Solutions For International Financial Management, 14th Edition Madura All Chapters 1-21 complete

,1. The commonly accepted goal of an MNC is to:
x x x x x x x x


a. maximize short-term earnings. x x


b. maximize shareholder wealth. x x


c. minimize risk. x


d. A and C. x x


e. maximize international sales. x x



ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x




2. With regard to corporate goals, an MNC is mostly concerned with maximizing
x x x x x x x x x x x x


x, and a purely domestic firm is mostly concerned with maximizing
x x x x x x x x x x .
a. shareholder wealth; short- x x


term earnings x


b. shareholder wealth; shareholder wealth x x x


c. short-term earnings; sales volume x x x


d. short-
term earnings; shareholder wealt
x x x


h
ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x




3. For an MNC, agency costs are typically:
x x x x x x


a. nonexistent
b. larger than agency costs of a small purely domestic firm.
x x x x x x x x x


c. smaller than agency costs of a small purely domestic f
x x x x x x x x x


irm.
d. the same as agency costs of a small purely domestic firm.
x x x x x x x x x x



ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.01
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x

,4. Which of the following could reduce agency problems for an MNC?
x x x x x x x x x x


a. stock options as managerial compensation
x x x x


b. hostile takeover threat x x


c. investor monitoring x


d. all of the above are forms of corporate control that could reduce agency problems for an M
x x x x x x x x x x x x x x x x


NC.
ANSWER: d
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.01
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Comprehension x




5. The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to
x x x x x x x x x x x x x x x x x x x


and when the foreign currencies denominating these cash flows are expected t
x x x x x x x x x x x


ox .
a. decrease; x


appreciate
b. increase; appreciate x


c. decrease; x


depreciate
d. increase; depreciate x



ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.04
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Comprehension x




6. Which of the following theories identifies specialization as a reason for international business?
x x x x x x x x x x x x


a. theory of comparative advantage
x x x


b. imperfect markets theory x x


c. product cycle theory x x


d. none of the above
x x x



ANSWER: a
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x

, 7. Which of the following theories identifies the nontransferability of resources as a reason for international business?
x x x x x x x x x x x x x x x


a. theory of comparative advantage
x x x


b. imperfect markets theory x x


c. product cycle theory x x


d. none of the above
x x x



ANSWER: b
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x




8. Which of the following theories suggests that firms seek to penetrate new markets over time?
x x x x x x x x x x x x x x


a. theory of comparative advantage
x x x


b. imperfect markets theory x x


c. product cycle theory x x


d. none of the above
x x x



ANSWER: c
DIFFICULTY: Easy
LEARNING OBJECTIVES: INFM.MADU.15.01.02
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Knowledge x




9. An industry based on which of the following would most likely take advantage of lower costs in some less developed for
x x x x x x x x x x x x x x x x x x x x


eign countries?
x


a. assembly line production x x


b. specialized professional services x x


c. nuclear missile programsx x


d. development of more sophisticated computer t x x x x x


echnology
ANSWER: a
DIFFICULTY: Moderate
LEARNING OBJECTIVES: INFM.MADU.15.01.02
x x


NATIONAL STANDARDS: United States - BUSPROG.INFM .MADU.15.03
x x x x x x


STATE STANDARDS:
x United States - OH - DISC.INFM.MADU.15.02 x x x x x


KEYWORDS: Bloom's: Application x