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C. cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter.

Foreign reserves are used to: ␣ ␣ A. help foreigners who need additional funds. B. provide military support to foreign operations, for example, the French legion and UN peacekeepers. C. cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter. D. support foreign operations that are branches but not subsidiaries.

B. influence interest rates and taxation, and so may influence exchange rates.

Monetary and fiscal policies: ␣ ␣ A. have nothing to do with exchange rate movement. B. influence interest rates and taxation, and so may influence exchange rates. C. have no predictable influence on inflation. D. have no influence on trade patterns.

B. a serious error, so the local law should be known.

Running afoul of miscellaneous laws in a foreign country is: ␣ ␣ A. easily understood and forgiven by foreign police. B. a serious error, so the local law should be known. C. not a major issue, since the embassy can work out your release. D. not a serious issue because your country and company stand behind you. E. none of the above.

C. higher costs to consumers.

The end result of legal trade obstacles is often: ␣ ␣ A. limited trade, with the recipient of the obstacles withdrawing. B. political negotiations between the two countries, to smooth relations and reduce costs. C. higher costs to consumers. D. lower taxes to citizens due to tariff revenues. E. none of the above.

E. foreign investors can assume that their interests will be protected.

The existence of the rule of law in a foreign market suggests that: ␣ ␣ A. lawyers will be necessary in any substantive business transaction. B. personal relationships will be less effective than in a country governed outside the rule-of-law system. C. none of A, B, D, or E. D. legal rulings will be the basis of any dispute resolution. E. foreign investors can assume that their interests will be protected.

D. two of the above.

Cultural dumping is found in: ␣ ␣ A. Japan's past refusal to import American skis because Japanese snow is different, so the skis should meet different standards. B. Saudi Arabia's refusal to import Playboy magazine. C. The small town of Orleans, Massachusetts, decision to prohibit franchised stores from operating in the town. D. two of the above. E. all of A, B, and C.

A. developing countries.

Currency exchange controls are found most frequently in: ␣ ␣ A. developing countries. B. developed countries. C. countries with pegged exchange rates. D. nondemocratic countries.

B. discriminate against imports and favor exports.

Customs procedures in many countries often: ␣ ␣ A. are transparent and fair. B. discriminate against imports and favor exports. C. are online and impersonal. D. two of the above. E. all of A, B, and C.

C. floating exchange rates and growth in the FX markets.

The following conditions led to the establishment of international finance centers: ␣ ␣ A. the end of the gold standard and the Bretton Woods Accord. B. WTO guidelines and IMF regulations. C. floating exchange rates and growth in the FX markets. D. growth of sustainable business practices and social responsibility.

C. in an efficient market, like goods will have like prices.

The law of one price is that: ␣ ␣ A. only one price can be charged for an item in a contract deal. B. in an efficient market, one price only is the permissible price. C. in an efficient market, like goods will have like prices. D. even in international markets, bait and switch is illegal.

D. Switzerland, Ireland, Singapore, and Russia.

The lowest corporate tax rates are found in: ␣ ␣ A. the United States, Brazil, India, and France. B. Brazil, China, Australia, and Japan. C. Peru, Australia, Italy, and Luxembourg. D. Switzerland, Ireland, Singapore, and Russia.

A. centralize the financial management function and thereby reduce costs and increase both profits and efficiencies.

Firms have developed international finance centers in order to: ␣ ␣ A. centralize the financial management function and thereby reduce costs and increase both profits and efficiencies. B. meet WTO guidelines. C. compete with international banks. D. facilitate interfirm and intrafirm transfer pricing.

A. the volume of global transactions started to exceed most countries' foreign exchange reserves, so . governments couldn't intervene to sustain the value of their currency.

Fixed-rate relationships among currencies could not stay fixed, according to Obstfeld and Rogoff, because: A. the volume of global transactions started to exceed most countries' foreign exchange reserves, so . governments couldn't intervene to sustain the value of their currency. B. the complexity of international trade demanded return of the gold standard. C. Walmart and other leading firms argued successfully at the Federal Reserve that fixed rates were too costly to maintain. D. the EU had decided to float the euro.

D. unanticipated movements in exchange rates.

Foreign exchange risks—transaction, translation, or economic—are caused most directly by: ␣ ␣ A. unanticipated political actions by foreign governments. B. anticipated movements in interest rates in foreign economies. C. trade-related distribution risks such as weather, the price of fuel, and transport strikes. D. unanticipated movements in exchange rates.

B. the U.S. Supreme Court and the EU Court of Justice. C. bilateral and multilateral treaties, along with customary law.

The main source(s) of international law is(are): ␣ ␣ A. the UN International Court of Justice. B. the U.S. Supreme Court and the EU Court of Justice. C. bilateral and multilateral treaties, along with customary law. D. nonexistent. E. the WIPO.

C. measurement won't get us closer to the desired state.

The major argument against 3BL is that: ␣ ␣ A. companies don't want the public to know what they are doing. B. social and environmental impacts cannot be measured as well as can economic results. C. measurement won't get us closer to the desired state. D. A and B.

