International Business Exam Review
Course Introduction
International Business explores the complexities of operating in the global marketplace, focusing on the strategies and practices that organizations use to compete internationally. The course covers key topics such as cross-cultural communication, international market entry strategies, global supply chain management, and the influence of economic, political, and legal environments on business decisions. Through case studies and real-world examples, students learn how factors like exchange rates, trade policies, and cultural differences impact multinational corporations. The course prepares learners to understand and navigate the challenges and opportunities of conducting business across borders in a dynamic, interconnected world.
Recommended Textbook
Multinational Business Finance 15th Edition by
David K. Eiteman
Available Study Resources on Quizplus
18 Chapters
1227 Verified Questions
1227 Flashcards
Source URL: https://quizplus.com/study-set/218
Page 2
Chapter 1: Multinational Financial Management: Opportunities and Challenges
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/3222
Sample Questions
Q1) The Eurocurrency market continues to thrive because it is a large international money market relatively free from governmental regulation and interference. Recent events may lead to greater regulation.
A)True
B)False
Answer: True
Q2) ________ 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.
A) Conservative; Aggressive
B) Defensive; Proactive
C) Proactive; Defensive
D) Aggressive; Proactive
Answer: C
Q3) The reference rate of interest in the eurocurrency market is the:
A) London Interbank Offered Rate.
B) Prima rate.
C) Federal funds rate.
D) Treasury rate.
Answer: A
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: The International Monetary System
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/3223
Sample Questions
Q1) Regime structures like the gold standard required no cooperative policies among countries, only the assurance that all would abide by the "rules of the game."
A)True
B)False
Answer: True
Q2) By and large, high capital mobility is forcing emerging market nations to choose between the two extremes of a free-floating exchange rate or a hard peg regime.
A)True
B)False
Answer: True
Q3) China today is a clear example of a nation that has chosen the following policies EXCEPT:
A) control and manage the value of its currency.
B) conduct an independent monetary policy.
C) full financial integration in an attempt to stimulate its domestic economy.
D) restrict the flow of capital into and out of the country.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Balance of Payments
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/3224
Sample Questions
Q1) Over the last two decades the surplus on U.S. services trade has typically been ________ the deficit on U.S. goods trade.
A) greater than B) equal to C) less than
D) The relationship is constantly shifting from greater than to less than.
Answer: C
Q2) Which of the following is NOT likely to occur in the quantity adjustment phase of the J-Curve adjustment path?
A) Imports become relatively more expensive.
B) Exports become relatively less expensive.
C) The balance of trade gets worse.
D) All of the above are true.
Answer: C
Q3) As of year-end 2016, the United States still held the world's largest foreign exchange reserve, but the total was rapidly being approached by China.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Financial Goals and Corporate Governance
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/3225
Sample Questions
Q1) Anglo-American markets is a term used to describe business markets in:
A) North, Central, and South America.
B) the United States, Canada, and Western Europe.
C) the United States, United Kingdom, Canada, Australia and New Zealand.
D) the United States, France, Britain, and Germany.
Q2) The relatively low cost of compliance with the Sarbanes-Oxley Act (SOX) has been a surprising benefit of the act.
A)True
B)False
Q3) Systematic risk can be eliminated through portfolio diversification.
A)True
B)False
Q4) The stakeholder capitalism model does not assume that equity markets are either efficient or inefficient.
A)True
B)False
Q5) Patient Capitalism is characterized by short-term focus by both management and investors.
A)True
B)False
6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: The Foreign Exchange Market
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/3226
Sample Questions
Q1) A German firm is attempting to determine the euro/pound exchange rate and has the following exchange rate information: USD/pound = $1.5509/£ and the USD/euro rate = $1.2194/ . Therefore, the euro/pound rate must be:
A) £1.2719/ .
B) 1.2719/£.
C) 0.7316/£.
D) 0.7863/£.
Q2) ________ make money on currency exchanges by the difference between the ________ price, or the price they offer to pay, and the ________ price, or the price at which they offer to sell the currency.
A) Dealers; ask; bid
B) Dealers; bid; ask
C) Brokers; ask; bid
D) Brokers; bid; ask
Q3) For individuals and firms involved in the import and export of goods and services, using the foreign exchange market is necessary, but incidental, to their underlying commercial or investment purpose.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: International Parity Conditions
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/3227
Sample Questions
Q1) The price elasticity of demand for DVD players manufactured by Sony of Japan is greater than one. If the Japanese yen appreciates against the U.S. dollar by 10% and the price of the Sony DVD players in the U.S also rises by 10%, then other things equal, the total dollar sales revenues of Sony DVDs would:
A) decline.
B) increase.
C) stay the same.
