[Get Answer ]-Khakaan

Question Description

Question 1

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2.  

   International governance is achieved by all of
   the following except:

   Answer

   poison
   pills.

   board of
   directors.

   institutional
   investors.

   blockholders.

1 points  

Question 2

2.  

   Which of the following types of international
   corporate control transaction is probably the most difficult to value by an
   MNC?

   Answer

   international
   acquisition.

   newly privatized foreign
   business.

   international
   alliance.

   international
   divestiture.

1 points  

Question 3

2.  

   When an MNC assesses targets among countries,
   it would prefer a country where the growth potential for its industry is ____
   and the competition within the industry is ____.

   Answer

   low; not
   excessive

   high;
   excessive

   high; not
   excessive

   low;
   excessive

1 points  

Question 4

2.  

   Other things being equal, a foreign subsidiary
   in China would more likely be divested by the U.S. parent if new information
   caused the parent to suddenly anticipate that:

   Answer

   the Chinese yuan would depreciate
   in the future.

   the Chinese yuan would appreciate
   in the future.

   the Chinese yuan would remain
   somewhat stable in the future.

   none of the above; the value of the
   Chinese yuan has no impact on the feasibility of a
   divestiture.

1 points  

Question 5

2.  

   If an MNC targets a successful foreign company
   with plans to continue the target’s local business in a more efficient manner,
   the risk of the business will be relatively ____, and therefore the MNC’s
   required return from acquiring the target will be relatively
   ____.

   Answer

   high; high

   high; low

   low; high

   low;
   low

1 points  

Question 6

2.  

   Firms based in ____ tend to acquire more U.S.
   target firms than the other countries listed here.

   Answer

   Canada

   Japan

   Germany

   Mexico

1 points  

Question 7

2.  

   Which of the following tax-related factors
   need not be considered in assessing a foreign target?

   Answer

   corporate tax rates in the host
   country.

   withholding tax rates in the host
   country.

   withholding tax rates in the home
   country.

   corporate tax rates in the home
   country.

1 points  

Question 8

2.  

   According to your text, U.S. firms pursue more
   international acquisitions in ____ than in other
   countries.

   Answer

   the U.K.

   Mexico

   Japan

   Germany

   France

1 points  

Question 9

2.  

   An international alliance typically requires a
   ____ initial outlay than an international acquisition, and the cash flows to be
   received will typically be ____ than the cash flow resulting from an
   international acquisition.

   Answer

   smaller;
   larger

   smaller;
   smaller

   larger;
   smaller

   larger;
   larger

1 points  

Question 10

2.  

   Based on information in your text, all of the
   following factors should be considered in an international acquisition,
   except:

   Answer

   the target’s willingness to be
   acquired.

   the target’s previous acquisition
   history.

   the target’s previous cash
   flows.

   the target’s local economic
   conditions.

1 points  

Question 11

2.  

   If the foreign currency ____ by the time the
   acquirer makes payment, the acquisition will be more costly, and the cost of the
   acquisition changes ____ the change in the exchange
   rate.

   Answer

   appreciates; by a lesser percentage
   then

   depreciates; in the same proportion
   as

   appreciates; in the same proportion
   as

   appreciates; by a greater
   percentage than

1 points  

Question 12

2.  

   Which of the following factors is least likely
   to cause the required rate of return to vary among MNCs assessing the same
   foreign target?

   Answer

   differences in the timing of
   remittances from the target to the parent.

   differences in the desired use of
   the target.

   differences in the local risk-free
   interest rate.

   differences in the ability to use
   financial leverage.

1 points  

Question 13

2.  

   Potential targets in countries where economic
   conditions are ____ are more likely to experience strong demand for their
   products in the future and may generate ____ cash
   flows.

   Answer

   strong;
   lower

   weak;
   higher

   weak; lower

   strong;
   higher

1 points  

Question 14

2.  

   The valuation of a newly privatized business
   is generally more difficult than the valuation of a publicly traded firm
   because:

   Answer

   It has previously operated in
   environments of very high competition.

   Interest rates in the countries
   where privatization takes place are extremely high.

   The stock markets in the countries
   where privatization takes place are overvalued.

   Economic conditions in the
   countries where privatization takes place are very
   uncertain.

1 points  

Question 15

2.  

   According to your text, all of the following
   are factors to be considered in an international acquisition,
   except

   Answer

   the target’s willingness to be
   acquired.

   the target’s previous acquisition
   history.

   the target’s previous cash
   flows.

   the target’s local economic
   conditions.

1 points  

Question 16

2.  

   To best reduce exposure to a host government
   takeover, a subsidiary could:

   Answer

   use a long-run profit perspective
   for business in that country.

   hire people from its own country
   (where the parent is located).

   attempt to obtain supplies from its
   parent for which substitutes are not available.

   borrow funds from its parent rather
   than from the host country’s
   creditors.