A. the subsidy.

The most common form of direct government participation in trade is: ␣ ␣ A. the subsidy. B. shipping on national vessels. C. import duties. D. a combination of the above. E. none of the above.

C. shoes.

The national defense argument for trade restrictions has been used in the United States to argue for restriction on imports of: ␣ ␣ A. munitions. B. uniforms. C. shoes. D. all of the above. E. two of A, B, and C.

A. Multi-Fiber Agreement (MFA).

The oldest orderly marketing arrangement, which was disbanded through the WTO, is the: ␣ ␣ A. Multi-Fiber Agreement (MFA). B. Jamaica Agreement. C. Textile Co-operation Treaty (CTC). D. Japanese truck export quota. E. Paris Convention.

C. some central banks from time to time intervene in the market to buy or sell large amounts of currency to . affect the supply and demand of a particular currency.

The present floating exchange rate system is not a totally free float because: ␣ ␣ A. there is an exchange fee of 1.5 to 1.75 percent. B. some governments refuse to allow foreign traders to trade their currency. C. some central banks from time to time intervene in the market to buy or sell large amounts of currency to . affect the supply and demand of a particular currency. D. A and B.

D. are set by the government, often above the free market rate.

When a government requires a permit to purchase foreign currency, the exchange rates: ␣ ␣ A. are market-driven. B. can be negotiated by the firm. C. are unpredictable. D. are set by the government, often above the free market rate.

D. varying interest rates take into account anticipated differences in inflation rates.

When the law of one price is applied to interest rates, it suggests that: ␣ ␣ A. interest rates do not differ much across national borders. B. inflation is not affected by interest rates. C. inflation and interest rates do not follow the law of one price. D. varying interest rates take into account anticipated differences in inflation rates.

C. often complex, so contracts should include choice-of-law and choice-of-forum clauses.

Where litigation in international disputes should occur is: ␣ ␣ A. usually evident from the documentation available. B. at times unclear, in which case the UN International Court of Justice will make a jurisdictional ruling. C. often complex, so contracts should include choice-of-law and choice-of-forum clauses. D. dictated by where the problem arose; a problem arising in India is adjudicated in India. E. determined by a jury during pretrial discovery.

A. the rate in effect when the stock was issued

Whether the functional currency is local or the parent company's currency, owner's equity is always translated at: ␣ ␣ A. the rate in effect when the stock was issued. B. the rate in effect the day of the consolidation. C. the rate in effect the day of the journal entry. D. the method of the company's choice, but consistency is required.

D. President Nixon

Who took the United States off the gold system? ␣ A. President Eisenhower B. President Kennedy C. the Supreme Court D. President Nixon

A. It is an optional contract, so the company could not exercise it and be able to benefit from upside swings in the foreign currency value.

Why is a currency option sometimes preferred to a forward market hedge? ␣ A. It is an optional contract, so the company could not exercise it and be able to benefit from upside swings in the foreign currency value. B. The rates are cheaper. C. Currency options are available for longer periods. D. The IRS favors currency options for tax credits when they are exercised.

A. more attractive because repayment can be made with cheaper money.

With increasing inflation, borrowing becomes: ␣ ␣ A. more attractive because repayment can be made with cheaper money. B. less attractive because repayment is made with dearer money. C. impossible because money has lost its value. D. a mute issue because of liquidity issues.

A. there is standardization, to some degree, through the Paris Union.

With patents: ␣ ␣ A. there is standardization, to some degree, through the Paris Union. B. there is no standardization, so often companies such as Nestlé file many patent applications in different countries. C. total harmonization has been reached through UN accords and the EPO. D. an inventor is automatically granted rights to her invention as long as she completes a patent filing. E. the first person to file is the one who receives patent protection

E. two of A, B, and C.

With privatization: A. assets are transferred from the public sector to the private sector. B. stock is bought back so that the company no longer has public shareholders. C. state activities are moved into private management through contracts. D. all of the above. E. two of A, B, and C.

D. an indirect tax levied on passive income.

Withholding tax is: ␣ ␣ A. an indirect tax paid by employers before employees receive salaries. B. a direct tax levied on earned income. C. a 30 percent tax levied on foreign residents. D. an indirect tax levied on passive income.

B. world financial markets are integrated, so we see the law of one price at work.

World interest rates tend to vary across a small range because: ␣ ␣ A. the IMF has been successful at promoting responsibility in the monetary sector. B. world financial markets are integrated, so we see the law of one price at work. C. bankers have low market appeal, given the financial crisis. D. the BIS has coordinated monetary policy.

D. China and Japan.

The largest international reserve accounts are held by: ␣ A. Hong Kong and Singapore. B. the United States, Mexico, and Canada (NAFTA). C. the EU. D. China and Japan.

D. A and C.

3BL gives companies the chance to measure and make public the social and environmental effects of their decisions: they should welcome this, in part because: ␣ A. what we tend to learn about companies is what is reported in the media, and that reporting tends to be focused on problems. B. it's about time companies are held accountable for their actions. C. right now we measure company decision results only at the economic level. D. A and C.

