Test Bank for International Financial Management – 15th Edition by Jeff Madura & Chad Zipfel (2025–2026)

TEST BANK
International Financial Management, 15th Edition - 9798214040684

,1. The commonly accepted goal of an MNC is to:
a. maximize short-term earnings.
b. maximize shareholder wealth.
c. minimize risk.
d. A and C.
e. maximize international sales.
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

2. 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
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

3. For an MNC, agency costs are typically:
a. nonexistent
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
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

,4. 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
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Comprehension

5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
and when the foreign currencies denominating these cash flows are expected
to .
a. decrease;
appreciate
b. increase; appreciate
c. decrease;
depreciate
d. increase; depreciate
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Comprehension

6. 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
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

, 7. Which of the following theories identifies the nontransferability 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
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

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
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Knowledge

9. An industry based on which of the following 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 programs
d. development of more sophisticated computer
technology
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
STATE STANDARDS: United States - OH - DISC.INFM.MADU.15.02
KEYWORDS: Bloom's: Application