1 points  

Question 17

2.  

   An MNC considers direct foreign investment in
   Germany. It is mainly concerned with the subsidiary’s ability to generate
   sufficient sales there. The country risk characteristic that would best address
   this concern is:

   Answer

   the host government’s tax rates
   charged on remitted earnings.

   the possibility of blocked
   funds.

   the state of the economy in
   Germany.

   the possibility of a withholding
   tax imposed by the German
   government.

1 points  

Question 18

2.  

   When quantifying country
   risk:

   Answer

   weights should be equally allocated
   among factors.

   weights should be assigned to the
   political and financial factors according to their perceived
   importance.

   it is not generally necessary to
   construct separate ratings for political and financial risk since these will be
   equally weighed in the final analysis.

   the derived factors will be
   identical for all MNCs conducting business in that
   country.

1 points  

Question 19

2.  

   ____ is (are) not a form of political
   risk.

   Answer

   Exchange rate
   movements

   Attitude of consumers in the host
   country

   Actions of the host
   government

   Blockage of fund
   transfers

1 points  

Question 20

2.  

   The ____ involves the collection of
   independent opinions on country risk without group discussion by the assessors
   who provide these opinions.

   Answer

   checklist
   approach

   discriminant
   analysis

   regression
   analysis

   Delphi
   technique

1 points  

Question 21

2.  

   An MNC has a foreign manufacturing plant to
   capitalize on cheap production costs; the MNC exports all the goods produced. It
   should be most concerned about the country’s:

   Answer

   growth in gross domestic
   product.

   government policies designed to
   increase tariffs on imported goods.

   local consumer purchasing
   habits.

   government environmental
   regulations and taxes on the lease or purchase of a production
   site.

1 points  

Question 22

2.  

   If a foreign country’s consumers tend to only
   purchase products that are produced locally, the least effective strategy for a
   U.S. firm is to:

   Answer

   use a licensing arrangement with a
   local firm in that country.

   enter into a joint venture in that
   country.

   develop a subsidiary (under the
   U.S. name) that manufactures and sells products in that
   country.

   develop a subsidiary (under the
   U.S. name) that manufactures products in that country and exports them to border
   countries.

1 points  

Question 23

2.  

   ____ is not a political risk
   factor.

   Answer

   High interest rates in a foreign
   country

   Currency
   inconvertibility

   War

   Corruption

1 points  

Question 24

2.  

   A ____ currency may ____ the volume of
   products imported by the country and therefore reduce the country’s production
   and national income.

   Answer

   weak;
   increase

   weak;
   reduce

   strong;
   increase

   strong;
   reduce

1 points  

Question 25

2.  

   When determining whether a particular
   proposed project in a foreign country is feasible:

   Answer

   a country risk rating can
   adequately substitute for a capital budgeting analysis.

   country risk analysis should be
   incorporated within the capital budgeting analysis.

   the effect of country risk on
   sales revenue is more important than the effect on cash
   flows.

   the project with the highest
   country risk rating (lowest country risk) should be
   accepted.

1 points  

Question 26

2.  

   Which of the following is not a way in which
   country risk analysis can be used?

   Answer

   to monitor countries where an MNC
   is currently doing business.

   as a screening device to avoid
   conducting business in countries with excessive risk.

   to revise an MNC’s financing
   decisions.

   to determine the degree to which
   the MNC is exposed to exchange rate
   movements.

1 points  

Question 27

2.  

   Which of the following is not a technique to
   assess country risk?

   Answer

   Gamma
   technique.

   Delphi
   technique.

   checklist
   approach.

   inspection
   visits.

1 points  

Question 28

2.  

   When the war in Iraq began in 2003, some MNCs
   feared that oil prices would ____ and that U.S. inflation and interest rates
   would ____.

   Answer

   rise; rise

   fall; fall

   rise; fall

   fall;
   rise

1 points  

Question 29

2.  

   According to the text, the most appropriate
   method of incorporating country risk into capital budgeting analysis is
   to:

   Answer

   compare each form of a country
   risk rating to a benchmark level.

   estimate the effect of each form
   of country risk on cash flows.

   estimate the effect of each form
   of country risk on the income statement and balance
   sheet.

   adjust the discount rate to
   reflect the level of country risk using the conventional adjustment formula that
   is used by virtually all
   MNCs.

1 points  

Question 30

2.  

   The checklist
   approach:

   Answer

   requires several inspections of
   the country being evaluated.

   requires the use of discriminant
   analysis to assess country risk.

   requires ratings and weights to be
   assigned to all factors relevant in assessing country
   risk.

   involves the collection of
   independent opinions on country risk.

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