FIN 330 midterm review chap 1 Questions and Answers Already Passed Latest Update 2025-2026
The goal of a multinational corporation (MNC) is the maximization of shareholder wealth. - AnswersTrue
If managers of foreign subsidiaries make decisions that maximize the values of their respective
subsidiaries, they automatically maximize the value of the entire corporation. - AnswersFalse
A centralized management style, where major decisions about a foreign subsidiary are made by the
parent company, results in an automatic increase in agency costs. - AnswersFalse
A decentralized management style, where subsidiary managers make the relevant decisions regarding
their subsidiary, may result in better decision making, as subsidiary managers are generally better
informed about their subsidiary's operations. - AnswersTrue
The Sarbanes-Oxley Act ensures a more transparent process for managers to report on the productivity
and financial condition of their firm. - AnswersTrue
The Theory of Comparative Advantage begins by assuming that a given firm first becomes established in
its home country and may subsequently penetrate foreign markets via geographic or product
differentiation. - AnswersFalse
Under the Product Cycle Theory, foreign demand can be initially satisfied by exporting. - AnswersTrue
In a joint venture, one firm is obligated to provide another firm with a specialized sales or service
strategy in exchange for periodic fees. - AnswersFalse
International trade is the most common form of direct foreign investment (DFI). - AnswersFalse
Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as
exchange rates are stable over time. - AnswersFalse
The goal of a multinational corporation (MNC) is - AnswersThe maximization of shareholder wealth.
Agency costs faced by multinational corporations (MNCs) may be larger than those faced by purely
domestic firms because - AnswersAll of these choices are correct.
Which of the following is not a form of corporate control that can be used to reduce agency problems in
MNCs? - AnswersA decentralized management style
Which of the following is not one of the more common methods used by MNCs to improve their internal
control process? - AnswersAll of these choices are common methods used by MNCs to improve their
internal control process.
Which of the following events would confirm the Theory of Comparative Advantage? - AnswersA U.S.
firm manufacturing computers imports the needed components from Taiwan.
The goal of a multinational corporation (MNC) is the maximization of shareholder wealth. - AnswersTrue
If managers of foreign subsidiaries make decisions that maximize the values of their respective
subsidiaries, they automatically maximize the value of the entire corporation. - AnswersFalse
A centralized management style, where major decisions about a foreign subsidiary are made by the
parent company, results in an automatic increase in agency costs. - AnswersFalse
A decentralized management style, where subsidiary managers make the relevant decisions regarding
their subsidiary, may result in better decision making, as subsidiary managers are generally better
informed about their subsidiary's operations. - AnswersTrue
The Sarbanes-Oxley Act ensures a more transparent process for managers to report on the productivity
and financial condition of their firm. - AnswersTrue
The Theory of Comparative Advantage begins by assuming that a given firm first becomes established in
its home country and may subsequently penetrate foreign markets via geographic or product
differentiation. - AnswersFalse
Under the Product Cycle Theory, foreign demand can be initially satisfied by exporting. - AnswersTrue
In a joint venture, one firm is obligated to provide another firm with a specialized sales or service
strategy in exchange for periodic fees. - AnswersFalse
International trade is the most common form of direct foreign investment (DFI). - AnswersFalse
Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as
exchange rates are stable over time. - AnswersFalse
The goal of a multinational corporation (MNC) is - AnswersThe maximization of shareholder wealth.
Agency costs faced by multinational corporations (MNCs) may be larger than those faced by purely
domestic firms because - AnswersAll of these choices are correct.
Which of the following is not a form of corporate control that can be used to reduce agency problems in
MNCs? - AnswersA decentralized management style
Which of the following is not one of the more common methods used by MNCs to improve their internal
control process? - AnswersAll of these choices are common methods used by MNCs to improve their
internal control process.
Which of the following events would confirm the Theory of Comparative Advantage? - AnswersA U.S.
firm manufacturing computers imports the needed components from Taiwan.
