Foreign Direct Investment and Cross-Border AcquisitionsTrue False Questions.doc

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1、Lecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-1 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distribute

2、d, or posted on a website, in whole or part.Lecture 12 (Chapter 16) Foreign Direct Investment and Cross-Border AcquisitionsTrue / False Questions1. In the early 1980s, Honda, the Japanese automobile company, built an assembly plant in Marysville, Ohio, and began to produce cars for the North America

3、n market. As the production capacity at the Ohio plant expanded, Honda began to export its U.S.-manufactured cars to Japan. True False2. Shareholders of U.S. bidders (acquiring firms in M&A) experience significant positive abnormal returns when firms expand into new industries and geographic markets

4、. True False3. Shareholders of U.S. targets experience higher wealth gains when they are acquired by foreign firms than when acquired by U.S. firms. True False4. Cross-border acquisitions are generally found to be synergy-generating corporate activities. True FalseMultiple Choice Questions5. Under a

5、 1981 Voluntary Trade Agreement Japanese automobile manufacturers were not allowed to increase their exports to the U.S. market. As a result A. they exited the market. B. Honda was motivated to circumvent the trade barriers. C. Hondas FDI may have been part of an overall corporate strategy designed

6、to bolster their competitive position vis-vis their domestic rivals such as Toyota. D. both b) and c)Lecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-2 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or di

7、stribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.6. Following Hondas FDI in the U.S., A. The U.S. government imposed a Voluntary Trade Agreement under which Japanese automobile manufacturers were not allo

8、wed to increase their exports to the U.S. market. B. Toyota and Nissan made direct investments in America. C. Sales of Hondas declined. D. none of the above7. Hondas decision to build a plant in Ohio A. was welcomed by the United Auto Workers. B. was encouraged by assistance from the state of Ohio,

9、including improved infrastructure around the plant and abatement of property taxes. C. involved setting up a special foreign trade zone that allowed Honda to import auto parts from Japan at a reduced tariff rate. D. all of the above8. When firms undertake FDI, A. they become MNCs. B. they reduce the

10、ir tax rate since they can tell each country that they do business in that they paid their taxes in other countries. C. the can exploit workers by paying them below-market wages in depreciating currencies. D. all of the above9. Prior to Hondas decision to build a plant in Ohio, A. the Japanese gover

11、nment had been urging the automobile companies to begin production in the United States. B. the Japanese government had been urging the automobile companies to keep production in Japan. C. the Japanese government imposed import quotas on U.S.-made automobiles. D. none of the aboveLecture 11- Foreign

12、 Direct Investment and Cross-Border Acquisitions16-3 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a w

13、ebsite, in whole or part.10. FDI can take the form of A. Greenfield investment. B. cross-border M&A. C. establishing new production facilities in a foreign country. D. all of the above11. The Ford Motor Company recently acquired Mazda, a Japanese auto maker, and Jaguar, a British auto maker. A. This

14、 is an example of cross-border M&A. B. This was a Greenfield investment. C. both a) and b) D. none of the above12. Firms become multinational A. when they undertake foreign direct investments (FDI). B. with the establishment of new production facilities in foreign countries such as Hondas Ohio plant

15、. C. when they become involved in mergers with and acquisitions of existing foreign businesses. D. all of the above13. The United States is the largest initiator, of FDI. The largest recipient of FDI is A. also the United States. B. France. C. Germany. D. China. E. none of the above14. According to

16、a recent UN survey, the world FDI stock grew at what rate relative to worldwide exports of goods and services? A. The world FDI stock grew twice as fast as worldwide exports of goods and services. B. The world FDI stock grew at the same rate as worldwide exports of goods and services. C. The world F

17、DI stock grew half as fast as worldwide exports of goods and services. D. None of the aboveLecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-4 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution

18、 in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.15. During the five-year period 2004-2008, total annual worldwide FDI outflows amounted to A. About $1,423 million on average. B. About $1,423 billion on average. C.

19、 About $1,423 trillion on average. D. None of the above16. During the five-year period 2004-2008, A. China received the largest amount of FDI inflows. B. India received the largest amount of FDI inflows. C. Mexico received the largest amount of FDI inflows. D. the United States received the largest

20、amount of FDI inflows.17. Japan plays a major role as an exporter of FDI. As a recipient of FDI, A. Japan receives as much FDI as it exports, making it a major player on both fronts. B. Japan plays a relatively minor role, reflecting a variety of legal, economic, and cultural barriers to FDI. C. Jap

21、ans receipts of FDI are third in the world. D. None of the above18. MNCs might have been lured to invest in China not only by lower labor and material costs but also A. by Chinas lower labor and material costs. B. by the desire to preempt the entry of rivals into Chinas potentially huge market. C. b

22、y the Kung Pao chicken. D. by the desire to see, if not buy, all the tea in China.19. The third most important host country for FDI is A. the United States. B. Japan. C. China. D. Mexico.Lecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-5 2012 by McGraw-Hill Education. This is pr

23、oprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.20. MNCs have invested in China A. by lower material costs. B. by low

24、er labor costs. C. by a desire to preempt the entry of rivals into Chinas potentially huge market. D. all of the above21. FDI stocks A. are the common shares of multinational companies that invest abroad. B. are mutual funds that invest in FDI. C. represent the accumulation of previous years FDI flo

