IBUS 401 EXAM 3, INTERNATIONAL
BUSINESS EXAM, IBUS 401 QUESTIONS
AND ANSWERS, GLOBAL STRATEGY
TEST, IBUS FINAL, BUSINESS EXAM PREP
Question : An argument for MNCs to have a debt-intensive
capital structure is:
(a) they are well diversified.(b) foreign government tax rules may change over time.(c) exposure to exchange rate fluctuations.(d) exposure to fund blockage.
Correct Answer: A
Question : According to the text, there is evidence that the
debt ratios (debt/capital) of MNCs based in:
(a) the U.S. tend to be generally higher than MNCs headquartered in Japan and Germany.(b) the United Kingdom tend to be generally higher than MNCs headquartered in other non-U.S. countries.(c) the U.S. tend to be generally lower than MNCs headquartered in Japan and Germany.(d) A and B
Correct Answer: C
Question : According to the text, the cost of capital for an
international project will:
(a) always be greater than the firm's cost of capital.(b) always be less than the firm's cost of capital.(c) always be the same as the firm's cost of capital.(d) none of the above
Correct Answer: D
Question : Which of the following factors is not expected to
generally have a favorable impact on the firm's cost of capital according to the text?(a) easy access to international capital markets.(b) high degree of international diversification.(c) volatile exchange rate fluctuations.(d) all of the above
Correct Answer: C
Question : only unsystematic variability in cash flows is
relevant.(b) only systematic variability in cash flows is relevant.(c) both systematic and unsystematic variability in cash flows are relevant.(d) neither systematic nor unsystematic variability in cash flows is relevant.
Correct Answer: B
Question : According to the text, MNCs: (a) use only debt financing in foreign countries to support foreign subsidiaries.(b) use only equity financing in foreign countries to support foreign subsidiaries.(c) use only parent financing in foreign countries to support foreign subsidiaries.(d) none of the above
Correct Answer: D
Question : The term "global" target capital structure for an
MNC represents the MNC's capital structure:
(a) in the U.S.(b) relative to competitors across all countries.(c) where it has its largest subsidiary.(d) when consolidating all of its subsidiaries.
Correct Answer: D
Question : According to the text, an MNC's "global" target
capital structure is:
(a) always debt-intensive.(b) always equity-intensive.(c) sometimes different from an MNC's "local" capital structures (at subsidiaries).(d) none of the above
Correct Answer: C
Question : One argument for why subsidiaries should be
wholly-owned by the parent is that the potential conflict of interests between the MNC's ____ is avoided.(a) managers and shareholders (b) majority shareholders and minority shareholders (c) existing creditors (d) managers and creditors
Correct Answer: B
Question : One argument for why subsidiaries should be only
partly-owned by the parent is:
(a) that the potential conflict of interests between the MNC's managers and shareholders is avoided.(b) that the potential conflict of interests between the MNC's majority shareholders and minority shareholders is avoided.(c) that the potential conflict of interests between the MNC's existing creditors is avoided.(d) to motivate subsidiary managers by allowing them partial ownership.
Correct Answer: D
Question : Other things being equal, countries with relatively
____ populations and ____ inflation are more likely to have a low cost of capital.(a) young; high