A. on the date of the sale.

A foreign currency sale is recorded as revenue, using the exchange rate: ␣ ␣ A. on the date of the sale. B. on the date the balance sheet is consolidated to financial reports. C. on a historical average over the period between the sale and the consolidation. D. that the company decides to use.

A. protect itself from the risk of blocked asset transfers, such as remittances, loan payments, and profit

A fronting loan enables the firm to: ␣ ␣ A. protect itself from the risk of blocked asset transfers, such as remittances, loan payments, and profit repatriations. B. build collateral with local firms. C. devote more resources to bricks and mortar. D. gain a competitive advantage in new markets.

D. all of the above.

A nontariff barrier is illustrated by: ␣ ␣ A. the French requirement in 1982 that all Japanese VCRs be inspected in Poitieres, far from the port and . lackingspeedyhighwayconnectiontotheport. B. the widespread Japanese belief that American rice can cause cancer. C. the European attitude toward genetically modified crops. D. all of the above. E. two of A, B, and C.

C. exclusive rights to manufacture, exploit, use, and sell the invention for a given time period.

A patent gives the inventor: ␣ ␣ A. property rights for 10 years. B. the right to use the invention until development costs are recouped. C. exclusive rights to manufacture, exploit, use, and sell the invention for a given time period. D. the right to keep the patented process but not the product for five years. E. two of the above.

B. be recorded in the BOP as a debit in the current account.

A purchase of foreign goods from the United States (requiring importing) will: ␣ ␣ A. be recorded in the BOP as an asset in the current account. B. be recorded in the BOP as a debit in the current account. C. have no record in the BOP because the purchase is made in the United States. D. be recorded in the BOP as a liability in the foreign transfer account.

B. paid in stages along the process from raw materials to consumer and then credited after final sale.

A value-added tax is actually a sales tax that is: ␣ ␣ A. paid by the firm rather than the consumer. B. paid in stages along the process from raw materials to consumer and then credited after final sale. C. called value added to create a positive spin on taxation. D. voluntarily paid on exports.

D. used for international trade or investment.

A vehicle currency is a currency: ␣ ␣ A. used to trade in the transportation sector and is usually the dollar, euro, or yen. B. whose value lies in its function in transfer pricing. C. specifically used in arbitrage deals as a trading medium only. D. used for international trade or investment.

D. participate in local U.S. equity markets without incurring the need for a broker or foreign exchange

ADRs are a way for non-U.S. firms to: ␣ A. participate in U.S. debt markets. B. lock in dollar exchange rates. C. leverage in a foreign currency. D. participate in local U.S. equity markets without incurring the need for a broker or foreign exchange

E. two of B, C, and D.

According to the text, the type of information a firm will need to judge country risks: A. none of B, C, and D. B. varies according to the nature of its business. C. varies according to its size. D. varies according to the length of time required to yield a satisfactory return. E. two of B, C, and D.

D. two of the above.

Among the external businesses that conduct country risk assessment are: ␣ A. the Economist Intelligence Unit, Euromoney, the Harvard Business Review B. Moody's, Standard and Poor's, STRATFOR C. The New York Times, Wilson Quarterly, Forum D. two of the above. E. all of A, B, and C.

D. there can be high costs from subsidizing infant industries.

An argument against the protection of an infant industry is that: ␣ A. in the long run the industry will have a competitive advantage. B. firms need protection from imports until the required investment capital is obtained. C. protection of emerging industries occurs only in developing nations. D. there can be high costs from subsidizing infant industries. E. Two of the above.

A. sanctions seldom achieve their goal of forcing change in the offending country.

An argument against using trade restrictions to punish an offending nation is that: ␣ A. sanctions seldom achieve their goal of forcing change in the offending country. B. sanctions are relatively harmful to the citizens of the offending country. C. sanctions are not condoned by the UN. D. sanctions decrease the cost of doing business. E. two of the above.

D. all of the above.

An example of environmental dumping can be found in the: A. maquiladora plants of Mexico, located near the U.S. border and operating at lower environmental standards than would be required in the United States. B. nuclear waste shipments to developing nations. C. garbage shipments from New Jersey to developing nations. D. all of the above. E. two of A, B, and C.

B. prevent large concentrations of economic power, such as monopolies.

Antitrust law is intended to: ␣ ␣ A. challenge successful businesses to allow proper levels of competition. B. prevent large concentrations of economic power, such as monopolies. C. create a more trusting business environment. D. allow socialism to flourish. E. two of the above.

B. the U.S. government is pushing for a world organization to clear antitrust issues.

Antitrust laws differ among countries, and complying with them is often difficult for the firm, so: ␣ ␣ A. international firms have had to increase their legal staff to ensure compliance. B. the U.S. government is pushing for a world organization to clear antitrust issues. C. firms have moved toward fewer mergers and more regionalized organizations. D. firms expect to be in antitrust litigation and act accordingly. E. two of the above.

