国际金融InternationalFinanceTestBank完美版.docx
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国际金融InternationalFinanceTestBank完美版.docx
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国际金融InternationalFinanceTestBank完美版
Chapter13—DirectForeignInvestment
1.Basedonthetext,itshouldbeobviousthatmarketsare____inreality,andconsequently,monopolisticadvantages____beexploited.
a.
perfect;maypossibly
b.
perfect;cannot
c.
imperfect;maypossibly
d.
imperfect;cannot
ANS:
CPTS:
1
2.Whenafirmanalyzesthefeasibilityofaproject,itshouldconsiderthe:
a.
variabilityoftheproject'scashflow.
b.
correlationoftheproject'scashflowrelativetotheprevailingcashflowsoftheMNC.
c.
AandB
d.
noneoftheabove
ANS:
CPTS:
1
3.The____aproject'svariabilityincashflows,andthe____thepositivecorrelationbetweentheproject'scashflowandtheMNC'scashflow,thelowertheriskoftheproject.
a.
higher;higher
b.
higher;lower
c.
lower;lower
d.
lower;higher
ANS:
CPTS:
1
4.Morethan50%oftheDFIbyU.S.firmsisinMexico.
a.True
b.False
ANS:
FPTS:
1
5.ConsiderFirmAandFirmBthatbothproducethesameproduct.FirmAwouldmorelikelyhavemorestablecashflowsifitspercentageofforeignsaleswere____andthenumberofforeigncountriesitsoldproductstowas____.
a.
higher;large
b.
higher;small
c.
lower;small
d.
higher;large
ANS:
APTS:
1
6.Accordingtothetext,afirmmaybeabletoachievea"moreefficient"projectportfolioifit:
a.
focusessolelyononeproduct.
b.
focusessolelyononelocationtomarketwhatitproduces.
c.
AandB
d.
noneoftheabove
ANS:
DPTS:
1
7.Accordingtoinformationinthetext,ahostgovernmentwouldbeleastlikelytoprovideincentivesfordirectforeigninvestment(DFI)intoitscountryifthefirmplanningDFI:
a.
wouldcompetewithlocalfirmsofthehostcountry.
b.
wouldproduceagoodnotcurrentlyavailableinthehostcountry.
c.
wouldproduceagoodandexportittoothercountries.
d.
BandC
ANS:
APTS:
1
8.Ifcountriesarehighlyinfluentialuponeachother,thecorrelationsoftheireconomicgrowthlevelswouldlikelybe____.Afirmwouldbenefit____bydiversifyingsalesamongthesecountriesrelativetoanothersetofcountriesthatwerenotinfluentialuponeachother.
a.
highandpositive;more
b.
closetozero;more
c.
highandpositive;less
d.
closetozero;less
ANS:
CPTS:
1
9.Afirmwilllikelybenefitmostfromdiversifyingif:
a.
thecorrelationsbetweencountryeconomiesarehigh.
b.
thecorrelationsbetweencountryeconomiesarelow.
c.
thevariabilityofallcountryeconomylevelsishigh.
d.
BandC
ANS:
BPTS:
1
10.Whenaforeigncurrencyisperceivedbyafirmtobeundervalued,thefirmmayconsiderdirectforeigninvestmentinthatcountry,astheinitialoutlayshouldberelativelylow.
a.True
b.False
ANS:
TPTS:
1
11.Consideracountrythatpresentlyhasahighlevelofunemploymentbecauseofweakeconomicconditions.Itsincomelevelsareverylow.Thiscountrymaybeanattractivetargetasaresultof____motivesbyU.S.firmsthatengageindirectforeigninvestment.
a.
revenue-related
b.
cost-related
c.
AandB
d.
noneoftheabove
ANS:
BPTS:
1
12.Whichofthefollowingisareasontoconsiderinternationalbusiness?
a.
economiesofscale.
b.
exploitmonopolisticadvantages.
c.
diversification.
d.
alloftheabove
ANS:
DPTS:
1
13.Fromtheconceptofan"efficientfrontier,"thepointonafrontierthatisoptimalforallfirms:
a.
isthetoppoint.
b.
isthepointclosesttotheverticalaxis.
c.
isthepointhalfwaybetweenthetwoendpoints.
d.
cannotbedeterminedsincefirmsvaryintheirwillingnesstoacceptrisk.
ANS:
DPTS:
1
14.Directforeigninvestmentisperceivedbyforeigngovernmentsto:
a.
beacauseofnationalproblems.
b.
bearemedyfornationalproblems.
c.
eitherAorBispossible.
d.
havenoimpactonnationalproblems.
ANS:
CPTS:
1
15.Directforeigninvestmentwouldtypicallybewelcomedif:
a.
theproductstobeproducedaresubstitutesforotherlocallyproducedproducts.
b.
peoplefromthecountryofthecompany'sheadquarteraretransferredtotheforeigncountrytoworkatthesubsidiary.
c.
theproductstobeproducedaregoingtobeexported.
d.
alloftheabove
ANS:
CPTS:
1
16.AssumeaU.S.firminitiatesdirectforeigninvestmentintheU.K.IftheBritishpoundisexpectedtoappreciateagainstthedollar,thedollarvalueofearningsremittedtotheparentshould____.Theparentmayrequestthatthesubsidiary____inordertobenefitfromtheexpectationaboutthepound.
a.
increase;postponeremittingearningsuntilthepoundstrengthens
b.
decrease;postponeremittingearningsuntilthepoundstrengthens
c.
decrease;remitearningsimmediatelybeforethepoundstrengthens
d.
increase;remitearningsimmediatelybeforethepoundstrengthens
ANS:
APTS:
1
17.AssumetheBritishpoundappreciatesagainstthedollarwhiletheJapaneseyendepreciatesagainstthedollar.Whichofthefollowingistrue?
a.
