Question Details

The valuation of an MNC is reduced if the required return on its investments 



1. The valuation of an MNC is reduced if the required return on its investments in foreign countries is reduced.
A) True.
B) False.

2. Which of the following is not mentioned in the text as an additional risk resulting from international business?
A) Exchange rate fluctuations.
B) Political risk.
C) Interest rate risk.
D) Exposure to foreign economies.

3. Licensing obligates a firm to provide _______, while franchising obligates a firm to provide _______.
A) A specialized sales or service strategy; its technology
B) Its technology; a specialized sales or service strategy
C) Its technology; its technology
D) A specialized sales or service strategy; a specialized sales or service strategy
E) Its technology; an initial investment

4. Which of the following is not a way in which agency problems can be reduced through corporate control?
A) Executive compensation.
B) Threat of hostile takeover.
C) Acquisition of a foreign subsidiary.
D) Monitoring by large shareholders.

5. A centralized management style, where major decisions about a foreign subsidiary are made by the parent company, results in an increase in agency costs.
A) True.
B) False.



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