B) have a 2:1 ratio of liabilities to equity. D) have a 2:1 ratio of liabilities to assets A) be equal. C) have a 2:1 ratio of assets to liabilities. Norway receives raw materials from their corporate parent in the U.S. with of net 60 days. Most of their sales are to firms in Norway where normal payment 6) Amundsen of payment terms terms are net 30 days. This causes a problem for the subsidiary management because with working capital A) accounts receivable and accounts payable are equal. B) accounts receivable are so much longer than accounts payable C) accounts payable are so much longer than accounts receivable. D) this doesn't really cause a problem; in fact it is to the benefit of the Norwegian subsidiary 7) An organizational structure employed by an MNE to reduce its use of bank lending for the support of operations is A) a reinvoicing center. C) a centralized depository B) a cost center. D) a syndicated bank. 8) Which of the following is NOT true regarding a letter of credit? A) The importer applies to its local bank for the issuance of a letter of credit. B) The exporter applies to its local bank f C) The importer's bank for the issuance of a letter of credit. cuts a sales contract based on its assessment of the creditworthiness of the importer D) The importer and exporter agree on a transaction. 9) A/An letter of credit is an obligation only of the issuing bank whereas other banks honor a/an letter of credit. A) irrevocable; unconfirmed C) confirmed; irrevocable B) unconfirmed; confirmed D) revocable; confirmed 10) In the United States, the Foreign Credit Insurance Corporation A) provides letters of credit for U.S. exporters. B) provides policies that protect U.S. exporters against default by foreign importers C) provides letters of credit for U.S. importers. D) is a subsidiary of the Export-Import Bank 11) In theory, the MNE should support because their cash flows are A) lower; more stable due to international diversification B) lower; less stable due to international diversification C) higher; more stable due to international diversification D) higher; less stable due to international diversification debt ratios than a purely domestic firm 12) The is issued to the exporter by a common carrier transporting the merchandise. A) Bill of lading B) Draft C) Banker's acceptance D) Line of credit