1|Page
IBUS 401 Exam 3 (2025/2026 Updated Exam
Pack) | Verified Questions & Correct Answers |
Fully Solved | A+ Graded
Which of the following is a reason to consider international business?
- economies of scale
- exploit monopolistic advantages
- diversification
- all of the above
Ans: all of the above
When a firm perceives that a foreign currency is , the firm
may attempt direct foreign investment in that country, as the initial
outlay should be relatively .
- overvalued; high
- overvalued; low
- undervalued; high
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- undervalued; low
Ans: undervalued; low
T/F: MNCs can probably achieve more desirable risk-return
characteristics from their project portfolios if they sufficiently diversify
among products and geographical markets.
Ans: true
When evaluating international project cash flows, which of the
following factors is relevant
- future inflation
- blocked funds
- exchange rates
- all of the above
Ans: all of the above
, 3|Page
A US-based MNC has just established a subsidiary in Algeria. Shortly
after the plant was built, the MNC determines that its exchange rate
forecasts, which had previously indicated a slight appreciation in the
Algerian dinar, were probably false. Instead of a slight appreciation,
the MNC now expects that the dinar will depreciate substantially
due to political turmoil in Algeria. This new development would likely
cause the MNC to its estimate of the previously computed
net present value.
- lower
- increase
- lower, but not necessarily if the mNC invests enough in Algeria to
offset the decrease in NPV
- increase, but not necessarily if the MNC reduces its investment in
Algeria by an offsetting amount
Ans: lower
IBUS 401 Exam 3 (2025/2026 Updated Exam
Pack) | Verified Questions & Correct Answers |
Fully Solved | A+ Graded
Which of the following is a reason to consider international business?
- economies of scale
- exploit monopolistic advantages
- diversification
- all of the above
Ans: all of the above
When a firm perceives that a foreign currency is , the firm
may attempt direct foreign investment in that country, as the initial
outlay should be relatively .
- overvalued; high
- overvalued; low
- undervalued; high
,2|Page
- undervalued; low
Ans: undervalued; low
T/F: MNCs can probably achieve more desirable risk-return
characteristics from their project portfolios if they sufficiently diversify
among products and geographical markets.
Ans: true
When evaluating international project cash flows, which of the
following factors is relevant
- future inflation
- blocked funds
- exchange rates
- all of the above
Ans: all of the above
, 3|Page
A US-based MNC has just established a subsidiary in Algeria. Shortly
after the plant was built, the MNC determines that its exchange rate
forecasts, which had previously indicated a slight appreciation in the
Algerian dinar, were probably false. Instead of a slight appreciation,
the MNC now expects that the dinar will depreciate substantially
due to political turmoil in Algeria. This new development would likely
cause the MNC to its estimate of the previously computed
net present value.
- lower
- increase
- lower, but not necessarily if the mNC invests enough in Algeria to
offset the decrease in NPV
- increase, but not necessarily if the MNC reduces its investment in
Algeria by an offsetting amount
Ans: lower
