Question 1

Why might setting up production facilities abroad lead to expanded sales in local markets?

Accepted Answer

When a firm such as a multinational produces abroad,it can more easily monitor market developments,adapt its products and production schedules,and provide more comprehensive after-sales services.Establishing local production facilities also demonstrates a greater commitment to the local citizens and the markets.It can also assure a stable supply of resources.This is particularly important for firms who produce intermediate goods for sale to other countries.

Question 2

Institutional investors play important roles in financial markets.Explain.

Accepted Answer

Institutional investors such as insurance companies,retirement funds,and mutual funds have the ability to help determine security prices,the cost of equity and debt.

Question 3

The main resources of the International Monetary Fund are provided by

Accepted Answer

A)  the members of the World Bank. 
B)  its member countries primarily through payments of quotas. 
C)  members of the Organization for Economic Cooperation and Development. 
D)  the Bank for International Settlements. 
A)  the members of the World Bank. 
B)  its member countries primarily through payments of quotas. 
C)  members of the Organization for Economic Cooperation and Development. 
D)  the Bank for International Settlements. B

Question 4

In 1992,the European Union decided to create an economic as well as a monetary union involving the introduction of

Accepted Answer

A)  a pegged currency known as the euro. 
B)  a managed currency know as the ecu. 
C)  a freely floating exchange rate for a currency known as the euro. 
D)  a single European currency managed by a European central bank. 
A)  a pegged currency known as the euro. 
B)  a managed currency know as the ecu. 
C)  a freely floating exchange rate for a currency known as the euro. 
D)  a single European currency managed by a European central bank.

Question 5

In the economic field of agency theory,which one of the following is viewed as an agent with the principals who are most importantly the firm's shareholders?

Accepted Answer

A)  suppliers 
B)  employees 
C)  managers 
D)  attorneys 
A)  suppliers 
B)  employees 
C)  managers 
D)  attorneys

Question 6

Which one of the following is the most common method of overcoming the agency problem in developed countries outside of the U.S.and the U.K?

Accepted Answer

A)  concentrated ownership 
B)  currency boards 
C)  hostile takeovers 
D)  foreign direct investment 
A)  concentrated ownership 
B)  currency boards 
C)  hostile takeovers 
D)  foreign direct investment

Question 7

Which one of the following has a single currency managed by a common central bank?

Accepted Answer

A)  ASEAN 
B)  European Union 
C)  World Trade Organization 
D)  The Organization for Economic Cooperation and Development 
A)  ASEAN 
B)  European Union 
C)  World Trade Organization 
D)  The Organization for Economic Cooperation and Development

Question 8

Which organization was originally designed to encourage free trade between member states by regulating and reducing tariffs on traded goods?

Accepted Answer

A)  NAFTA 
B)  EU 
C)  ASEAN 
D)  GATT 
A)  NAFTA 
B)  EU 
C)  ASEAN 
D)  GATT

Question 9

What is the name of the international organization that fosters monetary and financial cooperation and serves as a bank for central banks?

Accepted Answer

A)  WTO 
B)  EU 
C)  World Bank 
D)  Bank for International Settlements 
A)  WTO 
B)  EU 
C)  World Bank 
D)  Bank for International Settlements

Question 10

What is the name for the shifting of non-strategic functions to specialist firms to reduce costs?

Accepted Answer

A)  outsourcing 
B)  multinational company 
C)  globalization 
D)  transnational corporations 
A)  outsourcing 
B)  multinational company 
C)  globalization 
D)  transnational corporations

Question 11

What do the Enron Corporation,Worldcom,and Tyco have in common?

Accepted Answer

A)  They were part of the oil and gas industry. 
B)  All three were owned by a single parent company. 
C)  Each one was an example of sound corporate governance. 
D)  All were involved in corporate scandals. 
A)  They were part of the oil and gas industry. 
B)  All three were owned by a single parent company. 
C)  Each one was an example of sound corporate governance. 
D)  All were involved in corporate scandals.

