HW#1 Finance 463 Shapiro 9
Student: ___________________________________________________________________________
1. Historically, the primary motive for U.S. multinationals to produce abroad has been to
A. lower costs
B. respond more quickly to the marketplace
C. avoid trade barriers
D. gain tax benefits
2. The primary objective of the multinational corporation is to
A. maximize shareholder wealth
B. maximize world production
C. minimize debt
D. minimize the cost of doing business globally
3. When a firm operates globally it offers advantages such as
A. greater political power at home
B. bless taxes on its profits
C. greater negotiating power with foreign minority groups
D. greater negotiating power with labor unions
4. The prime transmitter of global competitive forces is the
A. public utility firm
B. financial management experience of the U.S. markets
C. the multinational corporation
D. the Federal Reserve System of the U.S.
5. Which of the following is an example of reverse foreign investment?
A. Honda builds a factory in Ohio
B. Apple builds a plant in Ireland that exports to the United States
C. British Telecom issues new stock in the United States
D. American investors buy shares in Sony
6. Which of the following theories identifies specialization as the main reason for international business activity?
A. Product life cycle theory of international trade
B. theory of diversification
C. doctrine of comparative advantage
D. theory of globalization
7. According to the capital asset pricing model
A. only the systematic component of risk affects the required return
B. foreign investments whose returns are uncorrelated with the market's return should have a higher required return than comparable domestic investments
C. total risk of the investment is most relevant for small to medium-sized firms
D. diversification is secondary to