MULTINATIONAL BUSINESS FINANCE
PRACTICE EVALUATION 2026 QUESTIONS
WITH ANSWERS GRADED A+
⩥ With regard to corporate goals, an MNC is mostly concerned with
maximizing ____, and a purely domestic firm is mostly concerned with
maximizing ____.
a.shareholder wealth; short-term earnings
b.shareholder wealth; shareholder wealth
c.short-term earnings; sales volume
d.short-term earnings; shareholder wealth. Answer: B
⩥ For the MNC, agency costs are typically:
a.non-existent.
b.larger than agency costs of a small purely domestic firm.
c.smaller than agency costs of a small purely domestic firm.
d.the same as agency costs of a small purely domestic firm. Answer: B
⩥ Which of the following could reduce agency problems for an MNC?
a.stock options as managerial compensation.
b.hostile takeover threat.
c.investor monitoring.
,d.all of the above are forms of corporate control that could reduce
agency problems for an MNC. Answer: D
⩥ The valuation of an MNC should rise when an event causes the
expected cash flows from foreign to ____ and when foreign currencies
denominating these cash flows are expected to ____.
a.decrease; appreciate
b.increase; appreciate
c.decrease; depreciate
d.increase; depreciate Answer: B
⩥ 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 the above Answer: A
⩥ Which of the following theories identifies the non-transferability of
resources as a reason for international business?
a.theory of comparative advantage.
b.imperfect markets theory.
c.product cycle theory.
, d.none of the above Answer: B
⩥ 8. Which of the following theories suggests that firms seek to
penetrate new markets over time?
a.theory of comparative advantage.
b.imperfect markets theory.
c.product cycle theory.
d.none of the above Answer: C
⩥ Which of the following industries would most likely take advantage of
lower costs in some less developed foreign countries?
a.assembly line production.
b.specialized professional services.
c.nuclear missile planning.
d.planning for more sophisticated computer technology. Answer: A
⩥ Due to the risks involved in international business, firms should:
a.only consider international business in major countries.
b.maintain international business to no more than 20% of total business.
c.maintain international business to no more than 35% of total business.
d.none of the above Answer: D
PRACTICE EVALUATION 2026 QUESTIONS
WITH ANSWERS GRADED A+
⩥ With regard to corporate goals, an MNC is mostly concerned with
maximizing ____, and a purely domestic firm is mostly concerned with
maximizing ____.
a.shareholder wealth; short-term earnings
b.shareholder wealth; shareholder wealth
c.short-term earnings; sales volume
d.short-term earnings; shareholder wealth. Answer: B
⩥ For the MNC, agency costs are typically:
a.non-existent.
b.larger than agency costs of a small purely domestic firm.
c.smaller than agency costs of a small purely domestic firm.
d.the same as agency costs of a small purely domestic firm. Answer: B
⩥ Which of the following could reduce agency problems for an MNC?
a.stock options as managerial compensation.
b.hostile takeover threat.
c.investor monitoring.
,d.all of the above are forms of corporate control that could reduce
agency problems for an MNC. Answer: D
⩥ The valuation of an MNC should rise when an event causes the
expected cash flows from foreign to ____ and when foreign currencies
denominating these cash flows are expected to ____.
a.decrease; appreciate
b.increase; appreciate
c.decrease; depreciate
d.increase; depreciate Answer: B
⩥ 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 the above Answer: A
⩥ Which of the following theories identifies the non-transferability of
resources as a reason for international business?
a.theory of comparative advantage.
b.imperfect markets theory.
c.product cycle theory.
, d.none of the above Answer: B
⩥ 8. Which of the following theories suggests that firms seek to
penetrate new markets over time?
a.theory of comparative advantage.
b.imperfect markets theory.
c.product cycle theory.
d.none of the above Answer: C
⩥ Which of the following industries would most likely take advantage of
lower costs in some less developed foreign countries?
a.assembly line production.
b.specialized professional services.
c.nuclear missile planning.
d.planning for more sophisticated computer technology. Answer: A
⩥ Due to the risks involved in international business, firms should:
a.only consider international business in major countries.
b.maintain international business to no more than 20% of total business.
c.maintain international business to no more than 35% of total business.
d.none of the above Answer: D
