Exam 19: International Managerial Finance

NAFTA is an international financial market that provides for borrowing and lending currencies outside their country of origin.

A partnership between a multinational company and a foreign investor in which contractually specified amounts of money and expertise are contributed by the participants for stated proportions of ownership and profit is a

If the exchange rate between the U.S. dollar and the Euro is $1.20 per Euro and the annual rate of inflation is 5 percent in the United States and 10 percent in Europe, what will be U.S. dollar per Euro exchange rate in one year?

The functional currency is the currency of the economic environment in which a business entity primarily generates and expends cash, and in which its accounts are maintained.

The ________ is the taxation technique that increases the U.S. income of an MNC by the amount of foreign income (before foreign taxes). The U.S. tax calculation is then based on that higher level.

The transfer by a multinational firm of capital, managerial, and technical assets from its home country to a host country is termed

The all-current-rate method dictated by the FASB No. 52 statement requires the translation of all balance sheet accounts at the ______ rate and all income statement items at the ________ rates.

Both theory and empirical evidence indicate that the capital structures of MNCs are no different from those of purely domestic firms.

The Mercosur Group is a major South American trading bloc that includes countries that account for more than half of the total of Latin America's GDP.

For ________ currencies, changes in the value of foreign exchange rates are called ________.

In general, an international bond is one that is initially sold in the country of the borrower and, then, often distributed in several countries.

An international bond that is sold primarily in countries other than the country of the currency in which the issue is denominated is called

Both theory and empirical evidence indicate that the capital structures of MNCs differ from those of purely domestic firms.

Micro political risk is the risk faced by all foreign firms in a host country related to political change, revolution, and the adoption of new policies of a government that may result in changes in ownership structure, closure or expropriation.

Joint venture laws and restrictions may result in any of the following negative implications for the operation of a foreign-based subsidiary EXCEPT

Nico Mining, a U.S.-based MNC has a foreign subsidiary that earns $1,050,000 before local taxes, with all the after tax funds to be available to the parent in the form of dividends. The foreign income tax rate is 30 percent, the foreign dividend withholding tax rate is 15 percent, and the firm's U.S. tax rate is 35 percent. What are the funds available to the parent MNC if no tax credits are allowed?

One reason for the recent rapid grow in the Euromarket is that it provides multinational companies with an "external" opportunity to borrow or lend funds with the additional feature of less government regulation.

The temporal method requires specific assets and liabilities to be translated at so-called historic exchange rates, and that foreign-exchange translation gains or losses be reflected in the current year's income.

Current U.S. tax laws require the separation of financial statements of subsidiaries and the operating results for some subsidiaries are excluded from the parent entirely for some countries such as China and India.

In 2003-2004, the United States signed a regional trade pact with south pacific countries including the Philippines, Indonesia, Malaysia called the South Pacific American Trade Agreement or SPAMTA.