52.
Award: 1.00 point
53.
Award: 1.00 point
54.
Award: 1.00 point
Financial managers of MNCs should
learn how to manage foreign exchange and political risks using proper tools and instruments.
deal with (and take advantage of) market imperfections.
benefit from expanded investment and financing opportunities.
all of the options
References
Multiple Choice Difficulty: 1 Easy
A purely domestic firm that sources its products, sells its products, and raises its funds domestically
can face stiff competition from a multinational corporation that can source its products in one country, sell them
in several countries, and raise its funds in a third country.
can be more competitive than an MNC on its home turf due to superior knowledge of the local market.
can still face exchange rate risk, just like an MNC.
all of the options
References
Multiple Choice Difficulty: 1 Easy
MNC stands for
Multinational Corporation.
Multi-Nationalized Corporation.
Military National Cooperation.
none of the options
References
Multiple Choice Difficulty: 1 Easy
55.
Award: 1.00 point
56.
Award: 1.00 point
57.
Award: 1.00 point
Which is growing at a faster rate, foreign direct investment by MNCs or international trade?
FDI by MNCs
International trade
Since they are linked, they grow at the same rate.
none of the options
References
Multiple Choice Difficulty: 1 Easy
A true MNC, with operations in dozens of different countries
must effectively manage foreign exchange risk.
can ignore foreign exchange risk since it is diversified.
will pay taxes in only its home county.
none of the options
References
Multiple Choice Difficulty: 1 Easy
An MNC can
be a factor that increases the opportunities of the citizens of less developed countries.
be a factor that increases the opportunity set of domestic investors.
increase economic efficiency.
all of the options
References
Multiple Choice Difficulty: 1 Easy
58.
Award: 1.00 point
59.
Award: 1.00 point
Today for an MNC to produce merchandise in one country on capital equipment financed by funds raised in a number of
different currencies through issuing securities to investors in many countries, and then selling the finished product to
customers in yet other countries is
not uncommon.
extremely common.
uncommon.
illegal.
References
Multiple Choice Difficulty: 1 Easy
A corporation that can source its products in one country, sell them in another country, and raise the funds in a third
country
is a multinational corporation.
is a domestic firm if all of the shareholders are from the same country.
enjoys a built-in hedge against exchange rate risk.
enjoys a built-in hedge against political risk.
References
Multiple Choice Difficulty: 1 Easy
60.
Award: 1.00 point
61.
Award: 1.00 point
Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Compute the opportunity cost of
producing one additional unit of food instead of textiles.
1.67 pounds of food per yard of textiles
1.67 yards of textiles per pound of food
0.6 pounds of food per yard of textiles
0.6 yards of textiles per pound of food
10 yards of textiles / 6 pounds of food = 1.67 yards of textiles per pound of food
References
Multiple Choice Difficulty: 1 Easy
The gains from trade
are likely realized in the long run when workers and firms have had the time to adjust to the new competitive
environment.
are immediately realized in the short run, when governments drop protectionist policies.
are smaller than the costs of adjustment.
none of the options
References
Multiple Choice Difficulty: 1 Easy
62.
Award: 1.00 point
63.
Award: 1.00 point
64.
Award: 1.00 point
Restrictions or impediments to free trade include such things as
import quotas.
import tariffs.
costly transportation.
all of the options
References
Multiple Choice Difficulty: 1 Easy
Suppose that country A is twice as good at producing widgets as country B. If the currency of B is twice as valuable as the