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