Multinational Financial Management 11th Edition by Alan C. Shapiro Test bank

b)  centralization of the MNC’s cash
c)  diversification
d)  investment
 
Ans:      c
Section: The Importance of Total Risk
Level:  Easy
 

1. Which one of the following has been a major driver of globalization?

 

1. massive deregulation
2. the collapse of the communist bloc
3. revolution in information technologies
4. all of the above

 
Ans:      d
Section: The rise of the multinational corporation
Level:  Easy
 
 
1.13  Companies gradually increase their commitment to international business with strategies that are progressively more sophisticated.  Which one of the following steps is NOT one of the steps?
a)  exporting
b)  setting up a sales subsidiary
c)  setting up a distribution system
d)  creating a legal entity in the new target country
 
Ans:  D
Section:  The Process of Overseas Expansion by Multinationals
Level:  Easy
 
1.14  Which one of the following is an alternate and/or a precursor to setting up a production facility abroad?
a)  exporting
b)  setting up a sales subsidiary
c)  setting up a distribution system
d)  licensing
 
Ans:  D
Section:  The Process of Overseas Expansion by Multinationals
Level:  Easy
 
1.15  In which category of multinational is McDonald’s most likely to fall?
a)  raw materials seeker
b)  market seeker
c)  cost minimizer
d)  hedge fund
 
Ans:      b 
Section: market seeker
Level:  Medium
 

1. Which of the following did NOT accelerate the growth of the global economy in

the past twenty years?
a)  the U.S.-Canada-Mexico free-trade pact
b)  the creation of the European Union
c)  China’s entrance into the WTO
d)  Trade sanctions against Iran
 
Ans:      d
Section: Consequences of Global Competition
Level:  Medium
 
1.17  The multinational financial system does NOT enable companies to
a)  avoid currency controls
b)  reduce taxes
c)  access lower cost financing sources
d)  avoid exchange rate risk
 
Ans:      d 
Section: rise of the multinational
Level:  Medium
 
1.18  Given the added risks associated with doing business abroad, companies should
a)  limit their foreign sales to less than 40% of total sales
b)  limit their foreign assets to less than 30% of total assets
c)  avoid foreign markets altogether unless they can earn a return in excess of the return they earn in their domestic market
d)  not limit their foreign sales at all
 
Ans:      d
Section: the internationalization of business
Level:  Medium
 
1.19  Which of the following is an example of reverse foreign investment?
 a)  Honda builds a factory in Ohio
 b)  Apple builds a plant in Ireland that exports to the United States
 c)  British Telecom issues new stock in the United States
 d)  American investors buy shares in Sony
 
Ans:      a
Section: market seeker
Level:  Medium
 
1.20  Which of the following is NOT a failing of the theory of comparative advantage? 
a)  it ignores the role of uncertainty and economies of scale
b)  it assumes that factors of production are immobile
c)  it assumes that there are no differentiated products
d)  it assumes a scarcity of resources
 
Ans:      d 
Section: rise of the multinational
Level:  Medium
 
1.21  Although a firm may be interested in expanding overseas, it may not have the option to acquire a local operation.  This type of challenge is most common in
a)  the European Union
b)  the United States
c)  Japan
d) developing countries
 
Ans: d
Section:  The Process of Overseas Expansion by Multinationals
Level:  Medium 
 
1.22  What would be the preferred mode of market penetration for the firm seeking to expand globally when the company wants to market its patent?