FIN 535 Week 5 Midterm Exam – Strayer New
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Chapter 1 Through 7
Chapter
1—Multinational Financial Management: An Overview
1. The
commonly accepted goal of the MNC is to:
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a.
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maximize short-term earnings.
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b.
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maximize shareholder wealth.
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c.
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minimize risk.
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d.
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A and C.
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e.
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maximize international sales.
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
2. With
regard to corporate goals, an MNC is mostly concerned with maximizing ____, and
a purely domestic firm is mostly concerned with maximizing ____.
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a.
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shareholder wealth; short-term earnings
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b.
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shareholder wealth; shareholder wealth
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c.
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short-term earnings; sales volume
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d.
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short-term earnings; shareholder wealth
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
3. For
the MNC, agency costs are typically:
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a.
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non-existent.
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b.
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larger than agency costs of a small purely
domestic firm.
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c.
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smaller than agency costs of a small purely
domestic firm.
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d.
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the same as agency costs of a small purely
domestic firm.
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
4. Which
of the following could reduce agency problems for an MNC?
|
a.
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stock options as managerial compensation.
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b.
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hostile takeover threat.
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c.
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investor monitoring.
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d.
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all of the above are forms of corporate control
that could reduce agency problems for an MNC.
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PTS: 1 DIF: Moderate OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Comprehension
5. The
valuation of an MNC should rise when an event causes the expected cash flows
from foreign to ____ and when foreign currencies denominating these cash flows
are expected to ____.
|
a.
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decrease; appreciate
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b.
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increase; appreciate
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c.
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decrease; depreciate
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d.
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increase; depreciate
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.04
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Comprehension
6. Which
of the following theories identifies specialization as a reason for
international business?
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a.
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theory of comparative advantage.
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b.
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imperfect markets theory.
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c.
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product cycle theory.
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d.
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none of the above
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
7. Which
of the following theories identifies the non-transferability of resources as a
reason for international business?
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a.
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theory of comparative advantage.
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b.
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imperfect markets theory.
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c.
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product cycle theory.
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d.
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none of the above
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
8. Which
of the following theories suggests that firms seek to penetrate new markets
over time?
|
a.
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theory of comparative advantage.
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b.
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imperfect markets theory.
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c.
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product cycle theory.
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d.
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none of the above
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
9. Which
of the following industries would most likely take advantage of lower costs in
some less developed foreign countries?
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a.
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assembly line production.
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b.
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specialized professional services.
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c.
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nuclear missile planning.
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d.
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planning for more sophisticated computer
technology.
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PTS: 1 DIF: Moderate OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Application
10. Due
to the risks involved in international business, firms should:
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a.
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only consider international business in major
countries.
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b.
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maintain international business to no more than
20% of total business.
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c.
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maintain international business to no more than
35% of total business.
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d.
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none of the above
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PTS: 1 DIF: Moderate OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Comprehension
11. A
product cycle is the process by which a firm provides a specialized sales or service
strategy, support assistance, and possibly an initial investment in the
franchise in exchange for periodic fees.
a.
True
b.
False
PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.02
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
12. Licensing
is the process by which a firm provides its technology (copyrights, patents,
trademarks, or trade names) in exchange for fees or some other specified
benefits.
a.
True
b.
False
PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.03
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Knowledge
13. The
agency costs of an MNC are likely to be lower if it:
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a.
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scatters its subsidiaries across many foreign
countries.
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b.
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increases its volume of international business.
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c.
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uses a centralized management style.
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d.
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A and B.
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
KEY: Bloom's: Comprehension
14. An
MNC may be more exposed to agency problems if most of its shares are held by:
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a.
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a few mutual funds
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b.
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a widely dispersed set of individual investors
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c.
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a few pension funds
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d.
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all of the above would prevent agency problems
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PTS: 1 DIF: Easy OBJ: INFM.MADU.15.01.01
NAT: BUSPROG.INFM .MADU.15.03 STA: DISC.INFM.MADU.15.02
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