Review Midterm IF

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market secker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?

• satisfaction of local demand in the foreign country

• political safety and small likelihood of government expropriation of assets

• satisfaction of local demand in the domestic markets

• All of the above are market-seeking activities.

_____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 competitor

• Conservative; Aggressive

• Defensive; Proactive

• Croachve, Deicastyc

• Aggressive; Proactive

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a raw material secker. Which of the following is NOT a reason why raw material seeker extract raw materials in foreign countries?

• They extract raw materials wherever they can be found to export from the host country.

• They extract raw materials wherever they can be found for sale in the host country.

• They extract raw materials wherever they can be found for further processing in the host country.

• All of the above.

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:

• domestic phase.

• multinational phase

• import-export banking phase.

• international trade phase

The authors describe the multinational phase of globalization for a firm as one characterized by the:

• potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.

• ownership of assets and enterprises in foreign countries

• imports from foreign suppliers and exports to foreign buyers.

• requirement that all employees be multilingual.

A firm in the International Trade Phase of Globalization:

• makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units.

• receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units.

• bears direct foreign exchange risk.

• none of the above

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!?

• evaluation of the credit quality of foreign buyers and sellers

• foreign consumer method of payment preferences

• credit risk management

• evaluation of foreign exchange risk

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, a country that has given up their own sovereignty over monetary policy is considered to have:

• a residual agreement.

• hard pegs.

• soft pegs.

• floating arrangements.

Since 2009 the IMFs exchange rate regime classification system uses a "de facto classification" methodology. Under this system, countries with "fixed exchange rates" are considered to have:

• a residual agreement

• soft pegs

• hard pegs

• floating arrangements.

A small economy country whose GDP is heavily dependent on trade with the United States could use a(n) exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate.

• pegged exchange rate with the United States

• pegged exchange rate with the Euro

• independent floating

• managed float