in more than one currency. 
B) has sales affiliates in several countries. 
C) is incorporated in more than one country. 
D) incorporated in one country that has production and sales operations in several other countries.

Question 2

In modern times,it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country.These controllers of capital and technology are

Accepted Answer

A) the state. 
B) the multinational corporations (MNCs). 
C) portfolio managers of international mutual funds. 
D) none of the above 
A) the state. 
B) the multinational corporations (MNCs). 
C) portfolio managers of international mutual funds. 
D) none of the above

Question 3

Suppose your firm invests $100,000 in a project in Italy.At the time the exchange rate is $1.25 = €1.00.One year later the exchange rate is the same,but the Italian government has expropriated your firm's assets paying only €80,000 in compensation.This is an example of

Accepted Answer

A) exchange rate risk. 
B) political risk. 
C) market imperfections. 
D) none of the above, since $100,000 = €80,000 * $1.25/€1.00 
A) exchange rate risk. 
B) political risk. 
C) market imperfections. 
D) none of the above, since $100,000 = €80,000 * $1.25/€1.00

Question 4

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

Accepted Answer

A) has been altered to include other goals as well. 
B) has lost out to other goals, even in the U.S. 
C) has been given increasing importance by managers in Europe. 
D) has been shown to be a deterrent to raising funds abroad. 
A) has been altered to include other goals as well. 
B) has lost out to other goals, even in the U.S. 
C) has been given increasing importance by managers in Europe. 
D) has been shown to be a deterrent to raising funds abroad.

Question 5

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

Accepted Answer

A) 1 bottle of whiskey = 1 keg of beer 
B) 3 bottles of whiskey = 1 keg of beer 
C) 2/3 bottle of whiskey = 1 keg of beer 
D) 1 bottle of whiskey = 3 kegs of beer 
A) 1 bottle of whiskey = 1 keg of beer 
B) 3 bottles of whiskey = 1 keg of beer 
C) 2/3 bottle of whiskey = 1 keg of beer 
D) 1 bottle of whiskey = 3 kegs of beer

Question 6

What is the relative price of a gun in terms of butter in North Carolina?

Accepted Answer

A) 1 gun costs 3 butters 
B) 3 guns cost 1 butter 
C) 1 gun costs 2 butters 
D) 2 gun costs 1 butter 
A) 1 gun costs 3 butters 
B) 3 guns cost 1 butter 
C) 1 gun costs 2 butters 
D) 2 gun costs 1 butter

Question 7

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

Accepted Answer

A) information asymmetry. 
B) excessive transactions costs. 
C) racial discrimination. 
D) a market imperfection. 
A) information asymmetry. 
B) excessive transactions costs. 
C) racial discrimination. 
D) a market imperfection.

Question 8

MNCs can use their global presence to

Accepted Answer

A) take advantage of underpriced labor services available in certain developing countries. 
B) gain access to special R&D capabilities residing in advanced foreign counties. 
C) boost profit margins and create shareholder value. 
D) all of the above 
A) take advantage of underpriced labor services available in certain developing countries. 
B) gain access to special R&D capabilities residing in advanced foreign counties. 
C) boost profit margins and create shareholder value. 
D) all of the above

Question 9

The theory of comparative advantage

Accepted Answer

A) claims that economic well-being is enhanced if each country's citizens produce only a single product. 
B) claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged all countries. 
C) claims that economic well-being is enhanced if each country's citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production. 
D) claims that no country has an absolute advantage over another country in the production of any good or service. 
A) claims that economic well-being is enhanced if each country's citizens produce only a single product. 
B) claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged all countries. 
C) claims that economic well-being is enhanced if each country's citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production. 
D) claims that no country has an absolute advantage over another country in the production of any good or service.

Question 10

The ultimate guardians of shareholder interest in a corporation,are the

Accepted Answer

A) rank and file workers. 
B) senior management. 
C) boards of directors. 
D) all of the above. 
A) rank and file workers. 
B) senior management. 
C) boards of directors. 
D) all of the above.

Question 11

Undoubtedly,we are now living in a world where all the major economic functions-consumption,production,and investment

Accepted Answer

A) are still inherently local. 
B) are still regional in nature. 
C) are slowly becoming globalized. 
D) are highly globalized. 
A) are still inherently local. 
B) are still regional in nature. 
C) are slowly becoming globalized. 
D) are highly globalized.

Question 12

Since the end of World War I,the dominant global currency has been the

Accepted Answer

A) British pound. 
B) Japanese yen. 
C) Euro. 
D) U.S.dollar. 
A) British pound. 
B) Japanese yen. 
C) Euro. 
D) U.S.dollar.

Question 13

The emergence of global financial markets is due in no small part to

Accepted Answer

A) advances in computer and telecommunications technology. 
B) enforcement of the Soviet system of state ownership of resources of production. 
C) government regulation and protection of infant industries. 
D) none of the above 
A) advances in computer and telecommunications technology. 
B) enforcement of the Soviet system of state ownership of resources of production. 
C) government regulation and protection of infant industries. 
D) none of the above

Question 14

The doctrine of comparative advantage was first put forth by

Accepted Answer

A) Adam Smith. 
B) Adam Sandler. 
C) David Ricardo. 
D) Ricky Ricardo. 
E) none of the above 
A) Adam Smith. 
B) Adam Sandler. 
C) David Ricardo. 
D) Ricky Ricardo. 
E) none of the above

Question 15

Foreign-owned manufacturing companies in the world's most highly developed countries

Accepted Answer

A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms. 
A) generally are more productive and pay their workers more than do comparable locally-owned businesses. 
B) generally are less productive and therefore pay their workers less than do comparable locally-owned businesses. 
C) tend to specialize in different articles of manufacture than they produce in their home countries. 
D) usually do not build their own production facilities but simply buy existing domestic manufacturing firms.