D) insufficient information
Q2) The final component of the equation for the Fisher Effect, (r)(?), where r = the real rate of return and ? = the expected rate of inflation, is often dropped from the equation because the number is simply too large for most Western economies.
A)True
B)False
Q3) In their approximate form, PPP, IRP, and forward rates as an unbiased predictor of the future spot rate lead to similar forecasts of the future spot rate.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Foreign Currency Derivatives: Futures and Options
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/3228
Sample Questions
Q1) Dash Brevenshure works for the currency trading unit of ING Bank in London. He speculates that in the coming months the dollar will rise sharply vs. the pound. What should Dash do to act on his speculation?
A) Buy a call on the pound.
B) Sell a call on the pound.
C) Buy a put on the pound.
D) Sell a put on the pound.
Q2) The price of an option is always somewhat greater than its intrinsic value, since there is always some chance that the intrinsic value will rise between the present and the expiration date.
A)True
B)False
Q3) Standard foreign currency options are priced around the forward rate.
A)True
B)False
Q4) Compare and contrast foreign currency options and futures. Identify situations when you may prefer one vs. the other when speculating on foreign exchange.
Q5) List and explain three "Greek" elements and their impact on a call option premium.
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Interest Risk and Swaps
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/3229
Sample Questions
Q1) Counterparty risk is greater for exchange-traded derivatives than for over-the-counter derivatives.
A)True
B)False
Q2) A firm entering into a currency or interest rate swap agreement holds no responsibility for the timely servicing of its own debt obligations since that responsibility now is born by the second party to the contract.
A)True
B)False
Q3) Individual borrowers - whether they be governments or companies - possess their own individual credit rating, the market's assessment of their ability to repay debt in a timely manner. These credit assessments influence all the following EXCEPT:
A) cost of capital.
B) access to capital.
C) credit risk premium.
D) risk-free rate.
Q4) A basis point is one-tenth of one percent.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Foreign Exchange Rate Determination and Intervention
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/3230
Sample Questions
Q1) The large and liquid capital and currency markets follow many of the principles outlined by the different schools of thought on exchange rate determination (parity conditions, balance of payments approach, and asset approach) relatively well in the medium to long term.
A)True
B)False
Q2) The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.
A) balance of payments
B) parity conditions
C) managed float
D) asset market
Q3) The authors claim that random events, institutional frictions, and technical factors may cause currency values to deviate significantly from their long-term fundamental path.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Transaction Exposure
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/3231
Sample Questions
Q1) According to a survey by Bank of America, the type of foreign exchange risk most often hedged by firms is:
A) translation exposure.
B) transaction exposure.
C) contingent exposure.
D) economic exposure.
Q2) Like a forward market hedge, a money market hedge also involves a contract and a source of funds to fulfill that contract. In this instance, the contract is a loan agreement.
A)True
B)False
Q3) Hedging can be advantageous to shareholders because management is in a better position than shareholders to recognize disequilibrium conditions and to take advantage of single opportunities to enhance firm value through selective hedging. A)True
B)False
Q4) Hedging, or reducing risk, is the same as adding value or return to the firm.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Translation Exposure
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/3232
Sample Questions
Q1) The main technique to minimize translation exposure is called a/an ________ hedge.
A) balance sheet
B) income statement
C) forward
D) translation
Q2) Gains or losses caused by translation adjustments when using the current rate method are reported separately on the:
A) consolidated statement of cash flow.
B) consolidated income statement.
C) consolidated balance sheet.
D) none of the above
Q3) The temporal method of foreign currency translation gains or losses resulting from remeasurement are carried directly to current consolidated income and thus introduces volatility to consolidated earnings.
A)True
B)False
Q4) Describe a balance sheet hedge and give at least two examples of when such a hedge could be justified.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Operating Exposure
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/3233
Sample Questions
Q1) Swap agreements are treated as line items on the balance sheet via U.S. accounting methods.
A)True B)False
Q2) Most swap dealers arrange swaps so that each firm that is a party to the transaction knows who the counterparty is.
A)True B)False
Q3) A Canadian firm with a U.S. subsidiary and a U.S. firm with a Canadian subsidiary agree to a parallel loan agreement. In such an agreement, the Canadian firm is making a/an ________ loan to the ________ subsidiary while effectively financing the ________ subsidiary.
A) indirect; U.S.; Canadian
B) indirect; Canadian; U.S.
C) direct; U.S.; Canadian
D) direct; Canadian; U.S.
Q4) The higher the price elasticity of demand, the higher the degree of pass-through.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Global Cost and Availability of Capital
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/3234
Sample Questions
Q1) The MNE can ________ its ________ by gaining access to markets that are more liquid and/or less segmented than its own.