C. the variety of these forces complicates the task of understanding the laws.

Anyone studying legal forces affecting international business soon realizes that: ␣ A. there is a remarkable level of coordination among legal systems in the developed nations. B. most laws are predictable, and that, although there is variance, what constitutes illegal behavior is commonly shared. C. the variety of these forces complicates the task of understanding the laws. D. thanks to the World Court, officials in most legal systems are open to collaborating with their international colleagues. E. none of the above.

B. exploit price differences between markets, so as to profit with no risk.

Arbitrage functions to: ␣ ␣ A. provide French markets access to other EU markets. B. exploit price differences between markets, so as to profit with no risk. C. create wealth through interest rate swaps. D. create increased trading in commodity markets.

A. often preferred by foreign litigants because it is perceived as fairer, faster, cheaper, and more confidential than are the courts.

Arbitration is a private solution that is: ␣ A. often preferred by foreign litigants because it is perceived as fairer, faster, cheaper, and more confidential than are the courts. B. favored by international unions. C. recommended by the UN for international companies facing litigation in developing countries. D. two of the above. E. all of A, B, and C.

E. none of the above.

Arbitration is often preferred because it is: ␣ A. easier to influence an arbiter than a judge. B. quicker and more private than the U.S. court system, although often more expensive. C. more discreet, although more costly than the court system. D. less bureaucratic than the court system of any country. E. none of the above.

D. all of the above.

Arguments for trade restrictions include: ␣ ␣ A. national defense, infant industry, and job protection. B. punishment of offending nations. C. fair competition and retaliation. D. all of the above. E. two of A, B, and C.

B. influence accounting, both its practice and the commonly shared understanding of its purpose.

Assumptions that underlie a country's legal, political, and economic systems: ␣ ␣ A. do not influence accounting because it is a quantified discipline, objective and factual. B. influence accounting, both its practice and the commonly shared understanding of its purpose. C. influence accountants but not the science of accounting. D. do not influence accounting because value is measured in currency, an objective and comparable measure.

C. reveal demand for a country's currency.

Balance-of-payments data: ␣ A. reveal a country's assets. B. suggest areas of concern in monetary and fiscal policy. C. reveal demand for a country's currency. D. show how the country's currency arrangement (fixed, pegged, floating) is valued.

B. cost consumers billions of dollars per year.

Barriers to trade: ␣ A. are a political issue but affect the cost of imports only marginally. B. cost consumers billions of dollars per year. C. save jobs in unprotected industries at $231,289 per job per year. D. none of the above. E. two of A, B, and C.

B. standardization in technology-related fields through specifications.

Both the ISO and the IEC promote: ␣ ␣ A. harmonization in international accountancy. B. standardization in technology-related fields through specifications. C. union membership in fields that are technology-intensive. D. shared bankruptcy standards across the globe. E. none of the above.

C. the gold exchange standard.

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or: ␣ ␣ A. the floating-rate system. B. the India Accord system. C. the gold exchange standard. D. the French rate system.

C. small loans made to small businesses, usually in developing countries.

Microloans are usually: ␣ ␣ A. loans made in small, developing economies. B. loans made to small, entrepreneurial businesses. C. small loans made to small businesses, usually in developing countries. D. pharmaceutical-backed loans.

A. rely on equity more than do companies in most other countries.

Companies in the United States, Canada, and the United Kingdom tend to: ␣ A. rely on equity more than do companies in most other countries. B. depend on debt more than do companies in other countries. C. divide their equity and debt almost evenly. D. rely on retained earnings more than do companies in most other countries.

A. less expensive, because interest on the debt is usually tax deductible.

Compared to equity financing, debt financing is thought to be: ␣ A. less expensive, because interest on the debt is usually tax deductible. B. more expensive, because interest rates are beyond the control of the company. C. more expensive, because debt markets are professionally run and mostly institutional. D. less expensive, because the debt is usually aggregated.

E. two of the above.

Copyrights are protected under: ␣ A. The WIPO Copyright Treaty. B. the International Convention for the Protection of Industrial Property. C. The Berne Convention of 1886. D. the Treaty of Rome. E. two of the above.

C. cocoa bean.

Cote d'Ivoire uses child labor, often imported and kidnapped, in the cultivation and harvesting of: ␣ ␣ A. marijuana. B. palm oil. C. cocoa bean. D. poppy. E. none of the above

D. two of the above.

Counterarguments to the "protect domestic jobs from cheap foreign labor" argument include: ␣ ␣ A. the labor rate is not all of the labor cost or the production cost. B. productivity per worker is what matters. C. cheap foreign labor is a natural occurrence. D. two of the above. E. all of A, B, and C.

C. their foreign reserves could be depleted.

Countries put limitations on the convertibility of their currency when they are concerned that: ␣ A. there is too much domestic spending. B. foreigners will hold control of their monetary policy. C. their foreign reserves could be depleted. D. there is not enough domestic spending.

