Percentage 88.2% 1.

With regard to corporate goals, an MNC is mostly concerned with maximizing ____________, and a purely domestic firm is mostly concerned with maximizing ____________. A) shareholder wealth; short-term earnings B) shareholder wealth; shareholder wealth C) short-term earnings; sales volume D) short-term earnings; shareholder wealth Points Earned: 5.0/5.0 Correct Answer(s): B 2. Which of the following theories identifies specialization as a reason for international business? A) theory of comparative advantage. B) imperfect markets theory. C) product cycle theory. D) none of the above. Points Earned: 5.0/5.0 Correct Answer(s): A 3. Which of the following theories suggests that firms seek to penetrate new markets over time? A) theory of comparative advantage. B) imperfect markets theory. C) product cycle theory. D) none of the above. Points Earned: 5.0/5.0 Correct Answer(s): C

4. Which of the following industries would most likely take advantage of lower costs in some less developed foreign countries? A) assembly line production. B) specialized professional services. C) nuclear missile planning. D) planning for more sophisticated computer technology. Points Earned: 5.0/5.0 Correct Answer(s): A

5. The agency costs of an MNC are likely to be lower if it: A) scatters its subsidiaries across many foreign countries. B) increases its volume of international business. C) uses a centralized management style. D) A and B. Points Earned: 5.0/5.0

Correct Answer(s): C

6. In comparing exporting to direct foreign investment (DFI), an exporting operation will likely incur __________ fixed production costs and __________ transportation costs than DFI. A) higher; higher B) higher; lower C) lower; lower D) lower; higher Points Earned: 5.0/5.0 Correct Answer(s): D

7. _____________ are most commonly classified as a direct foreign investment. A) Foreign acquisitions B) Purchases of international stocks C) Licensing agreements D) Exporting transactions Points Earned: 5.0/5.0 Correct Answer(s): A

8. Which of the following is not a way in which agency problems can be reduced through corporate control? A) executive compensation. B) threat of hostile takeover.

C) acquisition of a foreign subsidiary. D) monitoring by large shareholders. Points Earned: 0.0/5.0 Correct Answer(s): C

9. A high home inflation rate relative to other countries would _______ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would _______ the home country's current account balance, other things equal. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase Points Earned: 5.0/5.0 Correct Answer(s): C

10. Which of the following would likely have the least direct influence on a country's current account? A) inflation. B) national income. C) exchange rates. D) tariffs. E) a tax on income earned from foreign stocks. Points Earned: 5.0/5.0 Correct Answer(s): E

11. "Dumping" is used in the text to represent the: A) exporting of goods that do not meet quality standards. B) sales of junk bonds to foreign countries. C) removal of foreign subsidiaries by the host government. D) exporting of goods at prices below cost. Points Earned: 5.0/5.0 Correct Answer(s): D

12. Licensing obligates a firm to provide _______, while franchising obligates a firm to provide _______. A) a specialized sales or service strategy; its technology B) its technology; a specialized sales or service strategy C) its technology; its technology D) a specialized sales or service strategy; a specialized sales or service strategy E) its technology; an initial investment Points Earned: 5.0/5.0 Correct Answer(s): B

13. The Sarbanes-Oxley Act improves corporate governance of MNCs because it: A) makes executives more accountable for verifying financial statements. B) eliminates stock options as a form of compensation. C) ties executive compensation to firm performance. D) places a limit on the amount of funds that managers can spend. Points Earned: 5.0/5.0 Correct Answer(s): A

14. The valuation of an MNC should rise when an event causes the expected cash flows from foreign to _______ and when foreign currencies denominating these cash flows are expected to _______. A) decrease; appreciate B) increase; appreciate C) decrease; depreciate D) increase; depreciate Points Earned: 0.0/5.0 Correct Answer(s): B

15. Without the international capital flows, there would be _______ funding available in the U.S. across all risk levels, and the cost of funding would be _______ regardless of the firm's risk level. A) more; lower B) more; higher

C) less; lower D) less; higher Points Earned: 5.0/5.0

Correct Answer(s): D

16. A weak home currency may not be a perfect solution to correct a balance of trade deficit because: A) it reduces the prices of imports paid by local companies. B) it increases the prices of exports by local companies. C) it prevents international trade transactions from being prearranged. D) foreign companies may reduce the prices of their products to stay competitive. Points Earned: 5.0/5.0 Correct Answer(s): D

17. An increase in the current account deficit will place _______ pressure on the home currency value, other things equal. A) upward B) downward C) no D) upward or downward (depending on the size of the deficit) Points Earned: 5.0/5.0 Correct Answer(s): B