Recent Question

The direct foreign investment positions by U.S. firms 1. An increase in the use of quotas is expected to: A) reduce the country's current account balance, if other governments do not retaliate. B) increase the country's current account balance, if other governments do not retaliate. C) have no impact on the country's current account balance unless other governments retaliate. D) increase the volume of a country's trade with othe ...

Other / Other 22 Apr 2016

Franchising is the process by which national governments sell state owned operations 1. The agency costs of an MNC are likely to be lower if it: A) Scatters its subsidiaries across many foreign countries. B) Increases its volume of international business. C) Uses a centralized management style. D)Scatters its subsidiaries across many foreign countries and increases its volume of international business. 2. An MNC may be more exposed ...

Other / Other 22 Apr 2016

Which of the following is not a way in which agency problems can be reduced 1.The Single European Act of 1987: a. reduced competition in most industries. b. eliminated competition in many industries. c. reduced efficiency in most industries. d. increased competition in most industries. 2. ____________ are most commonly classified as a direct foreign investment. a. Foreign acquisitions c. Licensing agreements Licensing agreements ...

Other / Other 22 Apr 2016

Which of the following industries would most likely take advantage of lower costs 1. Which of the following theories identifies specialization as a reason for international business? A) Theory of comparative advantage. B) Imperfect markets theory. C) Product cycle theory. D) None of these. 2. Which of the following theories identifies the non-transferability of resources as a reason for international business? A) Theory of compara ...

Other / Other 22 Apr 2016

Which of the following is an example of direct foreign investment 1. The parent of an MNC can implement compensation plans that directly reward the subsidiary managers for enhancing the value of the MNC. A) True. B) False. 2. If a publicly traded MNC’s managers make poor decisions that reduce its value, it may encourage other firms to acquire it. A) True. B) False. 3. Institutional investors such as mutual funds or pension ...

Other / Other 22 Apr 2016

Which of the following theories suggests that firms seek to penetrate new markets 1.The commonly accepted goal of the MNC is to: a. maximize short-term earnings. b. maximize shareholder wealth. c. minimize risk. d. A and C. e. maximize international sales. 2.Which of the following is not a form of corporate control that could reduce agency problems for an MNC? a. stock options. b. hostile takeover threat. c. investor monitoring ...

Other / Other 22 Apr 2016

The valuation of an MNC should raise when an event causes the expected cash flows 1. One of the most prevalent factors conflicting with the realization of the goal of an MNC is the existence of agency problems. a. true. b. False false. 2. A centralized management style for an MNC results in relatively high agency costs. a. true. b. False false. 3. With regard to corporate goals, an MNC is mostly concerned with maximizing _______, ...

Other / Other 22 Apr 2016

Explain how financial markets could help to finance the growth of the business One of the best methods of learning broad concepts in this text is to put yourself in the place of an MNC manager or board member, and apply the concepts to make financial decisions. Board members do not normally make the decisions that are discussed here, but must have the conceptual skills to monitor the policies that are implemented by the MNC’s ma ...

Other / Other 22 Apr 2016

The spot rate of the Mexican peso 1. Covered Interest Arbitrage. Evansville, Inc., has $2 million in cash available for 90 days. It is considering the use of covered interest arbitrage, since the euro’s 90-day interest rate is higher than the U.S. interest rate. What will determine whether this strategy is feasible? 2. Effective Yield. Fort Collins, Inc., has $1 million in cash available for 30 days. It can earn 1% on a 30-da ...

Other / Other 22 Apr 2016

By what percentage will the Canadian dollar have to depreciate to make its effective yield 1. Effective Yield. Repeat question 9, but this time assume that Rollins, Inc., expects the 180-day forward rate of the pound to substantially underestimate the spot rate to be realized in 180 days. 2. Effective Yield. Assume that the one-year U.S. interest rate is 10% and the one-year Canadian interest rate is 13%. If a U.S. firm invests its fu ...

Other / Other 22 Apr 2016