B. selling a product abroad for less than the market price in the export nation.

Dumping is: ␣ ␣ A. selling a product abroad for less than its production cost in the importing nation. B. selling a product abroad for less than the market price in the export nation. C. exporting a product to a third country without correct documentation. D. two of the above. E. all of A, B, and C.

D. exchange rate changes on projected cash flows.

Economic exposure occurs at the operations level and results from: ␣ ␣ A. poor decision making in foreign markets. B. higher tax rates in foreign operations. C. risks incurred during foreign transactions. D. exchange rate changes on projected cash flows.

C. A and B.

Economic exposure results from: ␣ A. exchange rate variations on projected cash flows. B. operating exposure. C. A and B. D. poor planning.

B. markets, values, transparency, life-cycle technology, partnerships, time, and corporate governance.

Elkington suggests that the drivers for triple-bottom-line accounting can be: ␣ ␣ A. corporate profits and growth. B. markets, values, transparency, life-cycle technology, partnerships, time, and corporate governance. C. CSR. D. the SEC.

B. quite complicated and governed in most nations by the CISG.

Enforcing contracts that cross international borders is: ␣ A. simply a matter of applying the local law to the contract. B. quite complicated and governed in most nations by the CISG. C. the responsibility of Interpol. D. secondary to who has possession of the goods, regardless of title. E. nearly impossible, so negotiation is important.

C. the same in all areas except for the income statement.

Financial statements in Germany and the United States are: ␣ ␣ A. vastly different. B. exactly the same, allowing for comparisons. C. the same in all areas except for the income statement. D. the same in only the income statement; they are different in all other areas.

A. important because exchange rates influence all aspects of business.

Exchange rate forecasting is: ␣ ␣ A. important because exchange rates influence all aspects of business. B. important because markets depend on solid information. C. unimportant because exchange rate forecasting does not have a theoretical model. D. unimportant because exchange rate movements do not impact international transactions.

C. multilateral netting.

Exposure netting is a transaction exposure hedging technique that is similar to: ␣ ␣ A. leading and lagging. B. a forward market contract. C. multilateral netting. D. a spot currency contract.

A. a nation's attempt to enforce its law beyond its borders.

Extraterritoriality is: ␣ ␣ A. a nation's attempt to enforce its law beyond its borders. B. added territory as a result of dispute settlements in wars, such as the Sakalin Islands. C. a citizen's claim to government assistance in a foreign environment. D. a taxable condition most international firms attempt to avoid. E. two of the above.

C. allowing a bank to have a low level of capital to total assets.

Financial dumping is: ␣ A. sending excess financial resources to other nations. B. a government's decision to subsidize low interest rates for purchases of its exports. C. allowing a bank to have a low level of capital to total assets. D. all of the above. E. two of A, B, and C.

B. they are external forces beyond the influence of the firm, around which a manager can manage.

Financial forces such as inflation and taxation are considered uncontrollable because: ␣ ␣ A. there is nothing a manager can do to adjust to them, so the recommended approach is to ignore them. B. they are external forces beyond the influence of the firm, around which a manager can manage. C. they are external to the firm and their influence is to be avoided. D. they are unpredictable.

D. cross-listing.

When a firm offers its stock in a foreign market, it is: ␣ A. encountering foreign currency exposure. B. trying to limit its investor pool. C. violating domestic law in the EU or United States. D. cross-listing.

B. a historical function of government.

Government protection of economic activities is: A. two of the following. B. a historical function of government. C. a recent responsibility of government. D. a socialist characteristic. E. stronger in democracies.

C. maintains predictability in fiscal, monetary and political policies.

Government stability is a characteristic of a government that: A. makes sudden radical policy changes. B. readily shifts alliances to maintain power. C. maintains predictability in fiscal, monetary and political policies. D. two of the above. E. all of A, B, and C.

C. two of A, B, and D.

Government stability is understood to refer to a government's: A. policies—their ability to endure over time. B. ability to keep itself in power. C. two of A, B, and D. D. ability to adjust to sudden changes by making radical policy changes. E. all of A, B, and D.

D. A and B.

Hawalas make currency exchange and: ␣ A. avoid the international currency exchange markets. B. offer their clients nearly untraceable transactions. C. transfer funds through the established banking system. D. A and B.

B. an intervention currency.

In order to strengthen the U.S. dollar, the Federal Reserve might sell yen and buy dollars, in which case the yen functions as: ␣ ␣ A. a stronger currency than the dollar. B. an intervention currency. C. an arbitrage currency. D. none of the above.

A. exceedingly large awards.

In the U.S. court system, tort claims may result in: ␣ ␣ A. exceedingly large awards. B. lower liability insurance. C. a reduction in strict liability. D. reduced liability insurance costs for foreign companies. E. none of the above.

A. purity and scarcity.

Historically, gold has been used as a way for people to store value because of its: ␣ A. purity and scarcity. B. high transportation and security costs. C. lack of interest-earning ability. D. all of the above.

