1. Which of thefollowingis NOT a reason that an MNC may considerDirect Foreign Investment:

a. attract new sources of demand

b.enter profitable markets

c.react to exchange rate movments

d. decrease the cost of capital

e.none of the above.

2. AperfecthedgeispossibleonlywhenanMNCisin apositiontomaximizecurrencydiversification.

True

False

3. AnMNCnormally purchases a currency call option in order to:

a. lock in a maximum price to be paid for the currency in the future.

b.to hedge payables.

c.to hedge receivables.

d.a. and b. only

e.all the above

4. Due to available global capital and taking into account risk,an MNC(workingin adevelopingcountry)will normally have a lowercost of debtthan their domestic counterparts cost of debt.

True

False

5. Which of the following is not a true statement concerning today's global environment?

a.The U.S.has a national debt approaching$20trillion--large public debt tends to crowd out private investment and lowers future growth.

b.Chinacurrently has a debt to GDP ratio of approximately 260% -- eventually growth must slow in order to get debt under control.

c. Both England and Greece have recently voted to leave the European Union,primarily to ensure they both regain individual control of their monetary and fiscal policies.

d.none of the above,all are true statements.