Exam 1: Current Multinational Challenges and the Global Economy

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

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.

List and explain three strategic motives why firms become multinationals and give an example of each.

Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization-the privately held or family-owned business is the prevalent structure-and their goals and measures of performance differ dramatically.

Eurocurrency markets serve two valuable purposes: 1)Eurocurrency deposits are an efficient and convenient money market device for holding excess corporate liquidity; and 2)the Eurocurrency market is a major source of short-term bank loans to finance corporate working capital needs, including the financing of imports and exports.

Relative to MNEs, purely domestic firms tend to have GREATER political risk.

It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.

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

When discussing comparative advantage, it is apparent that today at least two of the factors of production, capital and technology, now flow directly and easily between countries, rather than only indirectly through traded goods and services.

Domestic firms tend to make GREATER use of financial derivatives than MNEs because they can bear the greater risk presented by these financial instruments.