B. to let an official know of the situation may be a good idea, but usually the embassy cannot help much.

If an international manager runs afoul of a miscellaneous law while working abroad, calling the embassy: ␣ ␣ A. will ensure that the charges are dropped. B. to let an official know of the situation may be a good idea, but usually the embassy cannot help much. C. will lead to meetings that will arrange for everything. D. to explain the various cultural values in your homeland to the foreign government official is a reasonable approach. E. will result in the application of American law to the resolution of the problem.

C. sell massive amounts of Japanese yen in the FX markets.

If the Japanese yen is strengthening against the U.S. dollar, and the Japanese government wanted to boost exports, the central bank of Japan might well: ␣ ␣ A. sell U.S. dollars in large amounts in the currency markets. B. buy massive amounts of Japanese yen in the FX markets. C. sell massive amounts of Japanese yen in the FX markets. D. buy massive amounts of other hard currencies, such as the British pound sterling and the euro, to deflect the focus on dollars.

B. they would bring their dispute to an English court.

If two English multinational companies had a dispute arising in New York City, and there were no choice-of-law or choice-of-forum clauses in their contract, it is likely that: ␣ A. a New York court would hear their complaint. B. they would bring their dispute to an English court. C. the dispute would get heard not in court but, rather, in the boardrooms. D. they would reach an agreement informally and develop an off-the-books settlement. E. they would bring their dispute to the World Court for adjudication.

B. local input.

Import duties can be set to encourage: ␣ A. increased imports based on sales volumes. B. local input. C. price-fixing. D. imports from other suppliers. E. all of the above.

C. the gold standard, with fixed rates.

In 1717, Sir Isaac Newton took Britain from the silver standard (pounds sterling) to: A. floating exchange rates. B. fixed exchange rates, using silver. C. the gold standard, with fixed rates. D. pegged rates.

A. foreign currency receivables for the home currency, matched to the due date of the receivables.

In a forward market hedge for transaction exposure, the firm sells forward: ␣ ␣ A. foreign currency receivables for the home currency, matched to the due date of the receivables. B. domestic currency receivables for the foreign currency, matched to the due date of the receivable. C. its anticipated sales in the foreign currency. D. its projected earnings in the foreign currency, which will be repatriated.

D. all of the above.

In an inflationary economy the following conditions may be present: A. demand exceeds supply. B. money supply is increasing. C. prices are rising. D. all of the above.

B. raise debt capital in the local markets first.

In debt markets, the corporate trend is to: ␣ A. raise debt-based capital in the home country first. B. raise debt capital in the local markets first. C. raise equity capital first. D. rely first on retained earnings before debt is incurred.

A. rarely use them.

In general, with regard to exchange controls, developed countries: ␣ A. rarely use them. B. use them only to discourage foreign investment. C. use them when needed to implement monetary policy. D. use them secretly.

A. capitalism can become civilized.

In his book Cannibals with Forks, John Elkington puts forward the argument that: ␣ ␣ A. capitalism can become civilized. B. capitalism is not, by its very nature, uncivilized and destructive of natural resources. C. natural resources are a God-given gift for mankind to use. D. developing nations will become more competitive with Western nations.

B. are based on differing assumptions, with the United States following a per se concept and the EU concerned about the existence of harm.

In the United States and EU, attitudes toward competition: ␣ ␣ A. are quite similar. B. are based on differing assumptions, with the United States following a per se concept and the EU concerned about the existence of harm. C. differ because the EU is anticompetitive; its Commission on Competition ensures competition isn't too severe. D. differ on the role of market dominance, with the United States supporting it and the EU wanting to avoid it. E. are both focused on prevention of price fixing.

D. two of the above.

In the United States, the Smoot-Hawley Tariff Act: ␣ ␣ A. outlawed tariffs for U.S. imports. B. led to the Wall Street crash of 1929. C. established some of the highest tariffs the United States has known. D. two of the above. E. all of A, B, and C.

C. on the date the balance sheet is produced.

In the current rate method, assets and liabilities are translated: ␣ A. at their historical rates. B. at an average of the historical and current rates. C. on the date the balance sheet is produced. D. however the company chooses, as long as it is consistent in all its foreign operations

B. their historic cost.

In the temporal method, fixed assets such as real estate are translated at: ␣ A. their market value. B. their historic cost. C. their assessed value. D. an average of the period's rates.

D. secrecy and conservatism.

In their measurement and disclosure for accounting systems, less developed countries tend toward: ␣ ␣ A. transparency and conservatism. B. transparency and optimism. C. secrecy and optimism. D. secrecy and conservatism.

D. VAT is an indirect tax.

Income tax is a direct tax levied on earnings, and: A. VAT is also a direct tax. B. VAT is not a tax, in the legal sense. C. VAT, vertical added tax, is indirect. D. VAT is an indirect tax.

C. descriptions of portside processes.

Incoterms attempt to standardize shipping agreements, and they include: ␣ ␣ A. FAS and CIF. B. CED and COD. C. descriptions of portside processes. D. insurance arrangements for international shipments. E. performance guarantees.

