Due to the political and country risks involved in international business, firms should: O A do business only in countries where they can guarantee their shareholders profit on every project. OB. attempt to assess, measure, and manage risks before investing abroad. OC. do business only in developed countries. O D. All of the above OE. None of the above
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- QUESTION B Which of the following is NOT a factor direct investors look at when judging whether they will be able to operate in a foreign country? CA Trade policy and privatization policy. OB CC The functioning and efficiency of local markets. The quality of domestic accountability systems. Standards of treatment of foreign affiliates. OD.QUESTION 15 The existence of inefficiencies in capital markets due to lack of disclosure and other reasons that may prevent portfolio investment from equalizing rates of return for given levels of risk internationally supports the hypothesis of foreign direct investment: O a. Market Disequilibrium O b. Market Structure O. Market equilibrium O d. Market Failure O e. Government Imposed Distortion QUESTION 16 A DISC (in international taxation) is a: O a. Company located in a foreign country that conducts domestic and international sales. Ob. Company incorporated in a possession territory of the United States. O c. Dummy Company to which a U.S. export company sources its profits. O d. Dummy International Sales Commission (for Tax Havens) O e. Sales Company working with international dummies. QUESTION 17 Answer questions 17 and 18 based on the following information: As you know, Flabovia has adopted a Value Added Tax (VAT); the tax rate across the board is 15%. A farmer grows vegetables and…1. Supposed a company plans to expand its business abroad, what are the risks it might encounter? 2. What are the needed policy interventions that must be imposed upon doing business internationally?
- Question #1 – What is the ‘expectations gap’? Is there even anything the accounting profession can do to close this ‘Expectations Gap’? Question #2 – To converge or not to converge, that is the question. The adoption of IFRS by U.S. companies would it easier to compare U.S. and foreign companies, as well as for U.S. companies to raise capital in foreign markets.Multinational Finance & investment Q2 c) Illustrate how to synthesize a forward hedging strategy by using only the money markets, in order to hedge against the foreign exchange risk.1. Should international companies invest in countries with totalitarian regimes? Why?
- QUESTION 5 One of the arguments for the irrelevance of exchange rate exposure management is that: O a. Individual investors cannot hedge exchange rate exposure as effectively as big companies O b. Foreign exchange markets are perfectly efficient. O c. Purchasing power parity does not hold. Od. Cash Flows become less predictable. O e. Cash flows become more predictable. QUESTION 6 In a perfectly integrated financial market: O a. The real risk-adjusted returns of integrated markets should be higher than those of segmented markets Ob. There are no real risk-adjusted returns since markets are fully integrated. O C. The real risk-adjusted returns expected to prevail in each country and currency should be equal. Od. The real risk-adjusted returns should be lower than returns on segmented markets. O e. The real risk-adjusted returns on integrated markets should be higher than those of segmented markets.Investors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.Q. There are different ways to enter the international markets and investment is one of those. Those who invest are called investors and investors may be different types. Elaborately discuss different types of international investors.(With example).
- 4. What is Dunning's OLI framework and how does it help us to understand foreign direct investment ?Sovereign risk refers to the risk that repayments from: Question 11Answer a. local borrowers are interrupted because of interference from foreign governments. b. foreign borrowers are interrupted because of interference from local governments. c. foreign borrowers are interrupted because of interference from foreign governments. d. None of the listed options are correct.Q1. These statements true or false? explain in detail 1.To protect an industry, it is best when the Effective Rate of Protection is higher than the Normal Rate of Protection. 2. Immiserizing growth takes place when there is an increase in growth and trade of a country. 3. The formation of Free Trade Areas and Custom Unions leads to free trade between all countries.