International Financial Management- Exam 3 Questions with Verified Answers

International Financial Management-
Exam 3 Questions with Verified
Answers
- Avoidance of trade barriers
- Employment of their own assets on a larger scale - ANSWERSWhich motivations for
cross-border M&A also apply to Greenfield Investments?

- Acquisition of special assets such as technical competence and brand names
- Rapid speed of deployment - ANSWERSWhat are motivations for cross-border M&A
only?

- Shareholder diversification
- Trade barriers
- Intangible asset contracting - ANSWERSWhat are examples of market imperfections
that would lead a company to invest overseas?

Fastest to Slowest growing - ANSWERS1. The world FDI stock
2. World exports of goods and services
3. World GDP

United States - ANSWERSWhich country is the largest recipient and initiator of FDI?

public - ANSWERSThe characteristics of intangible assets that lead to internalization,
sometimes termed non-rivalry (one firm's use of the asset does not preclude another
firm's use) and non-excludability (once the information is known its use is hard to
restrict), are referred to as _______________________ good properties.

- To obtain manufacturing/processing facilities near natural resources
- To obtain monopolistic of oligopolistic control over the input market
- To secure the supply of inputs at the stable price - ANSWERSWhat are reasons for a
MNC to backward vertically integrate?

synergistic - ANSWERSIf after an acquisition the value of the combined firm is greater
than the stand-alone valuations of the acquiring and target firms, then there are said to
be _______________ gains.

Both the establishment of new production facilities in foreign countries and acquisitions
of existing foreign businesses - ANSWERSWhat does FDI involve?

1. Singapore
2. Germany and United Kingdom

, 3. United States
4. Japan
5. China
6. Russia - ANSWERSWhat is the ranking of the countries, from least to most corrupt,
according to the 2015 Corruption Perception Index?

Voluntary Restraint Agreement - ANSWERSJapanese manufacturers were not allowed
to increase their automobile exports to the US market by the 1981 _____________
_____________ _____________

does; better - ANSWERSAlthough there is some variation internationally, cross-border
M&A _____________ create synergies, with _____________ outcomes typically
accruing to the target than the acquirer.

- backward; target's
- forward; acquirer's - ANSWERSA motivation for cross-border acquisitions is
____________-internalization when the assets internalized are the ____________

FCPA - ANSWERSUS companies are legally prohibited from bribing foreign officials by
the ______________

vertical - ANSWERSWhen firms engage in FDI by buying a supplier of a customer, they
are engaged in ____________ integration

1. Turkey
2. Brazil and India
3. China
4. Indonesia
5. Mexico
6. Nigeria - ANSWERSWhat is the ranking of these developing countries, from least to
most corrupt, according to the 2015 Corruption Perception Index?

- Form a joint venture with a local company
- Use local debt to finance the foreign project
- Form a consortium of international companies to undertake the foreign project -
ANSWERSWhat are methods MNCs can use to reduce political risk?

internalization - ANSWERSFirms that have intangible assets with a public good property
tend to invest directly in foreign countries in order to use these assets on a larger scale
and, at the same time, avoid the misappropriations of intangible assets that may occur
while transacting in foreign markets through a market mechanism according to the
________________ theory of FDI.

Anywhere in the free trade area - ANSWERSWhen a firm does not want to pay an
import tariff on its exports to a particular market and that market is part of a free trade
area, where might the MNC wish to produce?