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1.5 Hours
MULTINATIONAL BUSINESS FINANCE
PRACTICE EXAM PAPER
This question paper consists of 5 pages including this page
Answer ALL questions in Section A and TWO questions from Section B.
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Multinational Finance Mock exam, Übungen von Internationale Finanzmärkte
Prep. for exam from professor. Section A is multiple choice and section B short answer.
Art: Übungen
2018/2019
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1.5 Hours
MULTINATIONAL BUSINESS FINANCE
PRACTICE EXAM PAPER
This question paper consists of 5 pages including this page
Answer ALL questions in Section A and TWO questions from Section B.
Section A
Answer all questions from Section A. Each question carries 4 marks. For these questions just write the letter of the correct answer (a, b, c, or d) in your answer books. There will be no penalty for wrong answers.
- The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the
a. domestic phase. b. multinational phase. c. international trade phase. d. import-export banking phase.
- Which of the following forms of foreign direct investment requires greater foreign investment?
a. joint venture. b. domestic production and exporting. c. licensing management contracts. d. greenfield investment.
- In the Anglo-American model of corporate governance, the primary goal of management is to
a. maximize the wealth of all stakeholders. b. maximize shareholder wealth. c. minimize costs d. minimize risk.
- The exposure to foreign exchange risk known as Transaction Exposure may be defined as
a. the change in expected future cash flows arising from an unexpected change in exchange rates. b. changes in reported owners’ equity in consolidated financial statements caused by a change in exchange rates. c. the impact of settling outstanding obligations entered into before change in exchange rates but to be settled after change in exchange rates. d. all of the above.
- The drop in value of a currency pegged to gold or another currency is known as
a. revaluation b. depreciation c. deterioration d. devaluation
- A major U.S. multinational firm has forecast the Euro/dollar rate to be 1.10€/$ one year hence, and an exchange rate of $1.40 for the British pound (£) in the same time period. Based on this information, what would be the company’s expected rate for the Euro per pound to be in one year?
a. 1.40Euro/£ b. 1.40£/Euro c. 1.54£/Euro d. 1.54Euro/£
- If a firm lies within a country with ________ or __________ domestic capital markets, it can achieve lower global cost and greater availability of capital with a properly designed and implemented strategy to participate in international capital markets.
a. liquid; segmented b. liquid; large c. illiquid; segmented d. large; illiquid
- The most widely used reference rate for standardized quotations, loan agreements, or financial derivative valuations is the _______________.
a. Federal Reserve Discount rate b. federal funds rate c. LIBOR d. one-year U.S. Treasury Bill
- Which of the following would NOT be a way to implement comparative advantage?
a. IBM exports computers to Egypt. b. computer hardware is designed in the United States but manufactured and assembled in Korea. c. water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide. d. all of the above are examples of ways to implement comparative advantage.
Please turn over…….
Section B
Answer any TWO questions from Section B. Each question carries 20 marks
- List and explain three strategic motives why firms become multinationals and give an example of each.
- On January 4, 1999 the member nations of the EMU introduced a new unified currency, the Euro, to replace the individual national currencies of many member nations. Identify and explain several of the arguments made both for and against the Euro. Do you think the Euro has proven to be a “good” idea? Why/Why not?
- Most Western nations were on the gold standard for currency exchange rates from 1876 until 1914. Today we have several different exchange rate regimes in use, but the most of the larger economy nations have freely floating exchange rates today and are not obligated to convert their currency into a predetermined amount of gold on demand. Today several parties still call for the “good old days” and a return to the gold standard. Develop an argument as to why this is a good idea.
- The mobility of international capital flows is causing emerging market nations to choose between a free-floating currency exchange regime and a currency board (or sometimes even dollarization). Describe how each of the regimes would work and identify at least two likely economic results for each regime.