FINA 450 Chapter 1

Financial globalization has not resulted in
uniform ways of ownership, control, and governance across the world
A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value?
none of the above
A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?
an open marketplace
A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?
access to capital
A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:
FDIC
The modern eurocurrency market was born shortly after
World War II
The reference rate of interest in the eurocurrency market is the
LIBOR
Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
Eurocurrency loans are secured loans
The theory that suggests specialization by country can increase worldwide production is
the theory of comparative advantage
Which of the following is NOT a reason governments interfere with comparative advantage?
All are reasons governments interfere with comparative advantage
Which of the following factors of production do NOT flow freely between countries
raw materials
Which of the following would NOT be a way to implement comparative advantage?
All of the above are examples of ways to implement comparative advantage
Of the following, which would NOT be considered a way that government interferes with comparative advantage?
managerial skills
The concept of absolute comparative advantage’s origins lie in:
Adam Smith’s work of 1776
The concept of relative comparative advantage’s origins lie in:
On the Principles of Political Economy and Taxation book, published in 1817
Which of the following domestic financial instruments have NOT been modified for use in international financial management?
All of the above are domestic financial instruments that have also been modified for use in international financial markets
Which of the following is not always understood by MNE management?
Culture, history, and institutions
In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce a foreign countries?
Political safety and small likelihood of government expropriation of assets
______ investments are designed to promote and enhance the growth and profitability of the firm. _____ investments are designed to deny those same opportunities to the firm’s competitors
Proactive: Defensive
In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a raw material seeker. Which of the following is NOT a reason why raw material seeker extract raw materials in foreign countries?
All of the above
The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:
international trade phase
The authors describe the multinational phase of globalization for a firm as one characterized by the:
ownership of assets and enterprises in foreign countries
A firm in the International Trade Phase of Globalization:
bears direct foreign exchange risk
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?
foreign consumer method of payment preferences
The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interest rather than the interests of the firm.
corporate insiders and rulers of sovereign states