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nance
Chapter 1

Multinational Financial Management: An Overview

1. The commonly accepted goal of the MNC is to: A) maximize short-term earnings. B) maximize shareholder wealth. C) minimize risk. D) both maximize short-term earnings and minimize risk. E) maximize international sales.

2. 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

3. For the MNC, agency costs are typically: A) non-existent. B) larger than agency costs of a small purely domestic firm. C) smaller than agency costs of a small purely domestic firm. D) the same as agency costs of a small purely domestic firm.

5. 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

6. 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 these.

7. Which of the following theories identifies the non-transferability of resources as a reason for international business? A) theory of comparative advantage. B) imperfect markets theory. C) product cycle theory. D) none of these.

8. 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 these.

10. Due

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