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

a.

shareholder wealth; short-term earnings

b.

shareholder wealth; shareholder wealth

c.

short-term earnings; sales volume

d.

short-term earnings; shareholder wealth

2. Which of the following could reduce agency problems for an MNC?

a.

stock options as managerial compensation

b.

hostile takeover threat

c.

investor monitoring

d.

All of these are forms of corporate control that could reduce agency problems for an MNC.

3. Which of the following theories identifies specialization as a reason for international business?

a.

theory of comparative advantage

b.

imperfect markets theory

c.

product cycle theory

d.

None of these are correct.

4.The Sarbanes-Oxley Act improved corporate governance of MNCs because it:

a.

made executives more accountable for verifying financial statements.

b.

eliminated stock options as a form of compensation.

c.

tied executive compensation to firm performance.

d.

placed a limit on the amount of funds that managers can spend.

5.A forward contract can be used to lock in the ____ of a specified currency at a future point in time.

a.

purchase price

b.

sale price

c.

purchase price AND sale price

d.

None of these are correct.

6.Which of the following is an example of direct foreign investment?

a.

exporting to a country

b.

establishing licensing arrangements in a country

c.

purchasing existing companies in a country

d.

investing directly (without brokers) in foreign stocks