Introduction to International Finance Class

If a company sells its products in a foreign market below the cost of production or below its fair market value, it may be accused of what? Unfair behavior Carnivorous behavior Pandering Dumping Which of the following is the situation where the internationalization theory recommends FDI as opposed to licensing? When a company needs tight control over a foreign entity that produces and distributes its products. When a company produces products that have a low value-to-weight ratio. When a company's skills and know-how are amendable to licensing. When a company has know-how that can be adequately protected by a licensing contract. Which of the following refers to the main idea underlining the theory of mercantilism? As countries differ in their ability to produce goods efficiently, a country should specialize in producing goods in areas where it has an absolute advantage and import goods in areas where other countries have absolute advantages. The theory emphasizes self-sufficiency through a favorable balance of trade. By exporting more than importing, a country would be able to acquire a net accumulation of wealth from other nations. The theory highlights unrestricted free trade leads to potential world production greater than with restricted trade. Consider a country that is efficient in producing trucks. Foreign companies can sell auto parts and tires to this country at a competitive price, but its government requires that at least 51% of the component parts must be produced domestically in the country. This situation is an example of what? Antidumping measure Local content requirement Voluntary export restraint Import quota