International Financial Management Study Set 9

____ are most commonly classified as a direct foreign investment.

MNCs have a variety of cash flow streams that can be derived from different business styles. In general, we distinguish three different business profiles, with the profile of MNCs focused only on international trade being considered the most complex of the three.

With regard to corporate goals, an MNC is mostly concerned with maximizing ____, and a purely domestic firm is mostly concerned with maximizing ____.

Due to the risks involved in international business, firms should:

Market capitalization refers to the total value of all a company's shares of stock. It is calculated by multiplying the price of a stock by its number of stock exchange listings.

In comparing exporting to direct foreign investment (FDI), an exporting operation will likely incur ____ fixed production costs and ____ transportation costs than DFI.

The agency costs of an MNC are likely to be lower if it:

A joint venture is a venture that is owned and operated by two or more firms.

Although international business can reduce an MNC's exposure to its home country's economic conditions, it usually increases an MNC's exposure to:

Shareholder wealth is defined as the present value of the expected future returns to the owners (that is, shareholders) of the firm.

Franchising is the process by which national governments sell state owned operations to corporations and other investors.

An agency problem exists when managers are tempted to serve their own interests rather than those of the MNC or, consequently, shareholders.

Which of the following is not mentioned in the text as an additional risk resulting from international business?

According to the text, a disadvantage of licensing is that:

An indirect benefit to the MNC of following a worldwide code of ethics is:

The goal of a multinational corporation (MNC) is the maximization of shareholder wealth.

Which of the following is not a way in which agency problems can be reduced through corporate control?

Acquisitions allow firms to have __ control over their foreign businesses and to ___obtain a large portion of foreign market share.

When an MNC is cross-listed, its shares are quoted on more than one stock exchange.

A centralized management style for an MNC results in relatively high agency costs.