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IBUS 401 EXAM 3 2026
QUESTIONS AND ANSWERS| ACE
YOUR GRADES.
A country with high unemployment could best increase its
employment by:
- encouraging foreign firms to establish subsidiaries that produce
the same products local firms produce
- encouraging foreign firms to establish licensing arrangements
for products local firms produce
- encouraging foreign firms to establish subsidiaries that produce
products local firms do not produce
- none of the above would reduce employment - correct answer -
encouraging foreign firms to establish subsidiaries that produce
products local firms do not produce
the checklist approach:
- requires the use of discriminant analysis to assess country risk
- requires rating and weights to be assigned to all factors relevant
in assessing country risk
- involves the collection of independent opinions on country risk -
correct answer -requires rating and weights to be assigned to all
factors relevant in assessing country risk
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(1 is quantitative analysis, 2 is Delphi)
Country risk assessment should be used when:
- determined whether to establish a subsidiary in a foreign country
- determining whether to continue business in a foreign country
- A and B
- none of the above - correct answer -A and B
A firm may incorporate a country risk rating into the capital
budgeting analysis by:
- adjusting the NPV upward if the country risk rating has fallen
(implying increased risk) below a benchmark level
- adjusting the discount rate upward as the country risk increases
- A and B
- none of the above - correct answer -adjusting the discount rate
upward as the country risk increases
According to the text, MNCs can:
- use only debt financing in foreign countries to support foreign
subsidiaries
IBUS 401 EXAM 3 2026
QUESTIONS AND ANSWERS| ACE
YOUR GRADES.
A country with high unemployment could best increase its
employment by:
- encouraging foreign firms to establish subsidiaries that produce
the same products local firms produce
- encouraging foreign firms to establish licensing arrangements
for products local firms produce
- encouraging foreign firms to establish subsidiaries that produce
products local firms do not produce
- none of the above would reduce employment - correct answer -
encouraging foreign firms to establish subsidiaries that produce
products local firms do not produce
the checklist approach:
- requires the use of discriminant analysis to assess country risk
- requires rating and weights to be assigned to all factors relevant
in assessing country risk
- involves the collection of independent opinions on country risk -
correct answer -requires rating and weights to be assigned to all
factors relevant in assessing country risk
, Page | 2
(1 is quantitative analysis, 2 is Delphi)
Country risk assessment should be used when:
- determined whether to establish a subsidiary in a foreign country
- determining whether to continue business in a foreign country
- A and B
- none of the above - correct answer -A and B
A firm may incorporate a country risk rating into the capital
budgeting analysis by:
- adjusting the NPV upward if the country risk rating has fallen
(implying increased risk) below a benchmark level
- adjusting the discount rate upward as the country risk increases
- A and B
- none of the above - correct answer -adjusting the discount rate
upward as the country risk increases
According to the text, MNCs can:
- use only debt financing in foreign countries to support foreign
subsidiaries
