Course Introduction
International Finance
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International Finance explores the fundamental concepts and frameworks that govern financial interactions across borders, including foreign exchange markets, international monetary systems, global capital flows, and the management of financial risk in a multinational context. Students will analyze how exchange rates are determined, assess balance of payments issues, and evaluate the economic impact of currency fluctuations on global trade and investment. The course also addresses challenges and strategies for multinational corporations, such as hedging foreign exchange risk and navigating international financial regulations, providing students with practical tools for evaluating and making decisions in a global financial environment.
Recommended Textbook
International Business 8th Edition by Michael Czinkota
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Page 2
Chapter 1: The International Business Imperative
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Q1) Which statement below best summarizes the United States' export and import shares in recent decades?
A)The export share has increased while the import share has declined
B)The export share has declined while the import share has increased
C)Both export shares and import shares have declined
D)Both export shares and import shares have increased
E)There have been no changes in export shares and import shares in recent decades
Answer: B
Q2) In the past 30 years,German manufacturing employment has:
A)Increased by 11 percent
B)Increased only slightly
C)Remained the same
D)Dropped only slightly
E)Dropped by 13 percent
Answer: E
Q3) _________ is the ratio of primary commodities to manufactured goods in a country's trade.
Answer: Composition of trade
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Chapter 2: Trade and Investment
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Q1) Most-favored nation status is a term describing the ________ clause that calls for member countries to grant other member countries the same most-favorable treatment they accord any country concerning imports and exports.
A)GATT
B)WTO
C)IMF
D)NAFTA
E)EU
Answer: A
Q2) Alfred is looking to determine his own level of well being. To do so,he is evaluating his standard of living combined with environmental factors,such as the quality of his work and home life. This is an evaluation of:
A)Standard of pay
B)Quality of life
C)Personal sovereignty
D)Intelligence quotient
E)Emotional intelligence
Answer: B
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Chapter 3: The Theory of Trade and Investment
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Q1) The product cycle theory is most appropriate for which product?
A)Southwest Airlines
B)Chiquita Bananas
C)Woolite carpet cleaner
D)Apple iPad
E)Cutco cutlery
Answer: D
Q2) As per-capita income in China rises,the complexity and quality level of the products demanded by Chinese consumers also rises. This is a principle of which theory?
A)Theory of absolute advantage
B)Overlapping product ranges theory
C)Competitive advantage of nations theory
D)Imperfect markets theory
E)Product cycle theory
Answer: B
Q3) ________ is the political and economic policy of the 17th and early 18th centuries aimed at increasing a nation's wealth and power by encouraging the export of goods in return for gold.
Answer: Mercantilism
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Page 5
Chapter 4: The Balance of Payments
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Q1) The measurement of all international economic transactions between the residents of a country and foreign residents is called the:
A)Balance of power
B)Balance of trade
C)Balance of payments
D)Current financial account
E)Capital trade account
Q2) __________ refers to legal restraints on what a foreign investor may own or control in another country.
Q3) The BOP current account includes subcategories for all of the following EXCEPT:
A)Goods trade
B)Services trade
C)Income
D)Future transfers
E)Current transfers
Q4) Describe how the flow of capital has changed from 1860 through 2000.
Q5) The official reserves account makes sure the balance of payments actually balances.
A)True
B)False
6
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Chapter 5: Culture
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Q1) Housing,health,and educational systems are all included in the social infrastructure of society.
A)True
B)False
Q2) The process of adjusting and adapting to a specific culture other than one's own is called:
A)Cultural convergence
B)Norming
C)Culture risk
D)Change
E)Acculturation
Q3) _________ is the division of a particular population into classes.
Q4) Understanding __________ is especially important in negotiations.
A)values
B)manners and customs
C)attitudes
D)educational levels
E)material elements
Q5) Explain how the dominant religions of the world affect culture and play a role in international business.
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Chapter 6: Politics and Law
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Q1) _________ are designed to deny or at least delay the acquisition of strategically important goods to adversaries.
A)Sanctions
B)Coups d'états
C)Embargoes
D)Import-control systems
E)Export-control systems
Q2) The _________ is an agreement that outlines procedures for filing one international patent application rather than several individual national applications.
Q3) A forced change in a country's government,often resulting in attacks of foreign firms and policy changes by the new government is called:
A)Expatriation
B)Genocide
C)Coup d'état
D)Terrorism
E)Extortion
Q4) Countries may use __________ toward foreign investors in an effort to control multinational corporations and their capital.
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Chapter 7: Financial Markets
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Q1) Describe the purpose and outcome of the Bretton Woods agreement of 1944.
Q2) Coordinated intervention is a currency value management method whereby the central banks of the major nations simultaneously intervene in the currency markets in hopes of changing a currency's value.
