Question Details

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- 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 funds, which have large holdings of an MNC- stock, do not normally want to take control of it and therefore have no influence over management of the MNC.
A) True.
B) False.

4. In comparing exporting to direct foreign investment (DFI), an exporting operation will likely incur  _______ fixed production costs and _______ transportation costs than DFI.
A) Higher; higher 
B) Higher; lower 
C) Lower; lower 
D) Lower; higher 

5. Which of the following is an example of direct foreign investment ?
A) Exporting to a country.
B) Establishing licensing arrangements in a country.
C) Purchasing existing companies in a country.
D) Investing directly (without brokers) in foreign stocks.



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