International Finance Practice Exam
Course Introduction
International Finance explores the financial dynamics that govern the global marketplace, focusing on foreign exchange markets, international financial institutions, and cross-border investment strategies. The course examines key concepts such as exchange rate determination, financial risk management, balance of payments, and the impact of international monetary policies. Students will learn how multinational corporations raise and manage capital worldwide, assess political and economic risks, and understand the implications of globalization on financial decision-making. Real-world case studies and current events are analyzed to provide insight into the challenges and opportunities facing organizations in todays interconnected financial environment.
Recommended Textbook
Global Business 3rd Edition by Mike Peng
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17 Chapters
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Page 2
Chapter 1: Globalizing Business
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Sample Questions
Q1) The current state of globalization around the world is that of semiglobalization.
A)True
B)False
Answer: True
Q2) Purchasing power parity (PPP)is a conversion that determines the equivalent amount of goods and services different currencies can purchase.
A)True
B)False
Answer: True
Q3) Which of the following is true of semiglobalization?
A) It is a type of globalization that adopts a strategy of treating the entire world as one market.
B) It is a type of globalization that lies between total isolation and total globalization.
C) It is a form of globalization that treats each country as a unique market.
D) It is a form of globalization that considers each nation in isolation when conducting business.
Answer: B
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Chapter 2: Understanding Formal Institutions: Politics, Laws, and Economics
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Sample Questions
Q1) The _____ view focuses on the dynamic interactions between the laws,cultures and ethics of a country and a firm,and considers firm behaviors as the outcome of such an interaction.
A) internal strength-based
B) competency-based
C) institution-based
D) resource-based
Answer: C
Q2) An institutional framework is made up of formal and informal institutions governing individual and firm behavior.
A)True
B)False
Answer: True
Q3) Institutional framework only pertains to a firm's behavior.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Emphasizing Informal Institutions: Cultures, Ethics, and Norms
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Sample Questions
Q1) Which of the following is true of the reactive strategy to ethical challenges in business?
A) It admits responsibility and does less than what is required.
B) It accepts responsibility and does more than what is required.
C) It anticipates institutional changes and does more than what is required.
D) It denies responsibility and takes a passive approach.
Answer: D
Q2) Which of the following is true of the GLOBE clusters?
A) It divides all the nations of the world into western and eastern cultures.
B) It divides the nations of the world into ten clusters.
C) It divides the nations of the world based on civilizations.
D) It divides the nations of the world based on their religious affinity.
Answer: B
Q3) Power distance is the extent to which less powerful members within a country expect and accept that power is distributed unequally.
A)True
B)False
Answer: True
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Chapter 4: Leveraging Resources and Capabilities
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Sample Questions
Q1) An ODM is similar to an OBM in that both _____.
A) execute design blueprints provided by other firms
B) include product marketing in their organizational boundary
C) exclude manufacturing in their organizational boundary
D) design and manufacture their own products
Q2) According to the VRIO framework,non-value-adding resources and capabilities will lead to _____ for a firm.
A) a temporary competitive advantage
B) a competitive parity
C) a sustained competitive advantage
D) a competitive disadvantage
Q3) According to the VRIO framework,a firm with an organized,valuable,rare,but imitable resources and capabilities will display a(n)_____ performance.
A) below average
B) average
C) above average
D) poor
Q4) Explain the different categories of intangible resources and capabilities that a firm could possess.
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Chapter 5: Trading Internationally
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Sample Questions
Q1) The theory of national competitive advantage of industries assumes that comparative advantage always resides in the lead innovation nation.
A)True
B)False
Q2) Political arguments against free trade focus on protectionism and infant industries.
A)True
B)False
Q3) In the third stage of the product life cycle theory,the _____.
A) demand and ability to produce the product grow in developed nations
B) product is standardized
C) lead innovation nation starts exporting more and importing less
D) production of a product commanding a price premium will be concentrated in the lead innovation nation
Q4) Elaborate on Michael Porter's "diamond" theory.
Q5) By trying to be self-sufficient and producing a wide range of goods,mercantilist policies help sustain the wealth of a nation in the long run.
A)True
B)False
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Chapter 6: Investing Abroad Directly
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Sample Questions
Q1) Describe the process of obsolescing bargain between MNEs and governments.
