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