Question 16

Consider a dentist and a 14-year old boy.The dentist can make $100 per hour drilling teeth and the 14-year old boy can make $2 per hour picking up used aluminum cans.The dentist is a manly man and can mow his half-acre lot in one hour.The 14-year old boy can mow the lawn in two hours.If the dentist hires the boy to mow his lawn at any price less than $100,but more than $4

Accepted Answer

A) both he and the boy are better off. 
B) the dentist would be exploiting the boy. 
C) the boy would be exploiting the dentist. 
D) all of the above 
A) both he and the boy are better off. 
B) the dentist would be exploiting the boy. 
C) the boy would be exploiting the dentist. 
D) all of the above

Question 17

Nestlé,a well-known Swiss corporation,

Accepted Answer

A) has been a paragon of virtue in its opposition to all forms of political risk. 
B) at one time placed restrictions on foreign ownership of its stock.When it relaxed these restrictions, the total market value of the firm fell. 
C) at one time placed restrictions on foreign ownership of its stock.When it relaxed these restrictions, there was a major transfer of wealth from foreign shareholders to Swiss shareholders. 
D) none of the above 
A) has been a paragon of virtue in its opposition to all forms of political risk. 
B) at one time placed restrictions on foreign ownership of its stock.When it relaxed these restrictions, the total market value of the firm fell. 
C) at one time placed restrictions on foreign ownership of its stock.When it relaxed these restrictions, there was a major transfer of wealth from foreign shareholders to Swiss shareholders. 
D) none of the above

Question 18

Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso appreciates drastically against the U.S.dollar.This means

Accepted Answer

A) your company's products can be priced out of the Mexican market, as the peso price of American imports will rise following the peso's fall. 
B) your firm will be able to charge more in dollar terms while keeping peso prices stable. 
C) your domestic competitors will enjoy a period of facing lessened price competition from Mexican imports. 
D) both b and c are correct 
A) your company's products can be priced out of the Mexican market, as the peso price of American imports will rise following the peso's fall. 
B) your firm will be able to charge more in dollar terms while keeping peso prices stable. 
C) your domestic competitors will enjoy a period of facing lessened price competition from Mexican imports. 
D) both b and c are correct

Question 19

Suppose that Northern Ireland and Southern Ireland each have 1,000 hours of labor per day.Southern workers are paid €1 per day and Northern workers are paid £1 per day.What is the exchange rate associated with an international price of one keg of beer = 1 bottle of whiskey?

Accepted Answer

A) €1.25 = £1 
B) €0.80 = £1 
C) €1 = £1 
D) None of the above 
A) €1.25 = £1 
B) €0.80 = £1 
C) €1 = £1 
D) None of the above

A multinational firm can be defined as a firm that

In modern times,it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country.These controllers of capital and technology are

Suppose your firm invests $100,000 in a project in Italy.At the time the exchange rate is $1.25 = €1.00.One year later the exchange rate is the same,but the Italian government has expropriated your firm's assets paying only €80,000 in compensation.This is an example of

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

What is the relative price of a gun in terms of butter in North Carolina?

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

MNCs can use their global presence to

The theory of comparative advantage

The ultimate guardians of shareholder interest in a corporation,are the

Undoubtedly,we are now living in a world where all the major economic functions-consumption,production,and investment

Since the end of World War I,the dominant global currency has been the

The emergence of global financial markets is due in no small part to

The doctrine of comparative advantage was first put forth by

Foreign-owned manufacturing companies in the world's most highly developed countries

Nestlé,a well-known Swiss corporation,

Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso appreciates drastically against the U.S.dollar.This means

Suppose that Northern Ireland and Southern Ireland each have 1,000 hours of labor per day.Southern workers are paid €1 per day and Northern workers are paid £1 per day.What is the exchange rate associated with an international price of one keg of beer = 1 bottle of whiskey?

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 1: Globalization and the Multinational Firm

A multinational firm can be defined as a firm that

In modern times,it is not a country per se but rather a controller of capital and know-how that gives the country in which it is domiciled a comparative advantage over another country.These controllers of capital and technology are

Suppose your firm invests $100,000 in a project in Italy.At the time the exchange rate is $1.25 = €1.00.One year later the exchange rate is the same,but the Italian government has expropriated your firm's assets paying only €80,000 in compensation.This is an example of

As capital markets are becoming more integrated,the goal of shareholder wealth maximization

Suppose that trade occurs.Each country completely specializes and 500 kegs of beer are traded for 500 bottles of whiskey.What is the international price of beer?

What is the relative price of a gun in terms of butter in North Carolina?

Most governments at least try to make it difficult for people to cross their borders illegally.This barrier to the free movement of labor is an example of

MNCs can use their global presence to

The theory of comparative advantage

The ultimate guardians of shareholder interest in a corporation,are the

Undoubtedly,we are now living in a world where all the major economic functions-consumption,production,and investment

Since the end of World War I,the dominant global currency has been the

The emergence of global financial markets is due in no small part to

The doctrine of comparative advantage was first put forth by

Foreign-owned manufacturing companies in the world's most highly developed countries

Nestlé,a well-known Swiss corporation,

Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso appreciates drastically against the U.S.dollar.This means

Suppose that Northern Ireland and Southern Ireland each have 1,000 hours of labor per day.Southern workers are paid €1 per day and Northern workers are paid £1 per day.What is the exchange rate associated with an international price of one keg of beer = 1 bottle of whiskey?

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters