Fins3616 Test Bank Chapter 1

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Fundamentals of Multinational Finance, 3e (Moffett)
Chapter 1
Globalization and the Multinational Enterprise

1.1
Multiple Choice and True/False Questions

1)
Which of the following are critical to a firm trying to reach the top of the "firm value pyramid"? A)
an open market place
B)
high quality strategic management
C)
access to capital
D)
all of the above
Answer:
A
Topic:
Firm Value
Skill:
Conceptual

2)
A well-established, large firm U.S.-based MNE will probably not be able to overcome which of the following obstacles to maximizing firm value? A)
an open market place
B)
high quality strategic management
C)
access to capital
D)
none of the above
Answer:
D
Topic:
Firm Value
Skill:
Recognition

3)
Three necessary conditions for a firm to reach the top of the "firm value pyramid" are an open market place, high quality strategic management, and access to capital. Answer:
TRUE
Topic:
Firm Value
Skill:
Conceptual

4)
A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value? A)
an open marketplace
B)
high-quality strategic management
C)
access to capital
D)
access to qualified labor pool
Answer:
A
Topic:
Firm Value
Skill:
Conceptual

5)
A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value? A)
an open marketplace
B)
high-quality strategic management
C)
access to capital
D)
access to qualified labor pool
Answer:
C
Topic:
Firm Value
Skill:
Conceptual

6)
The theory that suggests specialization by country can increase worldwide production is ________. A)
the theory of comparative advantage
B)
the theory of foreign direct investment
C)
the international Fisher effect
D)
the theory of working capital management
Answer:
A
Topic:
Comparative Advantage
Skill:
Recognition

7)
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. Answer:
D
Topic:
Comparative Advantage
Skill:
Conceptual

8)
Which of the following would NOT be considered a feature of comparative advantage? A)
Exporters in Country A sell goods or services to unrelated importers in Country B. B)
Firms in Country A specialize in making products that can be produced relatively efficiently, given County A's endowment of factors of production. Firms in Country B do likewise thus maximizing the combined output of Countries A and B. C)

Trade exists between Counties A and B because of specialized factors of production that cannot be moved among countries. D)
All of the above are features of comparative advantage.
Answer:
D
Topic:
Comparative Advantage
Skill:
Recognition

9)
Of the following, which would NOT be considered a way that government interferes with comparative advantage? A)
tariffs
B)
managerial skills
C)
quotas
D)
other non-tariff restrictions
Answer:
B
Topic:
Comparative Advantage
Skill:
Recognition

10)
Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities. Answer:
TRUE
Topic:...
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