,Chapter 01: Multinational Financial Management: An Overvie
g1 g1 g1 g1 g1 g1
w
1. The commonly accepted goal of an MNC is to:
g1 g1 g1 g1 g1 g1 g1 g1
a. maximize short-term earnings. g1 g1
b. maximize shareholder wealth. g1 g1
c. minimize risk. g1
d. A and C. g1 g1
e. maximize international sales. g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
2. With regard to corporate goals, an MNC is mostly concerned with maximizing
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
, and a purely domestic firm is mostly concerned with maximizing
g1 g1 g1 g1 g1. g1 g1 g1 g1 g1 g1
a. shareholder wealth; short- g1 g1
term earnings g1
b. shareholder wealth; shareholder wealth g1 g1 g1
c. short-term earnings; sales volume g1 g1 g1
d. short-
term earnings; shareholder weal
g1 g1 g1
th
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
3. For an MNC, agency costs are typically:
g1 g1 g1 g1 g1 g1
a. nonexistent
b. larger than agency costs of a small purely domestic firm.
g1 g1 g1 g1 g1 g1 g1 g1 g1
c. smaller than agency costs of a small purely domest
g1 g1 g1 g1 g1 g1 g1 g1
ic firm. g1
d. the same as agency costs of a small purely domestic firm.
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
,Chapter 01: Multinational Financial Management: An Overvie
g1 g1 g1 g1 g1 g1
w
4. Which of the following could reduce agency problems for an MNC?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. stock options as managerial compensation
g1 g1 g1 g1
b. hostile takeover threat g1 g1
c. investor monitoring g1
d. all of the above are forms of corporate control that could reduce agency problems fo
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
r an MNC. g1 g1
ANSWER: d
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Comprehension g1
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
and when the foreign currencies denominating these cash flows are expect
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
ed to .
g1 g1
a. decrease; g1
appreciate
b. increase; appreciate g1
c. decrease; g1
depreciate
d. increase; depreciate g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Comprehension g1
6. Which of the following theories identifies specialization as a reason for international business?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above g1 g1 g1
ANSWER: a
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
, Chapter 01: Multinational Financial Management: An Overvie
g1 g1 g1 g1 g1 g1
w
7. Which of the following theories identifies the nontransferability of resources as a reason for international business?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage
g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above
g1 g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
8. Which of the following theories suggests that firms seek to penetrate new markets over time?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage
g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above
g1 g1 g1
ANSWER: c
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
9. An industry based on which of the following would most likely take advantage of lower costs in some less devel
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oped foreign countries?
g1 g1
a. assembly line production g1 g1
b. specialized professional services g1 g1
c. nuclear missile programsg1 g1
d. development of more sophisticated compute g1 g1 g1 g1
r technology
g1
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Application g1
g1 g1 g1 g1 g1 g1
w
1. The commonly accepted goal of an MNC is to:
g1 g1 g1 g1 g1 g1 g1 g1
a. maximize short-term earnings. g1 g1
b. maximize shareholder wealth. g1 g1
c. minimize risk. g1
d. A and C. g1 g1
e. maximize international sales. g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
2. With regard to corporate goals, an MNC is mostly concerned with maximizing
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
, and a purely domestic firm is mostly concerned with maximizing
g1 g1 g1 g1 g1. g1 g1 g1 g1 g1 g1
a. shareholder wealth; short- g1 g1
term earnings g1
b. shareholder wealth; shareholder wealth g1 g1 g1
c. short-term earnings; sales volume g1 g1 g1
d. short-
term earnings; shareholder weal
g1 g1 g1
th
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
3. For an MNC, agency costs are typically:
g1 g1 g1 g1 g1 g1
a. nonexistent
b. larger than agency costs of a small purely domestic firm.
g1 g1 g1 g1 g1 g1 g1 g1 g1
c. smaller than agency costs of a small purely domest
g1 g1 g1 g1 g1 g1 g1 g1
ic firm. g1
d. the same as agency costs of a small purely domestic firm.
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
,Chapter 01: Multinational Financial Management: An Overvie
g1 g1 g1 g1 g1 g1
w
4. Which of the following could reduce agency problems for an MNC?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. stock options as managerial compensation
g1 g1 g1 g1
b. hostile takeover threat g1 g1
c. investor monitoring g1
d. all of the above are forms of corporate control that could reduce agency problems fo
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
r an MNC. g1 g1
ANSWER: d
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Comprehension g1
5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
and when the foreign currencies denominating these cash flows are expect
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
ed to .
g1 g1
a. decrease; g1
appreciate
b. increase; appreciate g1
c. decrease; g1
depreciate
d. increase; depreciate g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Comprehension g1
6. Which of the following theories identifies specialization as a reason for international business?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above g1 g1 g1
ANSWER: a
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02 g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS: g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
, Chapter 01: Multinational Financial Management: An Overvie
g1 g1 g1 g1 g1 g1
w
7. Which of the following theories identifies the nontransferability of resources as a reason for international business?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage
g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above
g1 g1 g1
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
8. Which of the following theories suggests that firms seek to penetrate new markets over time?
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
a. theory of comparative advantage
g1 g1 g1
b. imperfect markets theory g1 g1
c. product cycle theory g1 g1
d. none of the above
g1 g1 g1
ANSWER: c
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Knowledge g1
9. An industry based on which of the following would most likely take advantage of lower costs in some less devel
g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1 g1
oped foreign countries?
g1 g1
a. assembly line production g1 g1
b. specialized professional services g1 g1
c. nuclear missile programsg1 g1
d. development of more sophisticated compute g1 g1 g1 g1
r technology
g1
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
g1 g 1
NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
g1 g 1 g1 g1 g1 g1
STATE STANDARDS:
g1 United States - OH - DISC.INFM.MADU.15.02 g1 g1 g1 g1 g1
KEYWORDS: Bloom's: Application g1