Q2) Dissemination risk refers to the cost that a firm has to endure even when its investment turns out to be unsatisfactory.
A)True
B)False
Q3) Capital inflow can help improve a host country's balance of payments.
A)True
B)False
Q4) Costs that a firm has to endure even when its investment turns out to be unsatisfactory are referred to as _____.
A) switching costs
B) replacement costs
C) cost overruns
D) sunk costs
Q5) Horizontal FDI refers to the amount of FDI moving out of a country in a year. A)True
B)False
Q6) Repatriated earnings from profits of MNEs benefit the host country financially.
A)True
B)False
Page 8
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Chapter 7: Dealing with Foreign Exchange
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Sample Questions
Q1) Majority of the largest US firms practice currency hedging.
A)True
B)False
Q2) In terms of international trade competitiveness,a strong dollar makes it easier for US firms to export and to compete on price when combating imports.
A)True
B)False
Q3) Describe what it means for a country to peg its currency to another,and give two benefits to adopting this policy.
Q4) The most extreme fixed rate policy is through a currency board.
A)True
B)False
Q5) The theory of purchasing power parity suggests that in the absence of trade barriers,the price for identical products sold in different countries will be different.
A)True
B)False
Q6) Compare and contrast the advantages and disadvantages of a strong and a weak dollar.
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Chapter 8: Capitalizing on Global and Regional Integration
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Sample Questions
Q1) All members of the EU have adopted the euro as their currency.
A)True
B)False
Q2) Which of the following is referred to as a multilateral trading system?
A) WTO
B) EU
C) NAFTA
D) ASEAN
Q3) Which of the following characterizes a customs union?
A) It requires each member to maintain different external policies regarding non-members.
B) It imposes common external policies on non-members.
C) It integrates the political and economic affairs of a region.
D) It permits the free movement of goods and people among its members.
Q4) The European Union (EU)was established when the ____ went into effect in 1993.
A) Treaty of Rome
B) Maastricht Treaty
C) Lisbon Treaty
D) ECSC Treaty
Q5) Explain possible benefits of global economic integration.
Page 10
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Chapter 9: Growing and Internationalizing the Entrepreneurial Firm
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Sample Questions
Q1) International new ventures are also referred to as _____.
A) born global firms
B) microfinance firms
C) greenfield subsidiaries
D) conglomerates
Q2) Cultural values and norms are examples of informal institutions.
A)True
B)False
Q3) Whether entrepreneurship is facilitated or retarded significantly depends on formal institutions governing how entrepreneurs start up new firms.
A)True
B)False
Q4) SMEs tend to be less entrepreneurial than large firms.
A)True
B)False
Q5) Entrepreneurs need to cultivate strong informal norms granting legitimacy to entrepreneurs.
A)True
B)False
Q6) Explain the concept of microfinance. Page 11
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Chapter 10: Entering Foreign Markets
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Sample Questions
Q1) A greenfield operation refers to _____.
A) a new corporate entity created and jointly owned by two or more parent companies
B) a wholly owned subsidiary created by building a new factory and offices from scratch
C) a wholly owned subsidiary created by acquisition
D) an outsourcing agreement in R&D between firms
Q2) The resource-based view suggests that firms need to take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries.
A)True
B)False
Q3) Which of the following is true of indirect exports?
A) They typically provoke protectionism, potentially triggering antidumping actions.
B) They treat foreign demand as an extension of domestic demand.
C) They export through domestically based export intermediaries.
D) They do not enjoy the economies of scale similar to direct exports.
Q4) Define a wholly owned subsidiary (WOS).What are the two primary means to set up a WOS?
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Chapter 11: Managing Global Competitive Dynamics
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Sample Questions
Q1) Which of the following industrial characteristics makes a collusion difficult but leads to competition?
A) Existence of few firms in the industry
B) Existence of an industry price leader
C) Lack of market commonality
D) High barriers of entry
Q2) Which of the following is a theory that studies the interactions between two parties that compete and/or cooperate with each other?
A) Predatory pricing
B) Game theory
C) Prisoner's dilemma
D) Cross-market retaliation
Q3) Explain the possible outcomes of an antidumping investigation in the United States.
Q4) The strategy that centers on a firm expanding overseas is called the dodger strategy.
A)True
B)False
Q5) Explain how interaction differs between tacit collusion and explicit collusion.
