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Business Multiple Choice

1. Which statement best explains the consequences of globalization?

a. balance of payments

b. creation of supply and demand

c. increase in market share

d. under the counter trade

e. long term cash management

2. Expropriation is taking of foreign property, with or without compensation by a government.

a. True

b. False

3. Which of the following is a stage in the global evolution of organizations?

a. creation of capital account

b. importing

c. commercial banking

d. franchising

e. forfaiting

4. Global funds are mutual funds that can be invested anywhere in the world, including the United States.

a. True

b. False

5. Which of the following best exemplifies the relationship among the international flow of goods, services, and capital, the balance of payments and domestic economic behavior?

interest rate, depreciation rate, and cross rate
inflation, tax rate, and deflation rate
exchange rate, parity condition, and country risk
interest rate, currency rate, devaluation
interest rate, inflation, and exchange rate

6. Emerging markets are encompasses the stock markets in first world nations.

a. True

b. False

7. Which techniques are used to conduct country risk analysis?

a. Inspection visits and standard deviation

b. Delphi and multiple regression analysis

c. Checklist and flowchart

d. Sensitivity analysis and PPP

e. Exchange rate risk and regression analysis

8. A tax haven is a nation with a moderate level of taxation and liberal tax incentives.

a. True

b. False

9. Which of the following derivatives could be used in speculation and hedging in the foreign market?

a. Forward market

b. Option

c. Internet

d. Money market

e. Capital market

10. Total corporate risk includes systematic but not unsystematic risk.

a. True

b. False

11. Which of the following is not an international risk consideration:

a. Terrorism

b. Poverty

c. Historical exchange rate

d. Cross-cultural risks

e. Cyber attacks

12. A foreign exchange market is a market place where one currency is exchanged for another.

a. True

b. False

13. The following are all strategies to avoid expropriation except:

a. Borrow locally

b. Divestiture

c. Hire local labor

d. Hedging

e. Buy insurance

14. Transaction exposure is the extent to which a given exchange rate change will change the value of foreign currency denominated transactions already entered into.

a. True

b. False

15. Which of the following is a capital source unique to global finance?

a. Russian mafia

b. African capital markets

c. US Treasury bills

d. Transfer pricing

e. Blocked funds

16. Forward contracts can only be negotiated between two banks.

a. True

b. False

17. You are an entrepreneur and wish to open a restaurant in Mexico. Which of the following would be the best source of capital to fund your venture?

a. Small business administration

b. Your credit union

c. Your bank

d. Latin American capital markets

e. International Monetary Fund (IMF)

18. Hedging is the use of financial derivatives contracts to protect against unexpected rate change movements.

a. True

b. False

19. International Company, an American company, wants to borrow money for its expansion in Australia. Recommended an optimal financing strategy for International Company In order to minimize currency volatility in repaying the loan:

a. Borrow locally

b. Borrow in the Euro market

c. Borrow in America

d. Borrow in Latin America

e. Borrow in Asia

20. A spot market is a market place to purchase or sell future currency contracts.

a. True

b. False

21. Parity conditions economic relationship that should apply to,

a. spot rates

b. inflation rates

c. interest rates

d. all of the above

22. Which of the following is an international finance risk factor?

a. political

b. temperature

c. balance of payments

d. interest rate parity

e. call option

23. Which statement best explains the drivers of globalization?

a. joint ventures

b. access to raw materials

c. the war on terror

d. trade barriers

e. licensing agreements

24. Which of the following short-term cash management technique can be used to make a foreign investment decision:

a. Cash budgeting

b. Lockbox

c. Inflation

d. Deflation

e. Depreciation

25. Your foreign investment strategy is to maximize shareholder's wealth. A terrorist attack has just occurred in the host country. Which of the following would you use to modify your investment strategy?

a. Counter-trade

b. Expansion

c. Diversity

d. Forfeiting

e. Wholly owned subsidiary

Solution Preview

1. Which statement best explains the consequences of globalization?

a. balance of payments

b. creation of supply and demand

c. increase in market share

d. under the counter trade

e. long term cash management

Increase in market share.
The is what the website www-personal.umich.edu/~alandear/ says "1. The increasing world-wide integration of markets for goods, services and capital that attracted special attention in the late 1990s. 2. Also used to encompass a variety of other changes that were perceived to occur at about the same time, such as an increased role for large corporations (MNCs) in the world economy and increased intervention into domestic policies and affairs by international institutions such as the IMF, WTO, and World Bank." www-personal.umich.edu/~alandear/

2. Expropriation is taking of foreign property, with or without compensation by a government.

a. True

b. False
True.
This is what the website www.imuna.org says: "the taking of property into public ownership without compensation, such as the property of foreign investors or foreign industry in a nation" www.imuna.org

3. Which of the following is a stage in the global evolution of organizations?

a. creation of capital account

b. importing

c. commercial banking

d. franchising
e. forfaiting

Franchising;

4. Global funds are mutual funds that can be invested anywhere in the world, including the United States.

a. True

b. False

True.
www.edwardjones.com" Funds that invest in stocks of foreign companies. A global fund may own securities from both the US and non-US market." www.edwardjones.com

5. Which of the following best exemplifies the relationship among the international flow of goods, services, and capital, the balance of payments and domestic economic behavior?

interest rate, depreciation rate, and cross rate
inflation, tax rate, and deflation rate
exchange rate, parity condition, ...

Solution Summary

Business Multiple Choice questions are discussed very comprehensively in this explanation.

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