FIN 4604 Final Exam Questions And Correct
Answers
The main goal of an MNC is to: maximize shareholder wealth
Agency costs are normally larger for MNC's. Large MNC agency costs can be increased by /
include: a high number of distant subsidiaries
The notion that specialization by countries can increase production efficiency is supported by
which theory of international business? ??? Imperfect Markets Theory
??? Theory of Competitive Advantage
CORRECT ANSWER SHOULD BE COMPARATIVE ADVANTAGE
What is a method of International business in which an MNC can quickly gain control over
foreign operations and quickly acquire a share of the foreign market ? acquisitions of
existing operations
comparative advantage theory suggesting that specialization by countries can increase
worldwide production
,FIN 4604 Final Exam Questions And Correct
Answers
imperfect market the condition where, due to the costs to transfer labor and other
resources used for production, firms may attempt to use foreign factors of production when they
are less costly than local factors
Different types of international business risk include all of the following except:
agency risk
exchange rate risk
political risk
foreign economic risk agency risk
The balance of payments formula includes all of the following components except:
transfer account
current account
capital account
financial account transfer account
,FIN 4604 Final Exam Questions And Correct
Answers
Direct foreign investment (DFI) activity is accounted for in what balance of payments account ?
financial account
Methods to conduct international business: --international trade
--licensing
--franchising
--joint ventures
--acquisitions of existing operations
--establishment of new foreign subsidiaries
product cycle theory theory suggesting that a firm initially establishes itself locally and
expands into foreign markets in response to foreign demand for its product; over time, the MNC
will grow in foreign markets; after some point, its foreign business may decline unless it can
differentiate its product from competitors
A U.S. investor receives an interest payment from an investment in a French corporate bond.
Which balance of payments account includes this activity? current account
, FIN 4604 Final Exam Questions And Correct
Answers
Which agency or organization provides a forum for multilateral trade negotiations and to settle
trade disputes related to the GATT accord ? World Trade Organization
GATT accord General Agreement on Tariffs and Trade
called for reduction or elimination of trade restrictions on specified imported goods over a ten
year period across 117 countries
financial account components: --direct foreign investment
--portfolio investment
--other capital investment
capital account represents a summary of the flow of funds between one specified country
and all other countries due to purchases of goods and services or to the cash flows generated by
income-producing financial assets
current account broad measure of a country's international trade in goods and services
Answers
The main goal of an MNC is to: maximize shareholder wealth
Agency costs are normally larger for MNC's. Large MNC agency costs can be increased by /
include: a high number of distant subsidiaries
The notion that specialization by countries can increase production efficiency is supported by
which theory of international business? ??? Imperfect Markets Theory
??? Theory of Competitive Advantage
CORRECT ANSWER SHOULD BE COMPARATIVE ADVANTAGE
What is a method of International business in which an MNC can quickly gain control over
foreign operations and quickly acquire a share of the foreign market ? acquisitions of
existing operations
comparative advantage theory suggesting that specialization by countries can increase
worldwide production
,FIN 4604 Final Exam Questions And Correct
Answers
imperfect market the condition where, due to the costs to transfer labor and other
resources used for production, firms may attempt to use foreign factors of production when they
are less costly than local factors
Different types of international business risk include all of the following except:
agency risk
exchange rate risk
political risk
foreign economic risk agency risk
The balance of payments formula includes all of the following components except:
transfer account
current account
capital account
financial account transfer account
,FIN 4604 Final Exam Questions And Correct
Answers
Direct foreign investment (DFI) activity is accounted for in what balance of payments account ?
financial account
Methods to conduct international business: --international trade
--licensing
--franchising
--joint ventures
--acquisitions of existing operations
--establishment of new foreign subsidiaries
product cycle theory theory suggesting that a firm initially establishes itself locally and
expands into foreign markets in response to foreign demand for its product; over time, the MNC
will grow in foreign markets; after some point, its foreign business may decline unless it can
differentiate its product from competitors
A U.S. investor receives an interest payment from an investment in a French corporate bond.
Which balance of payments account includes this activity? current account
, FIN 4604 Final Exam Questions And Correct
Answers
Which agency or organization provides a forum for multilateral trade negotiations and to settle
trade disputes related to the GATT accord ? World Trade Organization
GATT accord General Agreement on Tariffs and Trade
called for reduction or elimination of trade restrictions on specified imported goods over a ten
year period across 117 countries
financial account components: --direct foreign investment
--portfolio investment
--other capital investment
capital account represents a summary of the flow of funds between one specified country
and all other countries due to purchases of goods and services or to the cash flows generated by
income-producing financial assets
current account broad measure of a country's international trade in goods and services
