State Farm Estimatics Exam Latest Questions and Answers (2025
/2026) (Verified Answers)
if a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - currency hedging
exchange rate risk associating with the time delay between entering a contract and
settling it - transaction risk
forward transaction that protects traders and investors from exposure to
fluctuations of the spot rate - hedging
a means of spreading out activities in different currency zones in order to offset the
currency losses in certain regions through gains in other regions - strategic heding
amount of resources committed to entering a foreign market - scale of entry
how do institutions reduce uncertainty? - by signaling which conduct is legit and
which is not
pillar of formal institution, coercive power of government - regulatory
pillar of informal institution, the mechanism through which norms influence individual
and firm behavior - normative
pillar of informal institution, taken for granted values and beliefs that guide behavior
- cognitive
institutions represented by laws, regulations and rules - formal
institutions represented by norms, culture and ethics - informal
,the necessity of making rational decisions in the absence of complete information -
bounded rationality
bounded rationality is a position in which view of global business - institution
political system that affects global business with an individuals right to freedom of
expression and organization - democracy
political system that affects global business with hostility towards business, higher
political risk such as nationalism - totalitarianism
political system where citizens elect representatives to govern the country on their
behalf - democracy
political system where one person or party exercises absolute political control over
the population - totalitarianism
law that uses comprehensive statutes and codes as a primary means to form legal
judgements - civil
law that is shaped by precedents and traditions from previous judicial decisions -
common
law that is based on religious teachings - theocratic
less confrontational, shorter, less specific form of law - civil
what costs exist to a country receiving FDI? - loss of sovereignty, adverse effects on
competition, net outflow in the capital account
The aggregation of importing and exporting that leads to the country-level trade
,surplus or deficit. - balance of trade
firms with a degree of resource similarity are likely to have similar competitive
actions - high
a high degree of resource similarity but low market commonality = intensity of
rivalry - highest
little resource similarity but high market commonality = intensity of rivalry - lowest
mercantilism, absolute advantage and comparative advantage belong to what theory
of international trade - classical
theory of international trade that relies on more realistic product life cycles and first
mover advantages - modern
under free trade, a nation gains by specializing in economic activities in which it has
advantage - absolute
focuses on the idea that if a country does not have absolute advantage, they can still
choose to specialize in the production of one good where it has advantage -
comparative
comparative advantage and absolute advantage stem from - factor endowments
theory that the wealth of the world is fixed and that a nation that imports more and
exports less will be richer - mercantilism
stage of the product life cycle where production of a new product that commands a
price premium will concentrate in the US - new
stage of the product life cycle where demand and ability to produce grow in other
, developed nations - maturing
view that claims phenomenon of globalization was initially driven by the desire of
Western economies to exploit their power through MNE's - new
/2026) (Verified Answers)
if a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - currency hedging
exchange rate risk associating with the time delay between entering a contract and
settling it - transaction risk
forward transaction that protects traders and investors from exposure to
fluctuations of the spot rate - hedging
a means of spreading out activities in different currency zones in order to offset the
currency losses in certain regions through gains in other regions - strategic heding
amount of resources committed to entering a foreign market - scale of entry
how do institutions reduce uncertainty? - by signaling which conduct is legit and
which is not
pillar of formal institution, coercive power of government - regulatory
pillar of informal institution, the mechanism through which norms influence individual
and firm behavior - normative
pillar of informal institution, taken for granted values and beliefs that guide behavior
- cognitive
institutions represented by laws, regulations and rules - formal
institutions represented by norms, culture and ethics - informal
,the necessity of making rational decisions in the absence of complete information -
bounded rationality
bounded rationality is a position in which view of global business - institution
political system that affects global business with an individuals right to freedom of
expression and organization - democracy
political system that affects global business with hostility towards business, higher
political risk such as nationalism - totalitarianism
political system where citizens elect representatives to govern the country on their
behalf - democracy
political system where one person or party exercises absolute political control over
the population - totalitarianism
law that uses comprehensive statutes and codes as a primary means to form legal
judgements - civil
law that is shaped by precedents and traditions from previous judicial decisions -
common
law that is based on religious teachings - theocratic
less confrontational, shorter, less specific form of law - civil
what costs exist to a country receiving FDI? - loss of sovereignty, adverse effects on
competition, net outflow in the capital account
The aggregation of importing and exporting that leads to the country-level trade
,surplus or deficit. - balance of trade
firms with a degree of resource similarity are likely to have similar competitive
actions - high
a high degree of resource similarity but low market commonality = intensity of
rivalry - highest
little resource similarity but high market commonality = intensity of rivalry - lowest
mercantilism, absolute advantage and comparative advantage belong to what theory
of international trade - classical
theory of international trade that relies on more realistic product life cycles and first
mover advantages - modern
under free trade, a nation gains by specializing in economic activities in which it has
advantage - absolute
focuses on the idea that if a country does not have absolute advantage, they can still
choose to specialize in the production of one good where it has advantage -
comparative
comparative advantage and absolute advantage stem from - factor endowments
theory that the wealth of the world is fixed and that a nation that imports more and
exports less will be richer - mercantilism
stage of the product life cycle where production of a new product that commands a
price premium will concentrate in the US - new
stage of the product life cycle where demand and ability to produce grow in other
, developed nations - maturing
view that claims phenomenon of globalization was initially driven by the desire of
Western economies to exploit their power through MNE's - new