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Chapter 12: Making Alliances and Acquisitions Work
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Sample Questions
Q1) In the context of equity-based alliances,_____ involves both firms investing in each other.
A) strategic fit
B) acquisition premium
C) strategic investment
D) cross-shareholding
Q2) Which of the following alliances is a contractual alliance?
A) Strategic investment
B) Franchising
C) Cross-shareholding
D) Joint venture
Q3) The informal institution-based view that stresses on the cognitive pillar is centered on the internalized taken-for-granted values and beliefs that guide firm behavior.
A)True
B)False
Q4) Formal government policies regarding entry mode requirements are generally becoming more conservative.
A)True
B)False
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Chapter 13: Strategizing,Structuring,and Learning around the World
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Q1) In a transnational strategy,the flow of knowledge is unidirectional.
A)True
B)False
Q2) The _____ strategy focuses on development and distribution of standardized products worldwide to reap maximum benefits from low-cost advantages.
A) transnational
B) localization
C) home replication
D) global standardization
Q3) The _____ strategy is an extension of the home replication strategy.
A) global
B) transnational
C) localization
D) export
Q4) In MNEs adopting the home replication strategy,knowledge is developed at the center and transferred to subsidiaries.
A)True
B)False
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Q5) Summarize the advantages and disadvantages of the transnational strategy.
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Chapter 14: Competing on Marketing and Supply Chain Management
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Q1) Briefly discuss market orientation versus relationship orientation that concern marketing and supply chain management.
Q2) Discuss how institutions and resources affect marketing and supply chain management.
Q3) _____ refers to a philosophy or way of thinking that places the highest priority on the creation of superior customer value in the marketplace.
A) Market orientation
B) Societal orientation
C) Relationship orientation
D) Sales orientation
Q4) Agility refers to the ability to change supply chain configurations in response to longer-term changes in the environment and technology.
A)True
B)False
Q5) Enhancing agility often entails making a series of make-or-buy decisions.
A)True
B)False
Q6) Elaborate on the triple As in supply chain management.
Page 17
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Chapter 15: Managing Human Resources Globally
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Sample Questions
Q1) When expatriates evaluate HCNs,cultural difference may create problems.In ____ countries,performance appraisals based on subordinate expressions could potentially undermine the power and status of supervisors.
A) high individualism
B) high power-distance
C) high uncertainty avoidance
D) high masculinity
Q2) Which of the following is an advantage of hiring parent-country nationals (PCNs)?
A) Increases opportunities for HCNs
B) Opportunities for host-country nationals will be abundant.
C) Adaptation will take lesser time.
D) Managers are given international experience.
Q3) Compensation with a _____ makes locations,where pay is higher than in their home country,a more attractive place to work for PCNs and TCNs.
A) going rate approach
B) balance sheet approach
C) pay-per-impression
D) merit rate
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Chapter 16: Financing and Governing the Corporation
Globally
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Sample Questions
Q1) In the principal-agent relationship,principals are managers to whom authority is delegated.
A)True
B)False
Q2) _____ refers to a loan that the firm needs to pay back at a given time with interest.
A) Mutual fund
B) Debt
C) Equity
D) Unit trust
Q3) Owners,managers,and boards of directors are collectively known as the "tripod" of corporate governance.
A)True
B)False
Q4) Corporations in _____ are bank-oriented,network-based systems.
A) China
B) continental Europe
C) the United States
D) the United Kingdom
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Q5) Elaborate on the principal-principal conflicts.
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Chapter 17: Managing Corporate Social Responsibility
Globally
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Sample Questions
Q1) Codes of conduct tangibly express values that organizational members view as central and enduring.
A)True
B)False
Q2) According to the CSR approach,as long as there is competition,there will be both winners and losers.
A)True
B)False
Q3) Which of the following corporate social responsibilities is recommended for MNEs by the UN?
A) Respect the rights for employees to engage in collective bargaining
B) Refrain from improper or illegal involvement in local politics
C) Respect human rights and fundamental freedoms in host countries
D) Provide reasonable terms and conditions when granting licenses for industrial property rights
Q4) Suppliers and customers are secondary stakeholders.
A)True
B)False
Q5) Elaborate on the CSR movement.
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Q6) Elaborate on the proactive strategy to confront CSR pressures.
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