MULTINATIONAL BUSINESS FINANCE
CERTIFICATION REVIEW 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
⩥ What are the three main components of the balance of payments
statement? Answer: Current Account, Capital Account, and Financial
Account.
⩥ What does the Current Account summarize? Answer: The flow of
funds due to purchases of goods or services and the provision of income
on financial assets.
⩥ What is included in the Capital Account? Answer: The flow of funds
resulting from the sale of assets between one specified country and all
other countries.
⩥ What does the Financial Account refer to? Answer: Special types of
investment, including Direct Foreign Investment (DFI) and portfolio
investment.
⩥ What are merchandise exports and imports? Answer: Tangible
products transported between countries.
,⩥ What is the balance of trade? Answer: The difference between total
exports and imports.
⩥ What does Primary Income Payments represent in the Current
Account? Answer: Income earned by Multinational Corporations
(MNCs) on their direct foreign investments and income earned by
investors on their portfolio investments.
⩥ What does Secondary Income represent? Answer: Aid, grants, and
gifts from one country to another.
⩥ What has been the trend of the U.S. current account balance since
1992? Answer: It has been consistently negative.
⩥ What is Direct Foreign Investment (DFI)? Answer: New direct foreign
investment summarized over a given period.
⩥ What is Portfolio Investment? Answer: Investment in financial assets
such as stocks or bonds summarized over a given period.
⩥ What does the Capital Account summarize? Answer: The flow of
funds due to financial assets transferred across borders by people
moving to a different country or due to sales of patents and trademarks.
, ⩥ What event led to reductions in trade barriers in Eastern Europe?
Answer: The removal of the Berlin Wall.
⩥ What was the purpose of the Single European Act of 1987? Answer:
To improve access to supplies from firms in other European countries.
⩥ What did the North American Free Trade Agreement (NAFTA) allow?
Answer: U.S. firms to penetrate product and labor markets that were
previously inaccessible.
⩥ What was the goal of the General Agreement on Tariffs and Trade
(GATT)? Answer: To reduce or eliminate trade restrictions on specified
imported goods over a 10-year period across 117 countries.
⩥ What is outsourcing? Answer: The process of subcontracting to a third
party in another country to provide supplies or services that were
previously produced internally.
⩥ What are some criticisms of outsourcing? Answer: It may reduce jobs
in the United States.
⩥ What should managers consider when making outsourcing decisions?
Answer: Potential savings, job creation for U.S. workers, and possible
bad publicity or morale issues among U.S. workers.
CERTIFICATION REVIEW 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
⩥ What are the three main components of the balance of payments
statement? Answer: Current Account, Capital Account, and Financial
Account.
⩥ What does the Current Account summarize? Answer: The flow of
funds due to purchases of goods or services and the provision of income
on financial assets.
⩥ What is included in the Capital Account? Answer: The flow of funds
resulting from the sale of assets between one specified country and all
other countries.
⩥ What does the Financial Account refer to? Answer: Special types of
investment, including Direct Foreign Investment (DFI) and portfolio
investment.
⩥ What are merchandise exports and imports? Answer: Tangible
products transported between countries.
,⩥ What is the balance of trade? Answer: The difference between total
exports and imports.
⩥ What does Primary Income Payments represent in the Current
Account? Answer: Income earned by Multinational Corporations
(MNCs) on their direct foreign investments and income earned by
investors on their portfolio investments.
⩥ What does Secondary Income represent? Answer: Aid, grants, and
gifts from one country to another.
⩥ What has been the trend of the U.S. current account balance since
1992? Answer: It has been consistently negative.
⩥ What is Direct Foreign Investment (DFI)? Answer: New direct foreign
investment summarized over a given period.
⩥ What is Portfolio Investment? Answer: Investment in financial assets
such as stocks or bonds summarized over a given period.
⩥ What does the Capital Account summarize? Answer: The flow of
funds due to financial assets transferred across borders by people
moving to a different country or due to sales of patents and trademarks.
, ⩥ What event led to reductions in trade barriers in Eastern Europe?
Answer: The removal of the Berlin Wall.
⩥ What was the purpose of the Single European Act of 1987? Answer:
To improve access to supplies from firms in other European countries.
⩥ What did the North American Free Trade Agreement (NAFTA) allow?
Answer: U.S. firms to penetrate product and labor markets that were
previously inaccessible.
⩥ What was the goal of the General Agreement on Tariffs and Trade
(GATT)? Answer: To reduce or eliminate trade restrictions on specified
imported goods over a 10-year period across 117 countries.
⩥ What is outsourcing? Answer: The process of subcontracting to a third
party in another country to provide supplies or services that were
previously produced internally.
⩥ What are some criticisms of outsourcing? Answer: It may reduce jobs
in the United States.
⩥ What should managers consider when making outsourcing decisions?
Answer: Potential savings, job creation for U.S. workers, and possible
bad publicity or morale issues among U.S. workers.