A. FAS and DAF.

Incoterms include: ␣ A. FAS and DAF. B. CFR and COD. C. INSAP and ECO. D. SAE and EBI. E. DOA and EDP

D. includes anything that is the result of things created using someone's intellect.

Intellectual property: ␣ ␣ A. excludes intangibles, which is why it is a difficult area. B. includes thoughts and ideas, but not tangible products. C. includes anything that is a result of a creative process that does not have material qualities. D. includes anything that is the result of things created using someone's intellect. E. excludes things found in nature, such as natural colors, scents, and sounds.

C. about half the world's 100 largest economic units are firms.

International business can be a powerful political force, in part because: ␣ A. a recent Supreme Court ruling in the United States allows corporate contributions to political races. B. many top management team members are willing to accept roles with national security agencies. C. about half the world's 100 largest economic units are firms. D. business is all about achieving political goals. E. two of the above.

A. two of B, C, and D.

Kidnapping: A. two of B, C, and D. B. is a weapon used by some terrorists to extract ransom. C. can result in counterproductive results if ransom is paid for hostages. D. can be insured against by obtaining kidnapping, ransom, and extraction (KRE) insurance. E. all of B, C, and D.

B. private international law.

Laws governing transactions of individuals and companies that cross international borders are: ␣ A. none of B, C, D, or E. B. private international law. C. product liability law. D. public international law. E. customary law.

A. of timing, leading with receivables in a weakening currency and payables in strengthening currencies.

Leading and lagging is a practice: ␣ ␣ A. of timing, leading with receivables in a weakening currency and payables in strengthening currencies. B. a defensive marketing strategy with finance implications. C. of interest rate manipulation, borrowing in low-rate environments and lending in high-rate environments. D. of leading with payables in weakening currencies and with receivables in strengthening currencies.

B. they have not, though, slowed down the growth of IB; instead, they have made it more complex.

Legal uncertainties have affected international business, and: ␣ A. they have prevented IB growth. B. they have not, though, slowed down the growth of IB; instead, they have made it more complex. C. prices and insurance costs have risen. D. fewer large businesses want to be involved across national borders due to the uncertainties of the legal environment. E. none of the above.

C. influenced by many forces including forces external to business, such as world events.

Market forces that set the relative prices of currencies are: ␣ ␣ A. not influenced by government policies. B. not influenced by world events. C. influenced by many forces including forces external to business, such as world events. D. A and B.

D. demand for a country's currency and potential changes in its economic environment.

Most significantly for the international manager, the balance of payments reveals: ␣ ␣ A. demand for a firm's products. B. a firm's financial position. C. a country's export patterns. D. demand for a country's currency and potential changes in its economic environment.

B. show impressive earnings that will attract investors. C. promote capitalism.

The Anglo-American inclination toward optimism is explained by a desire to: ␣ ␣ A. promote good feelings within the firm. B. show impressive earnings that will attract investors. C. promote capitalism. D. contribute to political stability.

B. opposing trends.

Nationalization and privatization are: A. similar trends. B. opposing trends. C. both risks faced by privately held firms. D. both risks not encountered in capitalist democracies. E. two of the above.

A. cultural, social, financial services, and tax dumping

New types of dumping include: ␣ ␣ A. cultural, social, financial services, and tax dumping. B. truck, financial services, and black-market dumping. C. gray-market, subsidiary, and transfer-pricing dumping. D. two of the above. E. all of A, B, and C.

D. all of the above.

Nonquantitative nontariff barriers: ␣ ␣ A. are seen by many to be the most significant nontariff barrier. B. often involve government participation in trade, especially in customs and other administrative procedures. C. often involve standards. D. all of the above. E. two of A, B, and C

A. annoy the importers with red tape and administrative paperwork.

Nuisance tariffs: ␣ A. annoy the importers with red tape and administrative paperwork. B. are a historical anomaly. C. are found in developed nations more than in developing nations. D. have no point other than to indicate that tariff regulations change quickly. E. two of the above.

D. two of the above.

Official prices ensure that: ␣ A. imported goods will be sold at minimum prices, to avoid dumping. B. a black market will be healthy and available for imported goods. C. low-priced invoices to avoid tariffs will not be successful. D. two of the above. E. none of A, B, and C.

C. offer reduced regulations and lower taxes than in the home country.

Offshore financial centers are appealing to the international firm because they: ␣ A. outsource all of the administrative details. B. are in Switzerland, the Cayman Islands, the Bahamas. C. offer reduced regulations and lower taxes than in the home country. D. have lower labor costs.

C. A and B.

Once convergence is reached: ␣ ␣ A. financial markets will be more integrated than they are now. B. direct comparisons of company statements will be possible. C. A and B. D. Western-style capitalism will be at its apex.

B. how specific it is.

One attribute of the U.S. tariff schedule is: ␣ A. that it is printed in both Arabic and Hebrew. B. how specific it is. C. that its categories are quite general and easy to apply. D. that its harmonized version can be accessed via cell phone and iPad.

