Question 1
The balance of payments as applied to a course in international finance may be 
defined as:
Answer
a. the amount owed by an exporting firm after making the down payment.
b. the amount still owed by governments to the International Monetary Fund.
c. the measurement of all international economic transactions between the residents of a
country and foreign residents
d. the amount of a countrys merchandise trade deficit or surplus.
Question 2
The text identify four distinct periods of capital mobility since 1860. Which of the 
following is termed as a “period of global economic destruction”?
a. 1860 – 1914
b. 1914 – 1945
c. 1945 – 1971
d. 1971 – 2007
Question 3
The issue of ethics in the reporting of income and the payment of taxes is a 
considerable one. Most MNEs operating in foreign countries tend to follow the general
principle of
a. “when in Rome, do as the Romans do.”
b. full disclosure to the tax authorities.
c. maintain a competitive playing field by cheating as much as the local competition, no
more, no less.
d. none of the above
Question 4
Toyota Motor Company (TMC) operates in many different countries and pays taxes at
many different rates. However, they always pay the same rate as their local competitors.
TMC is operating in an environment of ________ tax policy.
Answer
a. foreign neutrality
b. domestic neutrality
c. territorial approach
d. none of the above
Question 5
The United States taxes the domestic and remitted foreign earnings of U.S. based MNEs
no matter where the earnings occurred. This is an example of a ________ approach to
levying taxes.
Answer
a. worldwide
b. territorial
c. neutral
d. equitable
Question 6
________ is the pricing of goods and services between related companies.
a. Among pricing
b. Retail pricing
c. Transfer pricing
d. Wholesale pricing
Question 7
When discussing the structure of corporate governance, the text distinguishes between
internal and external factors. ________ is an example of an internal factor, and ________
is an example of an external factor.
a. Equity markets; executive management
b. Executive management; auditors
c. Auditors; regulators
d. Debt markets; board of directors
Question 8
Generally speaking, which of the following is NOT considered an important factor in 
the composition and control of corporate boards of directors?
a. The number of insider vs outside directors.
b. The total number of directors on the board.
c. The composition of the compensation committee.
d. All of the above are important factors of board composition.
Question 9
The Sarbanes-Oxley Act, passed by the U.S. Congress in July 2002, was design
a. to reinstitute heavy tariffs on international trade.
b. to reform corporate governance.
c. to limit the Federal Reserve Boards ability to engage in the buying and selling of gold.
