Question 1
In regard to the cultural risks related to nepotism and corrupt practices, which of the statements below is TRUE?
A. The Foreign Corrupt Practices Act, passed during the administration of President Carter, makes it illegal for U. S. citizens to pay bribes to foreign officials or leaders in order to facilitate business operations.
B. If a firm does not have a competitive advantage so that it can overcome the bribery situation and still make a profit, it may be best to look somewhere else to extend business operations. (Incorrect)
C. Companies can be forced by a local government official to hire specific individuals and place them in positions of control.
D. All of these statements are true.
Question 2
Low-dividend clientele are preferred by firms because _________.
A. they pay more money per share of comparable stock than other types of investors
B. high-dividend clientele are more active shareholders
C. they are less critical of management decisions
D. none of the above. Low dividend clientele are no more preferred than high-dividend clientele.
Question 3
Which of the following are not legitimate constraints on the dividends a firm will pay to shareholders?
A. Dividends must not eat into legal capital.
B. Bondholders may have covenants limiting the amount of the dividend.
C. Dividends may be constrained by the amount of cash a firm has.
D. All are legitimate constraints on the dividends that firms choose to pay to shareholders.
Question 4
Typically, shares of stock are stored in the vault of the brokerage firm and you, as owner, will not take physical possession. Under these circumstances the brokerage firm is the _________ and you are the ________.
A. street owner; settlement owner
B. settlement owner; street owner
C. owner of record; beneficiary owner
D. beneficiary owner; owner of record
Question 5
When accounts receivable involves a foreign operation, you face the added problem of changing _________ .
A. exchange rates
B. forward rates
C. interest rates
D. cash flows
Question 6
Which of the statements below is FALSE?
A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency.
B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate.
C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value.
D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate.
Question 7
__________ financial world is one without taxes, bankruptcy, and other imperfections.
A. An imperfect
B. A friction-full
C. A perfect
D. A realistic
Question 8
The _________ is the date when the board of directors announces the next cash dividend to the public.
A. declaration date
B. record date
C. payment date
D. ex-dividend date
Question 9
The federal government bond market is open only to ____________ .
A. state government agencies
B. local government agencies
C. the federal government
D. municipal government
Question 10
Businesses that operate in more than one country are commonly referred to as _________ .
A. multi-American firms
B. multinational firms
C. ultranational firms
D. worldwide firms
Question 11
In regard to the cultural risks related to human resources management, which of the statements below is TRUE?
A. In some countries, women are restricted from management positions.
B. The hiring of local citizens instead of bringing in foreign expatriates is often a necessary part of doing business abroad.
C. Foreign expatriates would find it difficult living and working in a community where they are seen as taking away wages and livelihood from local citizens.
D. All of these statements are true.
Question 12
In regard to the cultural risks related to ownership structure, which of the statements below is FALSE?
A. Cultural norms work their way into laws and regulations so that the interests of the host country will take precedence over the interest of the foreign country, the original home of the business.
B. In order to start a business operation in a foreign country, it may be necessary to utilize a joint venture business form.
C. Today, there are practically no industries protected against foreign ownership in host countries.
D. The ownership structure of a business can be restricted once the business ventures overseas and faces the additional constraint of meeting ownership requirements of more than one government. (Incorrect)
Question 13
The final distribution of cash to shareholders after a company has been sold off or discontinued operations is called a _________ dividend.
A. complete
B. liquidating
C. stock
D. optimal
Question 14
Which of the following is NOT a form of corporate dividend?
A. regular cash dividend
B. special cash dividend
C. stock dividend
D. These are all forms of corporate dividends.
Question 15
George lends $200,000 for each new idea. George's history is that he selects low-risk projects or ideas that hit 80% of the time. What rate of return must each successful project pay George for him to break even?
A. 20.50%
B. 22.00%
C. 23.50%
D. 25.00%
Question 16
Which of the statements below is TRUE?
A. The investment decision, although minor in comparison to the financing decision, is still an important consideration.
B. The financing decision, although minor in comparison to the investing decision, is still an important consideration.
C. The financing decision is minor in comparison to the investing decision and thus can be ignored.
D. The financing and investing decisions are equally important in terms of determining firm value.
Question 17
Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called _________ .
A. translation exposure
B. transaction exposure
C. conversion exposure
D. operating exposure
Question 18
The decision to pay a cash dividend is within the jurisdiction of __________ .
A. the board of directors of the firm
B. the firm's largest labor union
C. the largest shareholders of the firm
Question 19
"Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy?
A. residual dividend policy
B. sticky dividend policy
C. constantly declining dividend policy
D. none of the above
Question 20
If we are using foreign currency for the NPV decision, all we have to do is restate all the ________ in terms of present value and use the current exchange rate.
A. domestic incremental cash flow
B. foreign incremental cash flow
C. salvage value
D. None of these
