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International Business > Final Exam (Part 3) > Flashcards

Final Exam (Part 3) Flashcards

1
Q

A(n) ________ is a system that allocates financial resources in the form of debt and equity according to their most efficient uses.

A

B. capital market

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2
Q

Which of the following is a debt instrument that specifies the timing of principal and interest payments?

A

A. bond

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3
Q

________ refers to shares of ownership in a company’s assets that give shareholders a claim on the company’s future cash flows.

A

A. Stock

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4
Q

The ease with which bondholders and shareholders may convert their investments into cash is called ________.

A

A. liquidity

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5
Q

An expanded money supply ________.

A

D. reduces the cost of borrowing

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6
Q

________ are usually located on small island nations or territories with favorable tax and/or secrecy laws.

A

C. Booking centers

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7
Q

A bond issued by a Venezuelan company, denominated in U.S. dollars, and sold in Britain, France, and Germany is an example of a ________.

A

D. Eurobond

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8
Q

Rates that the world’s largest banks charge one another for loans are called ________.

A

C. interbank interest rates

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9
Q

The rate at which one currency is interchanged for another is called the ________.

A

D. exchange rate

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10
Q

The practice of insuring against potential losses that result from adverse changes in exchange rates is called currency ________.

A

B. hedging

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11
Q

Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.

ABC Software has had difficulty obtaining funds to expand. A friend of the CEO recommends that the company should explore an offshore financial center, which ________.

A

D. is a country or territory whose financial sector features very few regulations and few, if any, taxes

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12
Q

Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.

If ABC Software simultaneously purchases and sells foreign exchange for two different dates, the company is said to be involved in ________.

A

D. conducting a currency swap

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13
Q

Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.

If ABC Software holds a currency option to purchase Swiss francs at SF 1.67/$ in 30 days, at the end of which the exchange rate is SF1.70/$, then ABC Software ________.

A

B. would not exercise its currency option

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14
Q

ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.

The company’s financial advisors recommend that ABC Software conduct most of its business in a vehicle currency. Which of the following is true of vehicle currencies?

A

D. The U.S. dollar became a vehicle currency after World War II when all of the world’s major currencies were tied indirectly to the dollar because it was the most stable currency.

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15
Q

Which of the following is the most common method of buying and selling goods internationally?

A

C. exporting and importing

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16
Q

Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies?

A

B. export through local distributors

17
Q

________ take ownership of the merchandise when it enters their country and accept all the risks associated with generating local sales.

A

B. Distributors

18
Q

Which of the following occurs when a company sells its products to intermediaries who then resell to buyers in a target market?

A

C. indirect exporting

19
Q

A(n) ________ exports products on behalf of an indirect exporter.

A

A. export management company

20
Q

Selling goods or services that are paid for, in whole or part, with other goods or services is called ________.

A

C. countertrade

21
Q

Which of the following refers to the exchange of goods or services directly for other goods or services without the use of money?

A

D. barter

22
Q

Which of the following allows a country to earn back some of the currency it pays out for imports?

A

B. counterpurchase

23
Q

A company proposes that in exchange for a hard-currency sale, it will make a hard-currency purchase of an unspecified product from the buyer nation in the future. Which of the following is the company proposing?

A

A. an offset

24
Q

________ is a countertrade whereby one company sells to another its obligation to make a purchase in a given country.

A

A. Switch trading

25
Q

Buyback is defined as ________.

A

D. the export of industrial equipment in return for products produced by that equipment

26
Q

Which of the following is a method of export/import financing?

A

D. documentary collection

27
Q

A document ordering the importer to pay the exporter a specified sum of money at a specified time is called a ________.

A

D. bill of exchange

28
Q

Which of the following refers to a contract between the exporter and shipper that specifies merchandise destination and shipping costs?

A

C. bill of lading

29
Q

Which of the following is a method of export/import financing in which the importer’s bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document?

A

C. letter of credit

30
Q

Which of the following is a contractual entry mode?

A

B. turnkey projects

31
Q

Which of the following is a contractual entry mode in which a company owning intangible property grants another firm the right to use that property for a specified period of time?

A

B. licensing

32
Q

Which of the following is a contractual entry mode in which one company supplies another with intangible property and other assistance over an extended period?

A

B. franchising

33
Q

A ________ is a separate company created and owned by two or more independent entities to achieve a common business objective.

A

A. joint venture

34
Q

Which of the following types of joint ventures involve parties investing together in downstream business activities?

A

D. forward integration

International Business (9 decks)

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