FIN 480 pre test Flashcards
chapter 1
T/F
If managers of foreign subsidiaries make decisions that maximize the values of their respective subsidiaries, they automatically maximize the value of the entire corporation.
F
使支部利益最大化,不代表总公司也最大会
T/F
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.
F
centralized management would not increase agency cost, but decentralized management would
T/F
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
T
T/F
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 operation
T
T/F
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.
F
Theory of Comparative Advantage: Specialization
increases production efficiency.
T/F
Under the Product Cycle Theory, foreign demand can be initially satisfied by exporting.
T
T/F
In a joint venture, one firm is obligated to provide another firm with a specialized sales or service strategy in exchange for periodic fees.
F
Joint Ventures
• A venture that is jointly owned and operated by two or more firms. A firm may enter the foreign market by engaging in a joint venture with firms that reside in those markets.
T/F
International trade is the most common form of direct foreign investment (DFI).
F
Acquisitions of Existing Operations is the most common form of direct foreign investment
T/F
Although MNCs may need to convert currencies occasionally, they do not face any exchange rate risk, as exchange rates are stable over time.
F
Once you may need to convert currencies, you are facing the exchange rate risk
The goal of a multinational corporation (MNC) is
a. The establishment of subsidiaries in any country where operations would provide a return over and above the cost of capital, even if better projects are available domestically.
b. The maximization of shareholder wealth.
c. The minimization of taxes remitted from foreign subsidiaries.
d. The maximization of social benefits resulting from actions such as the employment of foreign managers.
B
The goal of MNC is the maximization of shareholder wealth.
Agency costs faced by multinational corporations (MNCs) may be larger than those faced by purely domestic firms because
a. Monitoring of managers located in foreign countries is more difficult.
b. MNCs are relatively large.
c. Foreign subsidiary managers raised in different cultures may not follow uniform goals.
d. All of these choices are correct.
D
Which of the following is not a form of corporate control that can be used to reduce agency problems in MNCs?
a. Stock options
b. Investor monitoring
c. A decentralized management style
d. Hostile takeover threat
e. All of these choices are forms of corporate control that can be used to reduce agency problems in MNCs.
c
Which of the following is not one of the more common methods used by MNCs to improve their internal control process?
a. Ensuring that all data are reported consistently among subsidiaries
b. Establishing a centralized database of information
c. Making executives more accountable for financial statements by personally verifying their accuracy
d. Speeding the process by which all departments and all subsidiaries have access to the data that they need
e. All of these choices are common methods used by MNCs to improve their internal control process.
e
Which of the following events would confirm the Theory of Comparative Advantage?
a. A U.S. firm manufacturing widgets builds a plant in Mexico to reduce labor costs.
b. A U.S. firm manufacturing computers establishes a plant in Germany in order to reduce transportation costs and to retain its advantage over its German competitors.
c. A U.S. firm manufacturing computers imports the needed components from Taiwan.
d. All of these choices are correct.
e. None of these choices are correct.
c
Which of the following events would confirm the Product Cycle Theory?
a. A U.S. firm manufacturing computers imports the needed components from Taiwan.
b. A U.S. firm manufacturing widgets builds a plant in Mexico to reduce labor costs.
c. A U.S. firm manufacturing computers establishes a plant in Germany in order to reduce transportation costs and to retain its advantage over its German competitors.
d. All of these choices are correct.
e. None of these choices are correct.
c
The most risky method(s) by which firms conduct international business is (are):
a. The establishment of new subsidiaries.
b. The acquisitions of existing operations.
c. Franchising.
d. [The acquisitions of existing operations.] and [The establishment of new subsidiaries.] only
e. All of these choices are correct.
d
The least risky method by which firms conduct international business is:
a. International Trade.
b. The establishment of new subsidiaries.
c. The acquisitions of existing operations.
d. Licensing
e. Franchising.
a
________ obligates a firm to provide a specialized sales or service strategy, support assistance, and possible an initial investment in exchange for periodic fees.
a. Licensing
b. A joint venture
c. International trade
d. Franchising
e. None of these choices are correct.
D
Which of the following is not mentioned in the text as a reason for the increased globalization of business?
a. Increased privatization in recent years
b. An increase in GNP of virtually all countries in recent years
c. Growth in direct foreign investment in recent years
d. An increased standardization of products and services across countries in recent years
e. An increase in international trade
B
并未涉及GNP数量在所有国家都明显增加
Which of the following is not mentioned in the text as an additional risk resulting from international business?
a. Exchange rate fluctuations
b. Financial risk
c. Political risk
d. Exposure to foreign economies
e. Country risk
B
Financial risk is not the additional risk resulting form international business
the risk of cash flow MNC
international economic condition
not from interest rate risk
Which of the following is not an example of how an MNC can be affected by exchange rate movements?
a. Remitted earnings from the foreign subsidiary of a U.S.-based MNC may increase due to a stronger home currency.
b. When the home currency weakens, products denominated in that currency become cheaper to foreign customers, which may increase foreign demand for the MNC’s products.
c. When the home currency strengthens, products denominated in that currency become more expensive to foreign customers, which may reduce foreign demand for the MNC’s products.
d. Remitted earnings from the foreign subsidiary of a U.S.-based MNC may increase due to a weaker home currency.
e. Due to exchange rate fluctuations, the number of units of a firm’s home currency needed to purchase foreign supplies can change even if suppliers have not adjusted their prices.
A,美元贬值,收入也会减少
不理解
Licensing obligates a firm to provide ________, while franchising obligates a firm to provide ________.
a. A specialized sales or service strategy; its technology
b. A specialized sales or service strategy; a specialized sales or service strategy
c. Its technology; its technology
d. Its technology; a specialized sales or service strategy
e. Its technology; an initial investment
D
Which of the following is not a way in which agency problems can be reduced through corporate control?
a. Acquisition of a foreign subsidiary
b. Executive compensation
c. Monitoring by large shareholders
d. Threat of hostile takeover
e. None of these choices are correct.
A
The valuation of an MNC should decline when an event causes the expected cash flows from foreign subsidiaries to ____ and when the foreign currencies denominating these cash flows are expected to ____.
a. increase; depreciate
b. decrease; appreciate
c. decrease; depreciate
d. increase; appreciate
C
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