Multinational Business Finance 15th Global Edition by David K. Eiteman test bank

Diff: 2
L.O.:  1.3 What Is Different about International Financial Management?
Skill:  Conceptual
AACSB:  Application of knowledge
 

1.4  The Globalization Process
 
1) The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:
A) domestic phase.
B) multinational phase.
C) international trade phase.
D) import-export banking phase.
Answer:  C
Diff: 1
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
2) The authors describe the multinational phase of globalization for a firm as one characterized by the:
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.
Answer:  A
Diff: 1
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
3) A firm in the International Trade Phase of Globalization:
A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units.
B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units.
C) bears direct foreign exchange risk.
D) none of the above
Answer:  C
Diff: 1
L.O.:  1.4 The Globalization Process
Skill:  Conceptual
AACSB:  Application of knowledge
 

4) Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk
Answer:  B
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
5) The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.
A) rulers of sovereign states and unsavory customs officials
B) corporate insiders and attorneys
C) corporate insiders and rulers of sovereign states
D) attorneys and unsavory customs officials
Answer:  C
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
6) Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.
Answer:  TRUE
Diff: 1
L.O.:  1.4 The Globalization Process
Skill:  Conceptual
AACSB:  Application of knowledge
 
7) Typically, a "greenfield" investment abroad is considered an investment having a greater foreign presence than a joint venture with a foreign firm.
Answer:  TRUE
Diff: 1
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
8) The authors argue that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance.
Answer:  TRUE
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Conceptual
AACSB:  Application of knowledge
 
9) The authors describe a process for development of a MNE that begins with a purely domestic phase, followed by the multinational phase, and topping out with the international trade phase.
Answer:  FALSE
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
10) Today it is widely assumed that there are NO LIMITS to financial globalization.
Answer:  FALSE
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
11) The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.
Answer:  TRUE
Diff: 2
L.O.:  1.4 The Globalization Process
Skill:  Recognition
AACSB:  Application of knowledge
 
12) Describe the structural and managerial changes and challenges experienced by a firm as it moves its operations from domestic to global (globalization process).
Answer:  A firm's initial strategy is to develop a sustainable competitive advantage in the U.S. market (domestic phase). As firms becomes visible and viable competitors in the U.S. market, strategic opportunities arise to expand the firm's market reach by exporting product and services to one or more foreign markets and/or by importing inputs (international trade phase). If companies are successful in their international trade activities, the time will come when the globalization process will progress to the next phase. Companies will soon need to establish foreign sales and service affiliates. This step is often followed by establishing manufacturing operations abroad or by licensing foreign firms to produce and service (multinational phase). Once companies own assets and enterprises in foreign countries, they have entered the multinational phase of their globalization.