Question 1

What repercussions did the US CFOs anticipate when the Chinese government decided to allow the Yuan to float more freely in relation to other international currencies in 2010?

Accepted Answer

The answer of What repercussions did the US CFOs anticipate...

Question 2

The advantage of raising money through debt financing is that company management doesn't give up any ownership of the firm.

Accepted Answer

A) True 
 B)False

Question 3

What are the advantages of a centralized structure in an organization?

Accepted Answer

The answer of What are the advantages of a centralized...

Question 4

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

Accepted Answer

The answer of One alternative investment strategy approved by the...

Question 5

Most of the developed nations require consolidated statements so that losses can't be hidden under an unconsolidated subsidiary.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements holds true for transnational investment?

Accepted Answer

A)  It refers to the process of financing major projects such as plant expansion in different countries, entry into new countries, or research and development in new countries by taking loans from banks in the home country. 
B)  It refers to investing capital in foreign markets. 
C)  It refers to the organized trading of securities through exchanges. 
D)  It refers to seeking capital from foreign sources. 
E)  It refers to a technique that companies use to reduce the costs of cross-border payments between subsidiaries.

Question 7

Explain how Brazilian government policies have boosted foreign investment and innovation.

Accepted Answer

The answer of Explain how Brazilian government policies have boosted...

Question 8

An interim step toward the United States adopting IFRS would be to permit US firms that operate globally to file only under IFRS, rather than under both GAAP and IFRS, thereby reducing their financial-statement preparation costs.

Accepted Answer

A) True 
 B)False

Question 9

The _____ is the major entity proposing international standards of accounting and was formerly known as the International Accounting Standards Committee (IASC).

Accepted Answer

A)  International Public Sector Accounting Standards (IPSAS) Board 
B)  US Financial Accounting Standards Board (FAS
B)  
C)  International Accounting Standards Board (IAS
B)  
D)  Federal Reserve Bank (FRB
A)  of America 
E)  Australian Accounting Standards Board (AAS
B)

Question 10

Which of the following statements holds true for accounting standards?

Accepted Answer

A)  It refers to a statement that contains details of all a country's economic transactions with the rest of the world, for a given time period, usually one year. 
B)  It refers to the sale of securities under a negotiated agreement between an issuer and the investing institution, as an alternative to a public issue. 
C)  It refers to the rate of interest charged by the Federal Reserve Bank on financial accommodation extended to banks and financial institutions. 
D)  It refers to a system of rules and principles that prescribe the format and content of financial statements. 
E)  It refers to government securities that have the highest degree of reliability.

Question 11

Which of the following statements holds true for a decentralized 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)  A decentralized financial organization structure enables the firm to gain economies of scale for investment and borrowing activities that can reduce transaction costs and provide the firm with the most competitive pricing. 
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 12

Which of the following statements holds true for a forward contract?

Accepted Answer

A)  It refers to the method of foreign-currency translation in which items in the subsidiaries' financial statements are translated into the currency of the parent corporation at the current exchange rate. 
B)  It refers to the company-generated forecast of future spot exchange rates between two trading partners. 
C)  It refers to a method of foreign-currency translation that uses exchange rates based on the rate in place when the assets and liabilities were originally acquired or incurred. 
D)  It refers to the contract between two parties to buy or sell an asset today. 
E)  It refers to an agreement in which a firm agrees to pay a specific rate at the beginning of the contract for delivery at a future date.

Question 13

Joan wants to buy a new loom for her weaving business. She applies to a bank for a loan of $50,000. It is a long-term loan that she intends to pay in five years time at a fixed interest rate. This is an example of:

Accepted Answer

A)  debt financing. 
B)  capital budgeting. 
C)  equity financing. 
D)  trade credit. 
E)  multilateral netting.

Question 14

The internal forward rate is a company-generated forecast of future spot-exchange rates.

Accepted Answer

A) True 
 B)False

Question 15

Subsidiaries purchase assets at different times throughout the year and therefore the balance sheet of a multinational firm may not balance if the current-rate method is used.

Accepted Answer

A) True 
 B)False

Question 16

The downsides of a(n) _____ financial organization structure are higher costs (due to having to hire more employees), some unavoidable duplication of effort, and a diminishment of control.

Accepted Answer

The answer of The downsides of a(n) _____ financial organization...

Question 17

Which of the following statements holds true for fronting loan?

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 which in which the parent company directly gives a loan to its subsidiary. 
D)  It refers to the funding of the subsidiary by the parent company through a financial intermediary such as a bank. 
E)  It refers to the loan on which the bank charges companies a slightly lower rate of interest for expanding operations in developing countries.

Question 18

In the United States and Great Britain, companies tend to rely more on banks for funding than on individual investors.

Accepted Answer

A) True 
 B)False

Question 19

Why do some firms choose a decentralized financial organization structure?

Accepted Answer

The answer of Why do some firms choose a decentralized...

Question 20

_____ refers to the company-generated forecast of future spot exchange rates.

Accepted Answer

The answer of _____ refers to the company-generated forecast of...

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

What repercussions did the US CFOs anticipate when the Chinese government decided to allow the Yuan to float more freely in relation to other international currencies in 2010?

The advantage of raising money through debt financing is that company management doesn't give up any ownership of the firm.

What are the advantages of a centralized structure in an organization?

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

Most of the developed nations require consolidated statements so that losses can't be hidden under an unconsolidated subsidiary.

Which of the following statements holds true for transnational investment?

Explain how Brazilian government policies have boosted foreign investment and innovation.

An interim step toward the United States adopting IFRS would be to permit US firms that operate globally to file only under IFRS, rather than under both GAAP and IFRS, thereby reducing their financial-statement preparation costs.

The _____ is the major entity proposing international standards of accounting and was formerly known as the International Accounting Standards Committee (IASC) .

Which of the following statements holds true for accounting standards?

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

Which of the following statements holds true for a forward contract?

Joan wants to buy a new loom for her weaving business. She applies to a bank for a loan of $50,000. It is a long-term loan that she intends to pay in five years time at a fixed interest rate. This is an example of:

The internal forward rate is a company-generated forecast of future spot-exchange rates.

Subsidiaries purchase assets at different times throughout the year and therefore the balance sheet of a multinational firm may not balance if the current-rate method is used.

The downsides of a(n) _____ financial organization structure are higher costs (due to having to hire more employees), some unavoidable duplication of effort, and a diminishment of control.

Which of the following statements holds true for fronting loan?

In the United States and Great Britain, companies tend to rely more on banks for funding than on individual investors.

Why do some firms choose a decentralized financial organization structure?

_____ refers to the company-generated forecast of future spot exchange rates.