Question 1

Dividends paid from a foreign subsidiary to the U.S.parent company are not taxable under U.S.law.

Accepted Answer

A) True 
 B)False

Question 2

In the case of nationalization,"adequate" compensation is defined as fair market value.

Accepted Answer

A) True 
 B)False

Question 3

A foreign investor may take a case against a foreign government to arbitration where:

Accepted Answer

A)  The arbitration has been ordered by the president. 
B)  The Foreign Sovereign Immunities Act requires it. 
C)  The act of state doctrine requires it. 
D)  The foreign nation consents to it. 
E)  All of the above.

Question 4

Because passive investments create the least risk of foreign control,they are the least regulated of foreign investments.

Accepted Answer

A) True 
 B)False

Question 5

If a U.S.company chooses to establish a branch abroad,it faces less potential vicarious liability because it is separated from the branch.

Accepted Answer

A) True 
 B)False

Question 6

In order to qualify for the favorable tax treatment of a Foreign Sales Corporation,a U.S.firm must meet all of the following tests,except:

Accepted Answer

A)  At least one director must be a nonresident of the U.S. 
B)  Its income must be derived from qualified export activity such as the sale of goods abroad. 
C)  Management must be outside the U.S. 
D)  None of the income may be repatriated to the United States. 
E)  The FSC must participate in soliciting, negotiating, or contracting with a foreign buyer.

Question 7

Compare and contrast the partial sale,trade sale,and concession models of privatization.

Accepted Answer

The answer of Compare and contrast the partial sale,trade sale,and...

Question 8

Often,investors must create legal structures for their investment that will maximize the foreign venture's U.S.dollar resources.These might include:

Accepted Answer

A)  Borrowing start-up money in local currency. 
B)  Buying supplies and services locally, using local currency. 
C)  Building unitary index adjustment factors into contractual payment terms. 
D)  All of the above.

Question 9

Political risk or investment insurance is available in the United States through a U.S.government agency known as:

Accepted Answer

A)  The Overseas Public Investment Commission. 
B)  The Overseas Private Investment Corporation. 
C)  The Open Private Insurance Corporation. 
D)  The Overseas Panel for Insurance Coverage.

Question 10

Investors receiving compensation for the nationalization of property in a foreign country generally obtain payment in their own currency,thus avoiding any currency risk.

Accepted Answer

A) True 
 B)False

Question 11

Presume that you are considering investing in a foreign business/industry that is about to undergo government privatization.Draft a set of negotiation objectives you wish to address with the government.

Accepted Answer

The answer of Presume that you are considering investing in...

Question 12

An example of an active investment is the joint venture.

Accepted Answer

A) True 
 B)False

Question 13

As a general rule,firms are responsible for the torts committed by their foreign subsidiaries but not by their foreign branch offices.

Accepted Answer

A) True 
 B)False

Question 14

Explain the differences among the three main theories of compensation for government takings of foreign-owned properties.

Accepted Answer

The answer of Explain the differences among the three main...

Question 15

The political risk of investing in developed countries is roughly comparable with the risks of investing in the developing countries.

Accepted Answer

A) True 
 B)False

Question 16

Write a memo to the legislature advocating the adoption of a particular tax exemption system.

Accepted Answer

The answer of Write a memo to the legislature advocating...

Question 17

The "transfer pricing" provision attempts to identify the taxable income had the transaction been between unrelated parties dealing at arm's length.

Accepted Answer

A) True 
 B)False

Question 18

Considering the different types of currency risk associated with foreign transactions,which is most salient for a U.S.business?

Accepted Answer

The answer of Considering the different types of currency risk...

Question 19

Weigh the relative benefits and detriments of changing from a sales tax to a value-added tax.What other information would be important to you in making this assessment?

Accepted Answer

The answer of Weigh the relative benefits and detriments of...

Question 20

Virtually every foreign country prohibits entities controlled by foreigners in a number of particularly sensitive sectors.

Accepted Answer

A) True 
 B)False

Exam 18: Takings and National Controls on Foreign Direct Investment

Dividends paid from a foreign subsidiary to the U.S.parent company are not taxable under U.S.law.

In the case of nationalization,"adequate" compensation is defined as fair market value.

A foreign investor may take a case against a foreign government to arbitration where:

Because passive investments create the least risk of foreign control,they are the least regulated of foreign investments.

If a U.S.company chooses to establish a branch abroad,it faces less potential vicarious liability because it is separated from the branch.

In order to qualify for the favorable tax treatment of a Foreign Sales Corporation,a U.S.firm must meet all of the following tests,except:

Compare and contrast the partial sale,trade sale,and concession models of privatization.

Often,investors must create legal structures for their investment that will maximize the foreign venture's U.S.dollar resources.These might include:

Political risk or investment insurance is available in the United States through a U.S.government agency known as:

Investors receiving compensation for the nationalization of property in a foreign country generally obtain payment in their own currency,thus avoiding any currency risk.

Presume that you are considering investing in a foreign business/industry that is about to undergo government privatization.Draft a set of negotiation objectives you wish to address with the government.

An example of an active investment is the joint venture.

As a general rule,firms are responsible for the torts committed by their foreign subsidiaries but not by their foreign branch offices.

Explain the differences among the three main theories of compensation for government takings of foreign-owned properties.

The political risk of investing in developed countries is roughly comparable with the risks of investing in the developing countries.

Write a memo to the legislature advocating the adoption of a particular tax exemption system.

The "transfer pricing" provision attempts to identify the taxable income had the transaction been between unrelated parties dealing at arm's length.

Considering the different types of currency risk associated with foreign transactions,which is most salient for a U.S.business?

Weigh the relative benefits and detriments of changing from a sales tax to a value-added tax.What other information would be important to you in making this assessment?

Virtually every foreign country prohibits entities controlled by foreigners in a number of particularly sensitive sectors.