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1、Lecture 1 - Globalization and the Multinational Firm1-1 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, distributed, or posted on
2、a website, in whole or part.Lecture 1(Chapter 1) Globalization and the Multinational FirmTrue / False QuestionsThe first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can produce when they completely specialize in one or other product. The
3、last two columns give each countrys consumption without trade.1. Is Northern Ireland better off when it trades with Southern Ireland? True False2. Now suppose that Southern workers receive a raise to 2 per day. Will trade be possible at the exchange rate you found in the last question? True False3.
4、Now suppose that Southern workers are paid 1 per day but the Northern workers receive a raise to 2 per day. Will trade be possible at the exchange rate you found in the question before the last question? True FalseLecture 1 - Globalization and the Multinational Firm1-2 2012 by McGraw-Hill Education.
5、 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.Multiple Choice Questions4. What major dimension sets apar
6、t international finance from domestic finance? A. Foreign exchange and political risks B. Market imperfections C. Expanded opportunity set D. All of the above5. An example of a political risk is A. expropriation of assets. B. adverse change in tax rules. C. the opposition party being elected. D. bot
7、h answers a) and b) are correct.6. Production of goods and services has become globalized to a large extent as a result of A. natural resources being depleted in one country after another. B. skilled labor being highly mobile. C. multinational corporations efforts to source inputs and locate product
8、ion anywhere where costs are lower and profits higher. D. common tastes worldwide for the same goods and services.7. Recently, financial markets have become highly integrated. This development A. allows investors to diversify their portfolios internationally. B. allows minority investors to buy and
9、sell stocks. C. has increased the cost of capital for firms. D. answers a) and c) are both correct.8. Japan has experienced large trade surpluses. Japanese investors have responded to this by A. liquidating their positions in stocks to buy dollar denominated bonds. B. investing heavily in U.S. and o
10、ther foreign financial markets. C. lobbying the U.S. government to depreciate its currency. D. lobbying the Japanese government to allow the yen to appreciate.Lecture 1 - Globalization and the Multinational Firm1-3 2012 by McGraw-Hill Education. This is proprietary material solely for authorized ins
11、tructor 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.9. Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is $1.25 = 1.00. One y
12、ear later the exchange rate is the same, but the Italian government has expropriated your firms assets paying only 80,000 in compensation. This is an example of A. exchange rate risk. B. political risk. C. market imperfections. D. none of the above, since $100,000 = 80,000 $1.25/1.0010. Suppose you
13、start with $100 and buy stock for 50 when the exchange rate is 1 = $2. One year later, the stock rises to 60. You are happy with your 20 percent return on the stock, but when you sell the stock and exchange your 60 for dollars, you only get $45 since the pound has fallen to 1 = $0.75. This loss of v
14、alue is an example of A. exchange rate risk. B. political risk. C. market imperfections. D. weakness in the dollar.11. Suppose that Great Britain is a major export market for your firm, a U.S.-based MNC. If the British pound depreciates against the U.S. dollar, A. your firm will be able to charge mo
15、re in dollar terms while keeping pound prices stable. B. your firm may be priced out of the U.K. market, to the extent that your dollar costs stay constant and your pound prices will rise. C. to protect U.K. market share, your firm may have to cut the dollar price of your goods to keep the pound pri
16、ce the same. D. both b) and c) are correct12. Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso appreciates drastically against the U.S. dollar. This means A. your companys products can be priced out of the Mexican market, as the peso price of American imports
17、will rise following the pesos fall. B. your firm will be able to charge more in dollar terms while keeping peso prices stable. C. your domestic competitors will enjoy a period of facing lessened price competition from Mexican imports. D. both b) and c) are correctLecture 1 - Globalization and the Mu
18、ltinational Firm1-4 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.13. Supp
19、ose Mexico is a major export market for your U.S.-based company and the Mexican peso depreciates drastically against the U.S. dollar, as it did in December 1994. This means A. your companys products can be priced out of the Mexican market, as the peso price of American imports will rise following th
20、e pesos fall. B. your firm will be able to charge more in dollar terms while keeping peso prices stable. C. your domestic competitors will enjoy a period of facing little price competition from Mexican imports. D. both b) and c) are correct14. Suppose that you are a U.S. producer of a commodity good
21、 competing with foreign producers. Your inputs of production are priced in dollars and you sell your output in dollars. If the U.S. currency depreciates against the currencies of our trading partners, A. your competitive position is likely improved. B. your competitive position is likely worsened. C
22、. your competitive position is unchanged.15. Undoubtedly, we are now living in a world where all the major economic functions consumption, production, and investment A. are still inherently local. B. are still regional in nature. C. are slowly becoming globalized. D. are highly globalized.16. Most g
23、overnments at least try to make it difficult for people to cross their borders illegally. This barrier to the free movement of labor is an example of A. information asymmetry. B. excessive transactions costs. C. racial discrimination. D. a market imperfection.Lecture 1 - Globalization and the Multin
24、ational Firm1-5 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.17. Although
25、 the world economy is much more integrated today than was the case 10 or 20 years ago, a variety of barriers still hamper free movements of people, goods, services, and capital across national boundaries. These barriers include A. legal restrictions. B. excessive transportation costs. C. information
26、 asymmetry. D. all of the above18. The Japanese automobile company Honda decided to establish production facilities in Ohio, mainly to A. circumvent trade barriers. B. reduce transportation costs. C. reduce transactions costs. D. both a) and b)19. When individual investors become aware of overseas i
27、nvestment opportunities and are willing to diversify their portfolios internationally, A. they trade one market imperfection, information asymmetry, for another, exchange rate risk. B. they benefit from an expanded opportunity set. C. they should not bother to read or to understand the prospectus, s
28、ince its probably written in a foreign language. D. they should invest only in dollars or euros.20. The Nestl Corporation, a well-known Swiss MNC, used to issue two different classes of common stock, bearer shares and registered shares, and foreigners were allowed to hold only A. registered shares.
