Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
,Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
1. The commonly accepted goal of an MNC is to:
+j +j +j +j +j +j +j +j
a. maximize short-term earnings. +j +j
b. maximize shareholder wealth. +j +j
c. minimize risk. +j
d. A and C. +j +j
e. maximize international sales. +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
2. With regard to corporate goals, an MNC is mostly concerned with maximizing
+j +j +j +j +j +j +j +j +j +j +j +j
, and a purely domestic firm is mostly concerned with maximizing
+j +j +j +j +j +j +j +j +j +j +j .
a. shareholder wealth; short- +j +j
term earnings +j
b. shareholder wealth; shareholder wealth +j +j +j
c. short-term earnings; sales volume +j +j +j
d. short-
term earnings; shareholder wealt
+j +j +j
h
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
3. For an MNC, agency costs are typically:
+j +j +j +j +j +j
a. nonexistent
b. larger than agency costs of a small purely domestic firm.
+j +j +j +j +j +j +j +j +j
c. smaller than agency costs of a small purely domesti
+j +j +j +j +j +j +j +j
c firm. +j
d. the same as agency costs of a small purely domestic firm.
+j +j +j +j +j +j +j +j +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
,Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
4. Which of the following could reduce agency problems for an MNC?
+j +j +j +j +j +j +j +j +j +j
a. stock options as managerial compensation
+j +j +j +j
b. hostile takeover threat +j +j
c. investor monitoring +j
d. all of the above are forms of corporate control that could reduce agency problems for a
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
n MNC. +j
ANSWER: d
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Comprehension +j
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
and when the foreign currencies denominating these cash flows are expecte
+j +j +j +j +j +j +j +j +j +j
d to .
+j +j
a. decrease; +j
appreciate
b. increase; appreciate +j
c. decrease; +j
depreciate
d. increase; depreciate +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Comprehension +j
6. Which of the following theories identifies specialization as a reason for international business?
+j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage
+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: a
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
, Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
7. Which of the following theories identifies the nontransferability of resources as a reason for international business?
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
8. Which of the following theories suggests that firms seek to penetrate new markets over time?
+j +j +j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: c
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
9. An industry based on which of the following would most likely take advantage of lower costs in some less develop
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
ed foreign countries?
+j +j
a. assembly line production +j +j
b. specialized professional services +j +j
c. nuclear missile programs +j +j
d. development of more sophisticated computer +j +j +j +j
technology
+j
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Application +j
+j +j +j +j +j +j
w
,Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
1. The commonly accepted goal of an MNC is to:
+j +j +j +j +j +j +j +j
a. maximize short-term earnings. +j +j
b. maximize shareholder wealth. +j +j
c. minimize risk. +j
d. A and C. +j +j
e. maximize international sales. +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
2. With regard to corporate goals, an MNC is mostly concerned with maximizing
+j +j +j +j +j +j +j +j +j +j +j +j
, and a purely domestic firm is mostly concerned with maximizing
+j +j +j +j +j +j +j +j +j +j +j .
a. shareholder wealth; short- +j +j
term earnings +j
b. shareholder wealth; shareholder wealth +j +j +j
c. short-term earnings; sales volume +j +j +j
d. short-
term earnings; shareholder wealt
+j +j +j
h
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
3. For an MNC, agency costs are typically:
+j +j +j +j +j +j
a. nonexistent
b. larger than agency costs of a small purely domestic firm.
+j +j +j +j +j +j +j +j +j
c. smaller than agency costs of a small purely domesti
+j +j +j +j +j +j +j +j
c firm. +j
d. the same as agency costs of a small purely domestic firm.
+j +j +j +j +j +j +j +j +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:
+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
,Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
4. Which of the following could reduce agency problems for an MNC?
+j +j +j +j +j +j +j +j +j +j
a. stock options as managerial compensation
+j +j +j +j
b. hostile takeover threat +j +j
c. investor monitoring +j
d. all of the above are forms of corporate control that could reduce agency problems for a
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
n MNC. +j
ANSWER: d
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Comprehension +j
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
and when the foreign currencies denominating these cash flows are expecte
+j +j +j +j +j +j +j +j +j +j
d to .
+j +j
a. decrease; +j
appreciate
b. increase; appreciate +j
c. decrease; +j
depreciate
d. increase; depreciate +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Comprehension +j
6. Which of the following theories identifies specialization as a reason for international business?
+j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage
+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: a
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS:+j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
, Chapter 01: Multinational Financial Management: An Overvie
+j +j +j +j +j +j
w
7. Which of the following theories identifies the nontransferability of resources as a reason for international business?
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
8. Which of the following theories suggests that firms seek to penetrate new markets over time?
+j +j +j +j +j +j +j +j +j +j +j +j +j +j
a. theory of comparative advantage+j +j +j
b. imperfect markets theory +j +j
c. product cycle theory +j +j
d. none of the above +j +j +j
ANSWER: c
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Knowledge +j
9. An industry based on which of the following would most likely take advantage of lower costs in some less develop
+j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j +j
ed foreign countries?
+j +j
a. assembly line production +j +j
b. specialized professional services +j +j
c. nuclear missile programs +j +j
d. development of more sophisticated computer +j +j +j +j
technology
+j
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
+j + j
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
+j + j +j +j +j +j
STATE STANDARDS: +j United States - OH - DISC.INFM.MADU.15.02 +j +j +j +j +j
KEYWORDS: Bloom's: Application +j
