CH 1 Quiz
1. Suppose your firm invests $100,000 in a project in Italy. At the time the exchange rate is $1.23= 1.00 Euros. One year later the exchange rate is the same, but the Italian government has expropriated your firm’s assets paying only 80,000 Euros in compensation. This is an example of
a. Political risk
2. Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Compute the opportunity cost of adding one additional unit of food instead of textiles.
a. 1 yard of textiles per 6 pounds of food
3. In countries like France or Germany
a. Managers have often viewed shareholders as one of the “Stakeholders” of the firm, others being employees, customers, suppliers, banks, and so forth.
4. The common
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If the U.S., currency depreciates against the currencies of our trading partners.
ANSWER: your competitive position is likely improved.
20. Production of goods and services has become globalized to a large extent as a result of _______.
ANSWER: Multinational corporations’ efforts to source inputs and locate production anywhere where costs are lower and profits are higher.
21. Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Compute the opportunity cost of producing one additional unit of food instead of textiles.
ANSWER: 1 Yard of textile per .6 pounds of food
22. Which is growing at a faster rate, foreign direct investment by MNCs or international trade?
ANSWER: FDI by MNCs
23. 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,
ANSWER: both b and c are correct
24. When corporate governance breaks down
ANSWER: All the above
25. MNCs can use their global presence to
ANSWER: all the above
26. Suppose you start with $100 and buy stock for 50 Pounds when the exchange rate is 1 pound = $2. One year later, the stock rises to 60 pounds. You are happy with your 20% return on the stock but when you sell the stock and exchange your 60 pounds for dollars, you only get $45 since the pound has fallen to 1 pound=$.75. This loss of value is an example of _______
ANSWER: Political risk
Q6: How much production fixed expenses should be allocated to 1 kg of "complete meal"? Give a specific number and your logic to support the
11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?
The first key group of stakeholders are the employees. These include both managers and regular employees at all levels of the organization. The managers are in charge of overseeing certain departments within the corporation. Managers must also work to implement the company strategy and work towards accomplishing the company’s
Answer the next question on the basis of the following production possibilities tables for countries Alpha and Beta:
Q.1) Compute the following quantities for the current production process as well as for Mike’s and Ike’s plans, assuming the plans are implemented as described in the case.
12) Suppose a firm has $1500 in variable costs and $500 in fixed costs when it produces 500
19) Refer to the above cost chart. If the marginal revenue is $6, what output level will the firm produce?
D Realize greater cost economies from experience effects by serving an expanded global market from a
3. If a government has implemented significantly higher trade tariffs, but does not want this action to affect the value of its currency, it will
production and sales of Product A is 2,000 units and of Product B is 3,000 units. There are three activity cost
12) Suppose that we force the production of one unit of product A. The new objective function value will be
Currency risks are majorly involved with expanding into foreign markets. Due to the fluctuations of exchange rates, apples profits can vary due to demand and supply. The value of a currency is varied due to currency depreciation and appreciation and this fluctuation and
This paper will have a detailed discussion on the shareholder theory of Milton Friedman and the stakeholder theory of Edward Freeman. Friedman argued that “neo-classical economic theory suggests that the purpose of the organisations is to make profits in their accountability to themselves and their shareholders and that only by doing so can business contribute to wealth for itself and society at large”. On the other hand, the theory of stakeholder suggests that the managers of an organisation do not only have the duty towards the firm’s shareholders; rather towards the individuals and constituencies who contribute to the company’s wealth, capacity and activities. These individuals or constituencies can be the shareholders, employees,
1. Describe the shifts in the world economy over the past 30 years. What are the implications of these shifts for international business based in Great Britain? North America? Hong Kong?
International Financial Management Trial Exam Closed Book Examination INCLUDEPICTURE uvafileserverjligter1DataOnderwijsInternational Financeif2008sbriederLocal SettingsTempRarDI04.890ABS-logo.gif MERGEFORMAT Closed Book Examination Answer as brief and concise as possible redundant or superfluous remarks may lead to a lower score. The maximum score per problem is given between parentheses. The maximum score of the whole exam is 100 points. QUESTION 1 - 20 points SHAPE MERGEFORMAT This graph depicts the REAL value of the broad index which is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. a) Consider the following table of price levels,