JapaneseexporterscanincreaseAmericansalesbyshiftingoperationsfromtheirBritishsubsidiariestoJapan.
b.
BritishexporterscanincreaseAmericansalesbyshiftingoperationsfromtheirJapanesesubsidiariestoBritain.
c.
AmericanexporterscanincreasesalestoJapanbyshiftingoperationsfromJapanesesubsidiariestoAmericansubsidiaries.
d.
BandC
ANS:
APTS:
1
18.Evenifproductioncostsarehigherinaforeigncountry,aU.S.firmmayestablishamanufacturingplantintheforeigncountrynowif:
a.
thehostgovernmentofthatcountryeliminatesallquotas.
b.
thehostgovernmentofthatcountryreducesallquotas.
c.
thehostgovernmentofthatcountryincreasesallquotas.
d.
thehostgovernmentofthatcountryeliminatesalltariffs.
ANS:
CPTS:
1
19.Acountrywithhighunemploymentcouldbestincreaseitsemploymentby:
a.
encouragingforeignfirmstoestablishsubsidiariesthatproducethesameproductslocalfirmsproduce.
b.
encouragingforeignfirmstoestablishlicensingarrangementsforproductslocalfirmsproduce.
c.
encouragingforeignfirmstoestablishsubsidiariesthatproduceproductslocalfirmsdonotproduce.
d.
noneoftheabovewouldreduceemployment.
ANS:
CPTS:
1
20.Accordingtoyourtext,____isacountrythathasbeenperceivedasoneofthemostattractivesourcesofnewdemand.
a.
Paraguay
b.
Morocco
c.
Sweden
d.
China
ANS:
DPTS:
1
21.____isnotadisadvantageofdirectforeigninvestment.
a.
Theexpenseofestablishingaforeignsubsidiary
b.
Theuncertaintyofinflationandexchangeratemovements
c.
Politicalrisk
d.
Alloftheabovearedisadvantagesofdirectforeigninvestment
ANS:
DPTS:
1
22.Assumethecorrelationcoefficientbetweenthereturnontheexistingprojectandthereturnonaproposedforeignprojectis1.Alsoassumethereturnsontheexistingprojectandthenewprojectareequal,andthattheexistingprojecthasalowerstandarddeviationthantheproposedproject.Underthisscenario,undertakingtheproposedprojectwill____thevarianceofthefirm'soverallreturns.
a.
decrease
b.
increase
c.
decreaseorincrease,dependingontheexactsizeofthereturnsandstandarddeviations
d.
noneoftheabove
ANS:
BPTS:
1
23.Whichofthefollowingisnottrueregardinghostgovernmentattitudestowardsdirectforeigninvestment(DFI)?
a.
HostgovernmentsmayofferincentivestoMNCsintheformofsubsidiesincertaincircumstances.
b.
HostgovernmentsgenerallyperceiveDFIasaremedytoeliminateacountry'spoliticalproblems.
c.
TheabilityofahostgovernmenttoattractDFIisdependentonthecountry'smarketsandresources.
d.
SometypesofDFIwillbemoreattractivetosomegovernmentsthantoothers.
e.
Alloftheabovearetrue.
ANS:
BPTS:
1
24.WhichofthefollowingisnottrueregardingtheefficientfrontierconsideredbyMNCs?
a.
ThereisexactlyonepointontheefficientfrontierthatisoptimalforeveryMNC,regardlessofitsdegreeofriskaversion.
b.
Theefficientfrontierforinternationalprojectswillprobablylietotheleftoftheefficientfrontierfordomesticprojects.
c.
Eachpointontheefficientfrontierrepresentsaportfolioofprojectsasopposedtoanindividualproject.
d.
Alloftheabovearetrue.
e.
AandCarefalse.
ANS:
APTS:
1
25.Whichofthefollowingisnotacost-relatedmotiveofdirectforeigninvestment?
a.
Internationaldiversification.
b.
Lowlaborcosts.
c.
Landcanbepurchasedatalowprice.
d.
Manufacturingplantscanbebuiltforalowprice.
ANS:
APTS:
1
26.MNCscommonlyconsiderdirectforeigninvestmentbecauseitcanimprovetheirprofitabilityandenhanceshareholderwealth.
a.True
b.False
ANS:
TPTS:
1
27.____isnotarevenue-relatedmotivefordirectforeigninvestment.
a.
Attractingnewsourcesofdemand
b.
Fullybenefitingfromeconomiesofscale
c.
Exploitingmonopolisticadvantages
d.
Enteringprofitablemarkets
ANS:
BPTS:
1
28.____isnotacost-relatedmotivefordirectforeigninvestment.
a.
Exploitingmonopolisticadvantages
b.
Fullybenefitingfromeconomiesofscale
c.
Usingforeignfactorsofproduction
d.
Usingforeignrawmaterials
ANS:
APTS:
1
29.Whenafirmperceivesthataforeigncurrencyis____,thefirmmayattemptdirectforeigninvestmentinthatcountry,astheinitialoutlayshouldberelatively____.
a.
overvalued;high
b.
overvalued;low
c.
undervalued;high
d.
undervalued;low
ANS:
DPTS:
1
30.CountriesthatbecamepartoftheEuropeanUnioninrecentyearshadhighlaborandproductioncostsandthereforewerenottargetedfornewDFIbyM
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