if $150,000 face value bonds are issued at 102, the proceeds received will be $102,000.
adam smith argued that countries should specialize in the production of goods for which
they have an absolute advantage.
the attractiveness of a country as a potential market for an international business
depends on balancing the benefits, costs, and risks associated with doing business in
that country.
large strategic commitments increase strategic flexibility.
david ricardos theory of comparative advantage explains international trade in terms of
international differences in political environments.
It is uncommon for a parent company to charge its foreign subsidiaries royalties for the
technology, patents, or trade names it has transferred to them.
the times interest earned ratio is computed by dividing net income by interest expense.
Supporters of debt relief argue that new democratic governments in poor nations should
not be forced to honor debts incurred by corrupt and dictatorial predecessors.
in a planned economy, the means of production are owned by private individuals.
factor endowments refer to the extent to which a country is gifted with such resources
as land, labor, and capital.
the effective-interest method produces a constant dollar amount of interest expense to
be reported each interest period.
to exploit the opportunities presented by the eu, non-eu firms must establish eu
subsidiaries.
Most of the loans issued by the IMF are unconditional loans.
many firms adopt a geocentric policy toward staffing because it is a relatively
inexpensive staffing policy.
the four main differences between distribution systems are retail concentration, channel
length, channel exclusivity, and channel quality.
which of the following factors is not likely to make a country a more attractive location
for international business?
a.democratic regimes
b.planned economies
c.strong protection of property rights
d.market-based economic policies
which of the following is an advantage of franchising?
a.a firm takes profits out of one country to support competitive attacks in another
b.a firm is relieved of many of the costs and risks of opening a foreign market on its
own
c.it guarantees consistent product quality and achieves experience curve and location
economies
d.it improves the firms ability to take profits out of one country to support competitive
attacks in another
which of the following is a major drawback of using knickerbockers theory in
explaining fdi?
a.it ignores the fact that firms invest in a foreign country when demand in that country
will support local production
b.it does not explain why the first firm in an oligopoly decides to undertake fdi rather
than to export or license
c.it fails to identify when it is profitable to invest abroad
d.it ignores the fact that licensing as an entry strategy has its limitations
in the 1960s, the swedish vacuum manufacturer electrolux successfully marketed
vacuums in the united kingdom with the slogan “nothing sucks like an electrolux”.
the informal us meaning of the word sucks was already well known in the uk at the
time, and the company hoped the slogan, with its possible double entendre, would gain
attention. when this slogan was used in the american market, it was a catastrophe. this is
an example of:
a.cultural differences
b.religious differences
c.source effects
d.noise levels
antitrust laws in the united states are designed to:
a.restrict agricultural subsidies
b.increase trade barriers
c.outlaw monopolies
d.restrict privatization
the “millennium round” ended in 1999 with:
a.a successful record on agricultural products
b.a new agenda for the next round focusing on financial services
c.no agreement on the reduction of barriers to cross-border trade and investment
d.a decision to avoid fdi
a consumer surplus can be best described as:
a.what the consumer has “left-over” after a purchase
b.how much extra a consumer has to pay for a product
c.value for the money
d.the premium charged for a quality product
make-or-buy decisions are decisions about _____.
a.the components to be used in manufacturing process
b.procuring raw materials for a production process
c.procuring the capital equipments for production
d.whether or not to outsource value creation activities
when a companys product has a low value-to-weight ratio, the company should _____.
a.produce the product from two or three optimal locations and ship products from there
b.manufacture products from a centralized location
c.ignore transportation costs as they would only be a minor part
d.produce the product in multiple locations close to major markets
identify the theory that seeks to explain why firms often prefer foreign direct
investment over licensing as a strategy for entering foreign markets.
a.internalization theory
b.product life-cycle theory
c.perfect markets theory
d.random walk theory
if market segments transcend national borders:
a.the company should develop unique products for each national market
b.the company can view the global market as a single entity and pursue a global
strategy
c.a localization strategy would be appropriate
d.consumers will have differing purchasing behavior in different nations
on april 1, holton company borrows $80,000 from west bank by signing a 6-month, 6%,
interest-bearing note.
instructions
prepare the necessary entries below associated with the note payable on the books of
nolton company.
(a)prepare the entry on april 1 when the note was issued.
(b)prepare any adjusting entries necessary on june 30 in order to prepare the semiannual
financial statements. assume no other interest accrual entries have been made.
how is the adverse effect of the balance of payments for the home country due to an fdi
usually offset?
a.by increased imports to the home country as a result of the fdi
b.by the subsequent inflow of foreign earnings
c.by substituting direct exports made earlier from the home country
d.by further investments usually made to expand foreign operations
debate the ratification of the north american free trade agreement.
with the help of an example, explain how a tourist participates in the foreign exchange
market.
discuss the issues involved in unfreezing an organization.
explain countertrade and its purpose.
Explain the three types of decisions in international business.
a company receives $174, of which $14 is for sales tax. the journal entry to record the
sale would include a
adebit to sales tax expense for $14
b.debit to sales tax payable for $14
c.debit to sales for $174
d.debit to cash for $174
the board of directors of lauber corporation are considering two plans for financing the
purchase of new plant equipment. plan #1 would require the issuance of $5,000,000,
7%, 20-year bonds at face value. plan #2 would require the issuance of 200,000 shares
of $5 par value common stock that is selling for $25 per share on the open market.
lauber corporation currently has 100,000 shares of common stock outstanding and the
income tax rate is expected to be 30%. assume that income before interest and income
taxes is expected to be $600,000 if the new factory equipment is purchased.
instructions
prepare a schedule that shows the expected net income after taxes and the earnings per
share on common stock under each of the plans that the board of directors is
considering.
what are the financial advantages that make the eurocurrency market attractive to both
depositors and borrowers?
what is a greenfield investment? how does it compare to an acquisition? which form of
fdi is a firm more likely choose?