25、ws. D. at the sum total of current year FDI flows.22. The dominant source of FDI outflows A. several developed countries. B. a few underdeveloped countries next to wealthy neighbors, like Mexico. C. Africa and China. D. none of the above23. Alternatives to firms locating production overseas include

26、A. exporting from the home country. B. licensing production to a local firm in the host country. C. ignoring the foreign market. D. all of the above24. The key factors that are important in a firms decision to invest overseas are A. trade barriers, imperfect labor market, and intangible assets. B. v

27、ertical integration, product life cycle, and shareholder diversification services. C. profit maximization, global prestige, and competition. D. both a) and b)Lecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-6 2012 by McGraw-Hill Education. This is proprietary material solely for

28、 authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.25. Why do firms locate production overseas rather than exporting finished goods? A. Shipping cost

29、s B. Firms seek to extend corporate control overseas C. Imperfect factor markets D. All of the above26. Unlike the theory of international trade or the theory of international portfolio investment, A. we do not have a well-developed, comprehensive theory of FDI. B. the comprehensive theory of FDI fo

30、cuses on mean-variance efficiency. C. the comprehensive theory of FDI is an arbitrage argument, like interest rate parity. D. none of the above27. While there is no comprehensive theory of FDI, many existing theories emphasize A. imperfections in product markets. B. imperfections in capital markets.

31、 C. imperfections in labor markets. D. all of the above28. International markets for goods and services are often imperfect. Which is the MOST common and MOST important? A. Acts of governments B. Natural barriers like distance C. Cultural barriers D. Lack of knowledge29. Why do governments regulate

32、international trade? A. To raise revenue B. Protect domestic industries C. Pursue other economic objectives D. All of the aboveLecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-7 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not

33、 authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.30. Governments regulate international trade A. to raise revenue (e.g. through tariffs). B. to protect domestic industries. C. to

34、 pursue other economic policy objectives (e.g. North Korea forgoing trade). D. all of the above31. A classic example for trade barrier-motivated FDI is A. Hondas investment in Ohio. B. Bridgestones investment in Japan. C. NAFTA. D. None of the above32. Such products as mineral ore and cement that ar

35、e heavy or bulky relative to their economic values A. may be suitable for exporting because high transportation costs will be overcome by high profit margins in oligopolistic industries. B. have high “value-to-weight ratios“ that protect profit margins. C. may not be suitable for exporting because h

36、igh transportation costs will substantially reduce profit margins. D. none of the above33. Trade barriers can arise naturally. Which of the following are natural barriers to trade? A. Transportation costs B. Quotas C. Tariffs D. Transactions costs34. In a push to serve the North American market Sams

37、ung, a Korean firm, chose to locate production facilities in Mexico, mainly because A. of lower labor costs in Mexico. B. to circumvent trade barriers imposed by NAFTA. C. of colder weather in Canada. D. none of the aboveLecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-8 2012 by

38、 McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.35. Labor services in a country mig

39、ht be underpriced relative to productivity because A. workers are not allowed to freely move across national boundaries to seek higher wages. B. some countries do a bad job of educating their work force, consequently they are not very productive. C. in some countries there is a shortage of capital i

40、nvestment. D. all of the above are equally important36. Labor services in a country can be severely underpriced relative to its productivity A. because workers are not allowed to freely move across national boundaries to seek higher wages. B. because among all factor markets, the labor market is the

41、 most imperfect. C. because workers may choose to not move across national boundaries to seek higher wages due to the cultural differences. D. all of the above37. Severe imperfections in the labor market lead to persistent wage differentials among countries. Some explanations include A. because work

42、ers are not allowed to freely move across national boundaries to seek higher wages. B. because workers may choose to not move across national boundaries to seek higher wages due to the cultural differences. C. but these differences are offset by low productivity in low labor cost countries. D. both

43、a) and b)38. Factors of production include land, labor, capital, and entrepreneurial ability. Of all the factor markets, the MOST IMPERFECT is the A. labor market. B. capital market. C. real estate market. D. market for entrepreneurial ability.Lecture 11- Foreign Direct Investment and Cross-Border A

44、cquisitions16-9 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.39. Severe i

45、mperfections in the labor market lead to A. persistent wage differentials among countries. B. persistent exchange rate volatility among countries. C. persistent interest rate differentials among countries. D. none of the above40. Severe imperfections in the labor market arise from immobility of work

46、ers due to immigration barriers. As a response, firms should consider A. moving to the workers. B. moving to countries where labor services are the lowest in absolute terms. C. moving to countries where labor services are underpriced relative to productivity. D. hiring illegal immigrants.41. Coca-Co

47、la has invested in bottling plants all over the world rather than licensing local firms A. because the foreigners cant be trusted to follow the secret recipe. B. because Coca-Cola wanted to protect the formula for its famous soft drink. C. because of the internalization theory of FDI. D. both b) and

48、 c)42. The boomerang effect A. the possibility that if the secret formula of Coca-Cola were leaked, that other firms would come up with similar products and hurt Coca-Colas sales. B. the possibility that FDI in an undeveloped nation will lead to a group of workers who have enough money to afford the

49、 firms products, leading to an increase of sales and increase of workers and so on. C. the possibility that FDI in an undeveloped nation will lead to a group of domestic workers no longer have enough money to afford the firms products, leading to an decrease of sales. D. none of the aboveLecture 11- Foreign Direct Investment and Cross-Border Acquisitions16-10 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use.