A)True
B)False
Q3) What shook up the financial world during the Nixon administration in 1971?
A)The U.S.resorted back to the gold standard
B)The U.S.fixed the dollar to the Japanese yen
C)The U.S.abandoned fixed exchange rates
D)The IMF was disbanded
E)The World Bank was disbanded
Q4) A(n)________ bank is an unrelated bank (by ownership)based in a foreign country.
Q5) The 1980s and 1990s saw the growth of the Japanese yen as a pillar of size and strength.
A)True
B)False
Q6) __________ is the theory that the price of internationally traded commodities should be the same in every country.
Page 9
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Chapter 8: Economic Integration, emerging and Developing Markets
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Q1) A(n)__________ is a country making an effort to change and improve its economy with the goal of raising its performance to that of the world's more advanced nations.
A)communist market
B)junk market
C)capital market
D)transition market
E)emerging market
Q2) In 1999,China proposed the Asia Pacific Economic Cooperation as an annual forum.
A)True
B)False
Q3) In opposition to the U.S.-led Free Trade Area of the Americas (FTAA),which group focuses more on social welfare and economic aid than trade liberalization?
A)Central American Common Market
B)Cuban-Venezuelan Trade Agreement
C)Bolivarian Alternative for the People of Our America
D)Caribbean Common Market
E)Caribbean Basin Initiative
Q4) Discuss the four levels of economic integration in countries.
Page 10
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Chapter 9: Strategic Planning
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Q1) Carlyle,an American manager for a Japanese company,is highly critical of decisions coming from the headquarters in Japan,citing that these are "not applicable to the American culture". Carlyle's behavior can best be described as:
A)Protecting the home front
B)Repatriation
C)Expatriate defensiveness issues
D)Homesickness
E)Not-invented-here syndrome
Q2) Typically involving internal strengths and external attractiveness,________ are tools that have been proposed for use in market and competitive analysis.
A)quantitative unit algorithms
B)consumer-price indexes
C)marketing indexes
D)portfolio models
E)strategic business models
Q3) Explain the role of the strategic business unit (SBU)in the strategic planning process.
Q4) ________ is the ability to obtain what one wants through co-option and attraction.
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11
Chapter 10: Corporate Governance and Reform
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Q1) Stakeholder capitalism has its own set of challenges.Finding common ground between multiple stakeholder interests often proves daunting,slowing decision making and often the ability to move quickly enough to remain competitive.
A)True
B)False
Q2) ________is the dividend paid per share to shareholders as a percent of the current share price.
Q3) ________ represents the relationship among stakeholders that is used to determine and control the strategic direction and performance of the corporation.
Q4) Totally Tea is owned by a few private individuals.Totally Tea is an example of a(n):
A)Sole proprietorship
B)Publicly traded company
C)Corporation
D)Corporation sole
E)Partnership
Q5) List the four major requirements of the Sarbanes-Oxley Act.
Q6) List and briefly describe the five structures of corporate governance.
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Page 12
Chapter 11: Coordination, implementation, and Control
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Q1) Behavioral controls can be achieved through the preparation of manuals on such topics as sales techniques to be made available to subsidiary personnel or through efforts to fit new employees into the corporate culture.
A)True
B)False
Q2) Non-gateway hub countries offer significant advantages when organizing for growth.A late 2007 survey by Spire Research and Consulting among Asia-Pacific manufacturing companies found that _______ was the best location for regional headquarters.
A)Malaysia
B)Singapore
C)Thailand
D)Taiwan
E)Japan
Q3) ________ refers to a team of people who are based at various locations around the world and communicated through intranet and other electronic means to achieve a common goal.
Q4) ________ is the granting of a high degree of autonomy to subsidiaries.
Q5) Define and describe each of the three organizational designs.
Q6) Explain output and behavioral controls and provide examples of each
Page 13
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Chapter 12: Building the Knowledge Base Research Tools
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Q1) A research tool using a group of experts to rank major future developments is referred to as:
A)Foreign market opportunity analysis
B)Delphi studies
C)Content analysis
D)Scenario building
E)Joint occurrence
Q2) Systematic evaluation of communication for frequency of expressions is referred to as ________.
A)foreign market opportunity analysis
B)competitive assessment
C)content analysis
D)scenario building
E)joint occurrence
Q3) Research is more important internationally than domestically.
A)True
B)False
Q4) A user-centered design approach that observes customers in their normal environment in order to see how they use products and better identify their needs is called ________.
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Chapter 13: Entry and Expansion
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Q1) International activities may enable the firm to increase its output and therefore rise more rapidly on the learning curve.The Boston Consulting Group has shown that the doubling of output can reduce production costs up to ________ percent.