A) increase; MCC
B) decrease; MCC
C) maintain; MRR
D) none of the above
Q2) Despite the theoretical elegance of this hypothesis, empirical studies have come to the opposite conclusion. Despite the favorable effect of international diversification of cash flows, bankruptcy risk was only about the same for MNEs as for domestic firms.
However, MNEs faced higher costs for each of the following EXCEPT:
A) agency costs.
B) political risk.
C) asymmetric information.
D) In fact, each of these costs were higher for the MNE than for the domestic firm.
Q3) Empirical tests of market efficiency fail to show that most major national markets are reasonably efficient.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Funding the Multinational Firm
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/3235
Sample Questions
Q1) Most firms raise their initial capital in foreign markets.
A)True
B)False
Q2) In theory multinational firms are in a better position than domestic firms to support higher debt ratios.
A)True
B)False
Q3) One of the most important factors in making debt less expensive than equity is:
A) the seniority of equity obligations to debt claims.
B) the tax deductibility of dividends.
C) the tax deductibility of equity.
D) the seniority of debt obligations to equity claims.
Q4) Level I ADRs trade primarily:
A) on the New York Stock Exchange.
B) on the American Stock Exchange.
C) over the counter or pink sheets.
D) Level I ADRs typically do not trade at all, but instead are privately issued and held until maturity.
Q5) List and discuss three public pathway strategies for a MNE for raising equity capital outside its home market.
16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Multinational Tax Management
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/3236
Sample Questions
Q1) All indications are that the value-added tax will soon be the dominant form of taxation in the U.S.
A)True
B)False
Q2) What are the desired characteristics for a country if it expects to be used as a tax haven?
Q3) Refer to Table 15.1. How much in additional U.S. taxes would be due if BayArea averaged the tax credits and liabilities of the two foreign units, assuming a 50% payout rate from each?
A) $3,750
B) $13,750
C) $2,500
D) $0
Q4) As part of the Act of 2017, the taxation of Foreign-Source Income will not create tax credits or deficits when declared as dividends to the U.S. parent.
A)True
B)False
Q5) Why do the U.S. tax authorities tax passive income generated offshore differently from active income?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: International Trade Finance
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/3237
Sample Questions
Q1) In a typical international trade transaction, the order of activity would be which of the following?
A) The foreign buyer places an order; The domestic manufacturer ships to the buyer; The manufacturer's bank presents a draft and documents to the buyer's bank for acceptance; The buyer's bank submits payment to the manufacturer's bank.
B) The domestic manufacturer ships to the buyer; The buyer's bank submits payment to the manufacturer's bank; The foreign buyer places an order; The domestic manufacturer ships to the buyer; The manufacturer's bank presents a draft and documents to the buyer's bank for acceptance.
C) The foreign buyer places an order; The manufacturer's bank presents a draft and documents to the buyer's bank for acceptance; The domestic manufacturer ships to the buyer; The buyer's bank submits payment to the manufacturer's bank.
D) The domestic manufacturer ships to the buyer; The manufacturer's bank presents a draft and documents to the buyer's bank for acceptance; The foreign buyer places an order; The buyer's bank submits payment to the manufacturer's bank.
Q2) What is a banker's acceptance? How are they initiated? Why are they desirable for the exporter?
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Foreign Direct Investment and Political Risk
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/3238
Sample Questions
Q1) Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.
A)True
B)False
Q2) Greenfield investments are typically ________ and ________ than cross-border acquisition.
A) slower; more uncertain
B) faster; of greater certainty
C) slower; of greater certainty
D) faster; more uncertain
Q3) The owner-specific advantages of OLI must be:
A) firm-specific.
B) not easily copied.
C) transferable to foreign subsidiaries.
D) all of the above
Q4) List and explain three strategic motives why firms could become multinationals and give an example of each.
Q5) What does the OLI Paradigm propose to explain? Define each component and provide an example of each.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Multinational Capital Budgeting and Cross-Border Acquisitions
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/3239
Sample Questions
Q1) If a firm undertakes a project with ordinary cash flows and estimates that the firm has a positive NPV, then the IRR will be:
A) less than the cost of capital.
B) greater than the cost of capital.
C) greater than the cost of the project.
D) cannot be determined from this information
Q2) For financial reporting purposes, U.S. firms must consolidate the earnings of any subsidiary that is over ________ owned.
A) 20%
B) 40%
C) 50%
D) 75%
Q3) When evaluating capital budgeting projects, which of the following would NOT necessarily be an indicator of an acceptable project?
A) an NPV > $0
B) an IRR > the project's required rate of return
C) an IRR > $0
D) All of the above are correct indicators.
To view all questions and flashcards with answers, click on the resource link above. Page 20