Question 1

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

Accepted Answer

A) True 
 B)False  True

Question 2

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Accepted Answer

A) Evaluation of the credit quality of foreign buyers and sellers. 
B) Foreign consumer method of payment preferences. 
C) Credit risk management. 
D) Evaluation of foreign exchange risk. 
A) Evaluation of the credit quality of foreign buyers and sellers. 
B) Foreign consumer method of payment preferences. 
C) Credit risk management. 
D) Evaluation of foreign exchange risk. B

Question 3

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

Accepted Answer

A) Tariffs. 
B) Managerial skills. 
C) Quotas. 
D) Other non-tariff restrictions. 
A) Tariffs. 
B) Managerial skills. 
C) Quotas. 
D) Other non-tariff restrictions. B

Question 4

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

Accepted Answer

A) True 
 B)False

Question 5

The authors describe the multinational phase of globalization for a firm as one characterized by the

Accepted Answer

A) ownership of assets and enterprises in foreign countries. 
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars. 
C) imports from foreign suppliers and exports to foreign buyers. 
D) requirement that all employees be multilingual. 
A) ownership of assets and enterprises in foreign countries. 
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars. 
C) imports from foreign suppliers and exports to foreign buyers. 
D) requirement that all employees be multilingual.

Question 6

Defensive measures are designed to enhance growth and profitability of the firm itself.

Accepted Answer

A) True 
 B)False

Question 7

MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

Accepted Answer

A) True 
 B)False

Question 8

________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.

Accepted Answer

A) Conservative; Aggressive 
B) Defensive; Proactive 
C) Proactive; Defensive 
D) Aggressive; Proactive 
A) Conservative; Aggressive 
B) Defensive; Proactive 
C) Proactive; Defensive 
D) Aggressive; Proactive

Question 9

A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value?

Accepted Answer

A) An open market place. 
B) High quality strategic management. 
C) Access to capital. 
D) none of the above 
A) An open market place. 
B) High quality strategic management. 
C) Access to capital. 
D) none of the above

Question 10

A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?

Accepted Answer

A) An open marketplace. 
B) High-quality strategic management. 
C) Access to capital. 
D) Access to qualified labor pool. 
A) An open marketplace. 
B) High-quality strategic management. 
C) Access to capital. 
D) Access to qualified labor pool.

Question 11

International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.

Accepted Answer

A) True 
 B)False

Question 12

The theory that suggests specialization by country can increase worldwide production is ________.

Accepted Answer

A) the theory of comparative advantage 
B) the theory of foreign direct investment 
C) the international Fisher effect 
D) the theory of working capital management 
A) the theory of comparative advantage 
B) the theory of foreign direct investment 
C) the international Fisher effect 
D) the theory of working capital management

Question 13

Which of the following factors of production DO NOT flow freely between countries?

Accepted Answer

A) Raw materials 
B) Financial capital 
C) (Non-military)Technology 
D) All of the above factors of production flow freely among countries. 
A) Raw materials 
B) Financial capital 
C) (Non-military)Technology 
D) All of the above factors of production flow freely among countries.

Question 14

Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.

Accepted Answer

A) True 
 B)False

Question 15

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

Accepted Answer

A) Rulers of sovereign states and unsavory customs officials. 
B) Corporate insiders and attorneys. 
C) Corporate insiders and rulers of sovereign states. 
D) Attorneys and unsavory customs officials. 
A) Rulers of sovereign states and unsavory customs officials. 
B) Corporate insiders and attorneys. 
C) Corporate insiders and rulers of sovereign states. 
D) Attorneys and unsavory customs officials.

Question 16

For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.

Accepted Answer

A) True 
 B)False

Question 17

Typically, a "greenfield" investment abroad is considered a greater foreign investment having a greater foreign presence than a joint venture with a foreign firm.

Accepted Answer

A) True 
 B)False

Question 18

Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital.

Accepted Answer

A) True 
 B)False

Question 19

A firm in the International Trade Phase of Globalization

Accepted Answer

A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units. 
B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units. 
C) bears direct foreign exchange risk. 
D) none of the above 
A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units. 
B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units. 
C) bears direct foreign exchange risk. 
D) none of the above

Question 20

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the

Accepted Answer

A) domestic phase. 
B) multinational phase. 
C) international trade phase. 
D) import-export banking phase. 
A) domestic phase. 
B) multinational phase. 
C) international trade phase. 
D) import-export banking phase.

Exam 1: Globalization and the Multinational Enterprise

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.

The authors describe the multinational phase of globalization for a firm as one characterized by the

Defensive measures are designed to enhance growth and profitability of the firm itself.

MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.

________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.

A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value?

A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?

International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.

The theory that suggests specialization by country can increase worldwide production is ________.

Which of the following factors of production DO NOT flow freely between countries?

Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.

Typically, a "greenfield" investment abroad is considered a greater foreign investment having a greater foreign presence than a joint venture with a foreign firm.

Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital.

A firm in the International Trade Phase of Globalization

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007-2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives

Interest Rate and Currency Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Operating Exposure

Translation Exposure

The Global Cost and Availability of Capital

Sourcing Equity Globally

Sourcing Debt Globally

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Political Risk

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

International Trade Finance

Filters

investments are designed to promote and enhance the growth and profitability of the firm. investments are designed to deny those same opportunities to the firm's competitors.