FINA 450 Chapter 1 – Flashcards
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Financial globalization has not resulted in
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uniform ways of ownership, control, and governance across the world
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A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value?
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none of the above
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A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?
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an open marketplace
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A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?
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access to capital
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A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:
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FDIC
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The modern eurocurrency market was born shortly after
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World War II
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The reference rate of interest in the eurocurrency market is the
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LIBOR
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Interest spreads in the eurocurrency market are small for many reasons EXCEPT:
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Eurocurrency loans are secured loans
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The theory that suggests specialization by country can increase worldwide production is
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the theory of comparative advantage
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Which of the following is NOT a reason governments interfere with comparative advantage?
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All are reasons governments interfere with comparative advantage
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Which of the following factors of production do NOT flow freely between countries
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raw materials
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Which of the following would NOT be a way to implement comparative advantage?
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All of the above are examples of ways to implement comparative advantage
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Of the following, which would NOT be considered a way that government interferes with comparative advantage?
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managerial skills
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The concept of absolute comparative advantage's origins lie in:
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Adam Smith's work of 1776
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The concept of relative comparative advantage's origins lie in:
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On the Principles of Political Economy and Taxation book, published in 1817
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Which of the following domestic financial instruments have NOT been modified for use in international financial management?
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All of the above are domestic financial instruments that have also been modified for use in international financial markets
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Which of the following is not always understood by MNE management?
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Culture, history, and institutions
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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?
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Political safety and small likelihood of government expropriation of assets
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______ 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
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Proactive: Defensive
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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?
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All of the above
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The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:
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international trade phase
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The authors describe the multinational phase of globalization for a firm as one characterized by the:
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ownership of assets and enterprises in foreign countries
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A firm in the International Trade Phase of Globalization:
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bears direct foreign exchange risk
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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?
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foreign consumer method of payment preferences
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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.
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corporate insiders and rulers of sovereign states
