Question 1

In case of a _____ contract the firm will pay that rate specified at the beginning of the contract regardless of what the current exchange rate is at the date of the final settlement.

Accepted Answer

The answer of In case of a _____ contract the...

Question 2

Why do multinational firms choose to raise money in foreign markets?

Accepted Answer

The answer of Why do multinational firms choose to raise...

Question 3

In the case of _____ financing, firms can borrow money from banks or by selling bonds.

Accepted Answer

The answer of In the case of _____ financing, firms...

Question 4

Which of the following statements holds true for cost of capital?

Accepted Answer

A)  It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B)  It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future. 
C)  It refers to a process that lets the customer buying the goods or services defer payment on the good or services for a specified period of time, typically thirty or ninety days. 
D)  It refers to a set of procedures used to estimate the economic value of an owner's interest in a business. 
E)  It refers to the rate of return that a company could earn if it chose a different investment of equivalent risk.

Question 5

Which of the following statements holds true for trade credit?

Accepted Answer

A)  It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B)  It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future. 
C)  It refers to a process that lets the customer buying the goods or services defer payment on the good or services for a specified period of time, typically thirty or ninety days. 
D)  It refers to the process and a set of procedures used to estimate the economic value of an owner's interest in a business. 
E)  It refers to the rate of return that a company could earn if it chose a different investment of equivalent risk.

Question 6

Investors and banks use financial statements to determine whether to invest in or loan capital to the firm.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements holds true for a centralized financial organization structure?

Accepted Answer

A)  The government of the host country in which the subsidiary is located makes financing or investment decisions for the organization, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties. 
B)  Multinational firms choose a centralized financial organization structure due to variations in language, consumers, cultures, business practices, and government rules, laws, and regulations among different countries. 
C)  Subsidiaries or regions make financing or investment decisions for their region, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties. 
D)  The financial institutions which fund the organization set guidelines for the headquarters as well as the subsidiaries to follow, pool funds, leverage the benefits of scale for investment and borrowing, and hire knowledgeable staff to make the most effective firm-wide decisions. 
E)  All finance decisions are performed at headquarters, which sets guidelines for subsidiaries to follow, pools funds, leverages the benefits of scale for investment and borrowing, and hires knowledgeable staff to make the most effective firm-wide decisions.

Question 8

Consolidating financial statements of subsidiaries located in different countries poses problems because of the different currencies used in different countries.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements holds true for a spot exchange rate?

Accepted Answer

A)  It refers to the weighted average of a basket of foreign currencies. 
B)  It refers to the rate at which two parties agree to exchange currency and execute a deal that takes place immediately. 
C)  It refers to the rate that determines the pay-offs in a financial contract and that is outside the control of the parties to the contract. 
D)  It refers to the rate at which two parties agree to exchange currency and execute a deal at some specific point in the future, usually 30 days, 60 days, 90 days, or 180 days in the future. 
E)  It refers to the exchange rate based on the rate in place when the assets and liability were originally acquired or purchased.

Question 10

Which of the following statements holds true for multilateral netting?

Accepted Answer

A)  It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B)  It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future. 
C)  It refers to raising capital by selling shares of stock across countries. 
D)  It refers to a set of procedures used to estimate the economic value of an owner's interest in a business. 
E)  It refers to a technique that companies use to reduce the costs of cross-border payments between three or more subsidiaries.

Question 11

Which of the following statements is true about bilateral netting?

Accepted Answer

A)  It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B)  It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future. 
C)  It refers to raising capital by selling shares of stock across many countries. 
D)  It refers to a set of procedures used to estimate the economic value of an owner's interest in a business. 
E)  It refers to a technique that companies use to reduce the costs of cross-border payments between two subsidiaries.

Question 12

_____ refers to all the stock exchanges worldwide where firms can buy and sell stock for financing an investment.

Accepted Answer

A)  Global equity market 
B)  Commodity market 
C)  Currency market 
D)  Futures market 
E)  World trade market

Question 13

What alternatives to interest and speculative investments are approved by Sharia?

Accepted Answer

The answer of What alternatives to interest and speculative investments...

Question 14

In countries where companies tend to rely more on banks for funding, accounting rules are framed such that assets are valued conservatively to protect a bank's investment.

Accepted Answer

A) True 
 B)False

Question 15

The process of _____ budgeting helps a firm decide which major investment projects will be most economically advantageous for the firm by assessing each project's benefits, costs, and risks.

Accepted Answer

The answer of The process of _____ budgeting helps a...

Question 16

Some companies may gain greater efficiencies and stronger controls by making a move from the GAAP to the IFRS.

Accepted Answer

A) True 
 B)False

Question 17

An ice cream vendor signs a franchising agreement with the distributor. Under the agreement the distributor agrees to provide ice cream stock with a 10% discount on payment within 30 days, and a 20% discount on payment within 10 days. The distributor allows the operator 90 days to pay for the ice cream stock in full. The above serves as an example of:

Accepted Answer

A)  debt financing. 
B)  capital budgeting. 
C)  equity financing. 
D)  trade credit. 
E)  loan fronting.

Question 18

Sharia prohibits "gharar" which means "_____" and includes conventional practices like short selling.

Accepted Answer

A)  interest rate 
B)  uncertainty 
C)  gambling 
D)  lease 
E)  partnership

Question 19

An Indonesian importer needs U.S. dollars to pay for the shipment that he has just received. He will have to purchase the dollars to pay for the shipment. He exchanges rupiah for U.S. dollars which he pays to the foreign exporter. The rate at which he buys US dollars in the market is known as the _____.

Accepted Answer

A)  forward exchange rate 
B)  effective interest rate 
C)  spot exchange rate 
D)  internal forward rate 
E)  temporal rate

Question 20

Premium pricing, bank fees, and interest payments are costs associated with the current-rate method of foreign-currency translation.

Accepted Answer

A) True 
 B)False

Exam 15: Understanding the Roles of Finance and Accounting in Global Competitive Advantage

In case of a _____ contract the firm will pay that rate specified at the beginning of the contract regardless of what the current exchange rate is at the date of the final settlement.

Why do multinational firms choose to raise money in foreign markets?

In the case of _____ financing, firms can borrow money from banks or by selling bonds.

Which of the following statements holds true for cost of capital?

Which of the following statements holds true for trade credit?

Investors and banks use financial statements to determine whether to invest in or loan capital to the firm.

Which of the following statements holds true for a centralized financial organization structure?

Consolidating financial statements of subsidiaries located in different countries poses problems because of the different currencies used in different countries.

Which of the following statements holds true for a spot exchange rate?

Which of the following statements holds true for multilateral netting?

Which of the following statements is true about bilateral netting?

_____ refers to all the stock exchanges worldwide where firms can buy and sell stock for financing an investment.

What alternatives to interest and speculative investments are approved by Sharia?

In countries where companies tend to rely more on banks for funding, accounting rules are framed such that assets are valued conservatively to protect a bank's investment.

The process of _____ budgeting helps a firm decide which major investment projects will be most economically advantageous for the firm by assessing each project's benefits, costs, and risks.

Some companies may gain greater efficiencies and stronger controls by making a move from the GAAP to the IFRS.

Sharia prohibits "gharar" which means "_____" and includes conventional practices like short selling.

Premium pricing, bank fees, and interest payments are costs associated with the current-rate method of foreign-currency translation.