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FIn635 Homework: Chap 1: Questions 1 & 2 (P. 24) Chap 2: Problems 6 (p.56), 8 (p.57) Chap 4: Q 2 & 4 (p. 117)




Question;1.Which;of the following is generally NOT considered to be a viable operational goal;for a firm?;Maintaining a strong local;currency.;Maximization of after-tax;income.;Minimization of the firm's;effective global tax burden.;Correct positioning of the;firm's income, cash flows and available funds as to country and currency.;Question 2.2.Balance of;payment (BOP) data may be important for any of the following reasons;BOP;data helps to forecast a country's market potential, especially in the short;run.;The;BOP is an important indicator of a country's foreign exchange rate.;Changes;in a country's BOP may signal a change in controls over payment of dividends;and interest.;All;of the above.;Question 3.3.The BOP;must be in balance but the current account need not be.;True;False;Question 4.4.The;authors describe the multinational phase of globalization for a firm as one;characterized by the;ownership;of assets and enterprises in foreign countries.;potential;for international competitors or suppliers even though all accounts are with;domestic firms and are denominated in dollars.;imports;from foreign suppliers and exports to foreign buyers.;requirement;that all employees be multilingual.;Question 5.5.Which of;the following are critical to a firm trying to reach the top of the;firm value pyramid"?;An;open market place.;High;quality strategic management.;Access;to capital.;All;of the above.;Question 6.6.In the;decade since 2000, the U.S. has experienced its largest bilateral trade;deficits with the countries of China and Japan.;True;False;Question 7.7.The twin;agency problems limiting financial globalization are caused by these two;groups acting in their own self-interests rather than the interests of the;firm.;Rulers;of sovereign states and unsavory customs officials.;Corporate;insiders and attorneys.;Corporate;insiders and rulers of sovereign states.;Attorneys;and unsavory customs officials.;Question 8.8.Which of;the following is a reason why managers act to maximize shareholder wealth;in Anglo-American markets?;The;use of stock options to align the goals of shareholders and managers.;The;market for corporate control that allows for outside takeover of the firm.;Performance;based compensation for executive management.;All;of the above.;Question 9.9.The balance;of paymentsas applied to a course in;international finance may be defined as;the;amount still owed by an exporting firm after making an initial down payment.;the;amount still owed by governments to the International Monetary Fund.;the;measurement of all international economic transactions between the residents;of a country and foreign residents.;the;amount of a country's merchandise trade deficit or surplus.;Question 10.10.The;authors discuss the concept of the "Impossible Trinity" or the;inability to achieve simultaneously the goals of exchange rate stability;full financial integration, and monetary independence. If a country chooses;to have a pure float exchange rate regime, which two of the three goals is;a country most able to achieve?;Monetary;independence and exchange rate stability.;Exchange;rate stability and full financial integration.;Full;financial integration and monetary independence.;A;country cannot attain any of the exchange rate goals with a pure float;exchange rate regime.;Question 11.11.In 2007;the United States posted a current account deficit of -$731 billion. The;bulk of the negative value came from;a;net transfer deficit.;an;income balance deficit.;a;goods trade deficit.;an;income trade deficit.;Question 12.12.Which of;the following led to the eventual demise of the fixed currency exchange;rate regime worked out at Bretton Woods?;Widely;divergent national monetary and fiscal policies among member nations.;Differential;rates of inflation across member nations.;Several;unexpected economic shocks to member nations.;All;of the above.;Question 13.13.Which of;the following broad topics is NOT identified as an area to be established;as good corporate governance practice by the Organization for Economic;Cooperation and Development (OECD)?;Protect;the rights of shareholders.;Disclosure;and transparency.;The;proper role of stakeholders in the governance of the firm.;All;of the above should be a concern of good corporate governance.;Question 14.14.The;primary operational goal for the firm is to;maximize;after-tax profits in each country where the firm is operating.;minimize;the total financial risk to the firm.;maximize;the consolidated after-tax profits of the firm.;maximize;the total risk to the firm.;Question 15.15.The;financial account consists COMPLETELY of which three components?;Stock;investment, bond investment, and mutual fund investment.;Direct;investment, stock investment, and bond investment.;Direct;investment, portfolio investment, and other asset investment.;Mutual;fund investment, portfolio investment, and stock investment.;Question 16.16.A well-established;large, Brazil-based MNE will probably be most adversely affected by which;of the following elements of firm value?;An;open marketplace.;High-quality;strategic management.;Access;to capital.;Access;to qualified labor pool.;Question 17.17.Significant;amounts of United States Treasury issues are purchased by foreign;investors, therefore the U.S. must earn foreign currency to repay this;debt.;True;False;Question 18.18.Comparative;advantage in the 21st century is based more on services and their cross;border facilitation by telecommunications and the Internet.;True;False;Question 19.19.A small;economy country whose GDP is heavily dependent on trade with the United;States could use a (an) ________ exchange rate regime to minimize the risk;to their economy that could arise due to unfavorable changes in the;exchange rate.;pegged;exchange rate with the United States;pegged;exchange rate with the Euro;independent;floating;managed;float;Question 20.20.The;Stakeholder Capitalism Model;clearly;places shareholders as the primary stakeholder.;combines;the interests and inputs of shareholders, creditors, management, employees;and society.;has;financial profit as its goal and is often termed impatient capital.;is;the Anglo-American model of corporate governance.;Question 21.21.Describe the;management objectives of a firm governed by the shareholder wealth;maximization model and one governed by the stakeholder wealth maximization;model. Give an example of how these two models may lead to different;decision-making by executive management. (Points: 4);Question 22.22.Define and;then discuss the various aspects of the Special Drawing Right (SDR) of the;IMF (Points: 3);Question 23.23.What is a;country's balance of (merchandise) trade and why is it so widely reported in;the financial and popular press? (Points: 3)


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