A)10
B)20
C)30
D)50
E)75
Q2) Private and public sector facilitators supply knowledge and information to a firm as well as participate in the transaction.
A)True
B)False
Q3) The compensation paid by one firm to another under an agreement is called ________,
Q4) Under a(n)________,one firm permits another to use its intellectual property in exchange for compensation.
Q5) Participation by a firm in international business through an intermediary,in which the firm does not deal with foreign customers or firms is referred to as ________.
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Chapter 14: Marketing
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Q1) Coca-Cola took a risk in marketing Diet Coke in Japan because the population is not overweight by Western standards.Further,Japanese women do not like to drink anything clearly labeled as a diet product.The company changed the name to Coke Light and subtly shifted the promotional theme from "weight loss" to "figure maintenance." Coca-Cola was interested in the product's ________.
A)positioning
B)diversification
C)channel design
D)analogy
E)gap analysis
Q2) ________ is the perception by consumers of a firm's product in relation to competitors' products.
Q3) Price-setting strategy based on demand rather than cost is called ________.
Q4) The establishing of export prices far in excess of domestic prices often due to a long distribution channel and frequent markups is known as ________.
Q5) Price-setting strategy based on average unit costs of fixed,variable,and export-related costs is called ________.
Q6) Explain the three categories of factors that affect expansion strategy.
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Chapter 15: Services
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Q1) ________ are services that are provided in the areas of construction,design,and engineering.
Q2) The spread of influenza A (H1N1)around the world had a palpable impact on the tourism industry.
A)True
B)False
Q3) The trip abroad of a consultant for business purposes may be hard to track and measure.This represents a(n)________ problem in the service trade.
A)global regulation
B)data collection
C)e-commerce
D)engineering
E)transparency
Q4) Explain the differences between goods and services.
Q5) The removal of government interference is referred to as ________.
Q6) The language of the Internet is Spanish.
A)True
B)False
Q7) Interference in the marketplace by governments is called ________.
Page 17
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Chapter 16: Logistics
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Q1) A system responding to the need for product returns that ensures a firm can retrieve a product from the market for subsequent use,recycling,or disposal is known as
Q2) Approximately ________ percent of the world's manufactured exports by weight travel by air.
A)10
B)20
C)30
D)40
E)50
Q3) The first phase in the movement of materials is ________.
A)physical distribution
B)materials management
C)systems concept
D)supply-chain management
E)extended enterprise
Q4) The acceptance of e-commerce is uniform; it is widely accepted internationally.
A)True
B)False
Q5) Explain the packaging issues that international shippers may face.
Page 18
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Chapter 17: Financial Management
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Q1) Agreements between firms and banks which permit the firm to either sell or buy a specific foreign currency at a future date at a known price are known as ________.
Q2) ________ are calculates on actual income,either individual or firm income.
Q3) Among the 30 industrialized countries in the Organization for Economic Cooperation (OPEC),only ________ has a higher tax rate than the U.S.
A)Mexico
B)Turkey
C)Japan
D)China
E)Germany
Q4) A direct exchange of goods of approximately equal value,with no money involved is known as ________.
Q5) A(n)________ refers to a withdrawal document drawn against a company.
Q6) ________ is the policy of buying goods from one unit and selling them to a second unit and reinvoicing the sale to the next unit,to take advantage of favorable exchange rates.
Q7) Taxes applied to the payment of dividends,interest,or royalties by firms are called ________.
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Chapter 18: Human Resource Management
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Q1) An individual in the ________ stage of culture shock typically experiences cultural differences,such as the concept of time,through increased participation.
A)initial euphoria
B)irritation and hostility
C)adjustment
D)accommodation
E)re-entry
Q2) ________ percent of expatriates have to be called home early.
A)5
B)15
C)25
D)40
E)70
Q3) Define culture shock.List and briefly discuss the four stages of culture shock.
Q4) Various corporate efforts in the area of personal and professional development undertaken with the objectives of increasing employee satisfaction and increasing productivity is (are)referred to as ________.
Q5) The language habitually used among people of diverse speech to facilitate communication is known as ________.
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Chapter 19: New Horizons
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Q1) Of the following,which is a consequence of corruption?
A)Reduction of competition
B)Increases in prices
C)Lessening of product quality
D)Deprivation of those who lose out on the goods,services,or funding
E)All of the above
Q2) Trade practices such as governmental subsidization,dumping,and industrial targeting will:
A)Help the unemployed find a job
B)No longer be the problem of the government
C)Be an effective way to boost the global economy
D)Be encouraged by the government
E)Suffer swift and harsh punishment
Q3) In the western world,the time from ________ through ________ was characterized by commonality of purpose.
A)1800; 1880
B)1900; 1915
C)1930; 1940
D)1945; 1990
E)2000; 2009
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