Question 12

How can financial globalization be blamed for the loss of fiscal autonomy to a nation?

Accepted Answer

The loss of fiscal autonomy is often see

Question 13

State-owned investment funds that manage global portfolios of investment assets are known as

Accepted Answer

A)  hedge funds. 
B)  sovereign wealth funds. 
C)  city-state pensions. 
D)  multinational mutual funds. 
A)  hedge funds. 
B)  sovereign wealth funds. 
C)  city-state pensions. 
D)  multinational mutual funds.

Question 14

________ is a company that is commonly owned and operated by two or more firms.

Accepted Answer

A)  Joint Venture 
B)  Franchising 
C)  Licensing 
D)  Royalty 
A)  Joint Venture 
B)  Franchising 
C)  Licensing 
D)  Royalty

Question 15

Which of the following are institutional banks that provide financial support and professional advice for developing countries?

Accepted Answer

A)  multilateral development banks 
B)  central banks 
C)  investment banks 
D)  Barclays bank 
A)  multilateral development banks 
B)  central banks 
C)  investment banks 
D)  Barclays bank

Question 16

What economic field of study explores the problems associated with a firm that arise from a separation of ownership and control and devises ways to resolve them?

Accepted Answer

A)  futures and options 
B)  agency theory 
C)  foreign direct investment 
D)  franchising 
A)  futures and options 
B)  agency theory 
C)  foreign direct investment 
D)  franchising

Question 17

Globally why are certain types of firms seeking others with poor corporate governance?

Accepted Answer

Hedge funds and private equity

Question 18

Which one of the following is an investment from which the payoff over time is derived from the performance of an underlying asset?

Accepted Answer

A)  a common stock certificate 
B)  a derivative security 
C)  a corporate bond 
D)  a mortgage bond 
A)  a common stock certificate 
B)  a derivative security 
C)  a corporate bond 
D)  a mortgage bond

Question 19

It is the right given to firms to produce specific products in exchange for a ________ fee.

Accepted Answer

A)  Joint Venture 
B)  Securitization 
C)  Licensing 
D)  Royalty 
A)  Joint Venture 
B)  Securitization 
C)  Licensing 
D)  Royalty

Question 20

Why do the anti-globalists see globalization as a threat to the home country?

Accepted Answer

Anti-globalists believe that o

Exam 1: Globalization and the Multinational Corporation

Why might setting up production facilities abroad lead to expanded sales in local markets?

Institutional investors play important roles in financial markets.Explain.

The main resources of the International Monetary Fund are provided by

In 1992,the European Union decided to create an economic as well as a monetary union involving the introduction of

In the economic field of agency theory,which one of the following is viewed as an agent with the principals who are most importantly the firm's shareholders?

Which one of the following is the most common method of overcoming the agency problem in developed countries outside of the U.S.and the U.K?

Which one of the following has a single currency managed by a common central bank?

Which organization was originally designed to encourage free trade between member states by regulating and reducing tariffs on traded goods?

What is the name of the international organization that fosters monetary and financial cooperation and serves as a bank for central banks?

What is the name for the shifting of non-strategic functions to specialist firms to reduce costs?

What do the Enron Corporation,Worldcom,and Tyco have in common?

How can financial globalization be blamed for the loss of fiscal autonomy to a nation?

State-owned investment funds that manage global portfolios of investment assets are known as

________ is a company that is commonly owned and operated by two or more firms.

Which of the following are institutional banks that provide financial support and professional advice for developing countries?

What economic field of study explores the problems associated with a firm that arise from a separation of ownership and control and devises ways to resolve them?

Globally why are certain types of firms seeking others with poor corporate governance?

Which one of the following is an investment from which the payoff over time is derived from the performance of an underlying asset?

It is the right given to firms to produce specific products in exchange for a ________ fee.

Why do the anti-globalists see globalization as a threat to the home country?

The Foreign Exchange Market

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Exchange Rate Systems

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

Country and Political Risk

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

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