29、B. bearer shares. C. voting shares. D. convertible shares.Lecture 1 - Globalization and the Multinational Firm1-6 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,
30、scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.21. Deregulated financial markets and heightened competition in financial services provided an environment for financial innovations that resulted in the introduction of various instruments. Examples of these innov
31、ative instruments include A. currency futures and options, foreign stock index futures and options. B. multicurrency bonds. C. international mutual funds, country funds, exchange traded funds. D. all of the above22. Nestl, a well-known Swiss corporation, A. has been a paragon of virtue in its opposi
32、tion to all forms of political risk. B. at one time placed restrictions on foreign ownership of its stock. When it relaxed these restrictions, the total market value of the firm fell. C. at one time placed restrictions on foreign ownership of its stock. When it relaxed these restrictions, there was
33、a major transfer of wealth from foreign shareholders to Swiss shareholders. D. none of the above23. The goal of shareholder wealth maximization A. is not appropriate for non-U.S. business firms. B. means that all business decisions and investments that a firm makes are done for the purpose of making
34、 the owners of the firm better off financially. C. is a sub-objective the firm should attempt to achieve after the objective of customer satisfaction is met. D. is in conflict with the privatization process taking place in third-world countries.24. As capital markets are becoming more integrated, th
35、e goal of shareholder wealth maximization A. has been altered to include other goals as well. B. has lost out to other goals, even in the U.S. C. has been given increasing importance by managers in Europe. D. has been shown to be a deterrent to raising funds abroad.Lecture 1 - Globalization and the
36、Multinational Firm1-7 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.25. Re
37、cent corporate scandals at firms such as Enron, WorldCom and the Italian firm Parmalat A. show that managers might be tempted to pursue their own private interests at the expense of shareholders. B. show that Italian shareholders are better at monitoring managerial behavior than U.S. shareholders. C
38、. show that white-collar criminals hardly ever get punished. D. show that socialism is a better way to go than capitalism.26. While the corporate governance problem is not confined to the United States, A. it can be a much more serious problem in many other parts of the world, where legal protection
39、 of shareholders is weak or nonexistent. B. it has reached its high point in the United States. C. the U.S. legal system, with lawsuits used only as a last resort, ensured that any conflicts of interest will soon be a thing of the past. D. none of the above27. The owners of a business are the A. tax
40、payers. B. workers. C. suppliers. D. shareholders.28. The massive privatization that is currently taking place in formerly socialist countries, will likely A. eventually enhance the standard of living to these countries citizens. B. depend on private investment. C. increase the opportunity set facin
41、g these countries citizens. D. all of the aboveLecture 1 - Globalization and the Multinational Firm1-8 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, du
42、plicated, forwarded, distributed, or posted on a website, in whole or part.29. A firm with concentrated ownership A. may give rise to conflicts of interest between dominant shareholders and small outside shareholders. B. may enjoy more accounting transparency than firms with diffuse ownership struct
43、ures. C. is a partnership, never a corporation. D. tends to exist overseas but not in the U.S.30. The ultimate guardians of shareholder interest in a corporation, are the A. rank and file workers. B. senior management. C. boards of directors. D. all of the above.31. In countries like France and Germ
44、any, A. managers have often made business decisions with regard to maximizing market share to the exclusion of other goals. B. managers have often viewed shareholders as one of the “stakeholders“ of the firm, others being employees, customers, suppliers, banks and so forth. C. managers have often re
45、garded the prosperity and growth of their combines, or families of related firms, as their critical goal. D. managers have traditionally embraced the maximization of shareholder wealth as the only worthy goal.32. When corporate governance breaks down A. shareholders are unlikely to receive fair retu
46、rns on their investments. B. managers may be tempted to enrich themselves at shareholder expense. C. the board of directors is not doing its job. D. all of the aboveLecture 1 - Globalization and the Multinational Firm1-9 2012 by McGraw-Hill Education. This is proprietary material solely for authoriz
47、ed 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.33. Privatization refers to the process of A. having government operate businesses for the betterment of th
48、e public sector. B. government allowing the operation of privately owned business. C. prohibiting government operated enterprises. D. a country divesting itself of the ownership and operation of a business venture by turning it over to the free market system.34. Deregulation of world financial marke
49、ts A. provided a natural environment for financial innovations, like currency futures and options. B. has promoted competition among market participants. C. has encouraged developing countries such as Chile, Mexico, and Korea to liberalize by allowing foreigners to directly invest in their financial markets. D. all of the above35. The emergence of global financial markets is due in no small part to A. advances in computer and telecommunications te
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