A. the United States follows the per se concept, wherein actions are illegal whether they have done harm.

One difference between the U.S. and EU approaches to antitrust law is that: ␣ ␣ A. the United States follows the per se concept, wherein actions are illegal whether they have done harm. B. the EU forbids market dominance by cartels, no matter the conditions, whereas the United States does not. C. the U.S. focus is on impact on competition, whereas the EU focus is on the consumer. D. the EU avoids competition, whereas the United States seeks it. E. the EU emphasizes the prevention of price fixing, while the United States does not.

D. A and C.

One of the major differences between GAAP and the IFRS is that: ␣ A. IFRS relies more on norms than does GAAP, which relies on expedience for compliance. B. IFRS is more lax than is GAAP. C. IFRS relies on principles, whereas GAAP is rules-based. D. A and C.

B. use home-country currency for all transactions.

One way to avoid transaction exposure is to: ␣ ␣ A. issue all bonds in the home currency. B. use home-country currency for all transactions. C. hedge the risk by a forward money market contract. D. A and C.

A. markets, although interconnected, are not fully integrated.

Opportunities for corporations to tap into varying international markets exist because: ␣ ␣ A. markets, although interconnected, are not fully integrated. B. some regional markets favor certain business sectors (Mexico, cement; U.S., fast food; EU, cheese). C. national markets favor domestic companies. D. B and C.

A. cultural differences in value systems between the EU and the United States.

Part of the problems with international accounting convergence efforts has to do with: ␣ ␣ A. cultural differences in value systems between the EU and the United States. B. stubbornness on the part of U.S. negotiators. C. accounting's objectivity. D. difficulties related to quantification.

D. the Paris Union.

Patent treatment is standardized thanks to: ␣ A. the WTO. B. the UN Commission on Patents. C. domestic laws in various nations. D. the Paris Union. E. the ACTA.

A. looking for loopholes in patent protection and exploiting them.

Patent trolling is the process of: ␣ A. looking for loopholes in patent protection and exploiting them. B. recording and registering patents in foreign countries to protect the firm's IP. C. searching out patents that have expired and negotiating their replacements. D. legal research that uncovers obscure, deceased patent holders and liberates their inventions. E. none of the above.

D. modern highway robbers who exploit loopholes in IP protection.

Patent trolls are: ␣ ␣ A. a record of all patents, recorded by the UN. B. the numerical controls issued on patents, standardized by the Paris Convention. C. the organizing system for patent review that is kept internationally by the OECD. D. modern highway robbers who exploit loopholes in IP protection. E. the framework used for filing and referencing patents.

A. exclusive rights to use, sell, manufacture, or exploit the invention or process.

Patents are government grants that give the owner: ␣ ␣ A. exclusive rights to use, sell, manufacture, or exploit the invention or process. B. the exclusive right to use the fundamental ideas on which the invention is based. C. the right to sell the invention, but only beyond the patent-granter's borders. D. rights to the invention but do not prevent others from copying the invention. E. two of the above.

C. access to government contracts.

Privately owned companies sometimes complain that government-owned companies have the following unfair advantages: A. higher-cost financing. B. ability to charge higher prices. C. access to government contracts. D. all of the above. E. two of A, B, and C.

D. the United States

Punitive damages in product liability cases can be awarded in: ␣ ␣ A. Japan. B. Japan and the EU. C. the UK. D. the United States E. all of the above.

A. the purchasing power of several currencies.

Purchasing power parity is a way to compare: ␣ ␣ A. the purchasing power of several currencies. B. tastes in several different cultures. C. the impact of financial aid in several economies. D. meals in the quick-service restaurant sector—via the Big Mac index.

A. limits, established by the importer.

Quotas are a quantitative barrier that sets: ␣ A. limits, established by the importer. B. goals, established by the exporter. C. precise quantities of imports or exports, based on price. D. expectations on domestic and foreign sales. E. two of the above.

B. the rate in effect when the earnings were posted.

Regardless of the functional currency, retained earnings are translated at: ␣ A. their market value based on recent stock price. B. the rate in effect when the earnings were posted. C. the rate in effect the day of consolidation. D. a reasonable rate of the company's choice.

A. extraterritorially.

The EU applies its competition policy: ␣ ␣ A. extraterritorially. B. only within the EU. C. within the EU and applicant states. D. within the EU and other European nations. E. none of the above.

C. established a fixed equivalency between gold and the British currency.

Sir Isaac Newton put England on the gold standard when he: ␣ ␣ A. declared, as master of the English mint, that he would sell gold for 1 pound, 1 shilling, 1 pence, under the law of one price. B. set a market price for gold, the British pound and the U.S. dollar. C. established a fixed equivalency between gold and the British currency. D. brought the matter to Queen Anne, who declared Britain would follow the gold standard.

C. reduced, so that they can enter the game earlier, possibly with generics.

Smaller nations would like patent protection: ␣ ␣ A. extended, to allow them to build their competitive advantage. B. extended, so that they can recoup development costs. C. reduced, so that they can enter the game earlier, possibly with generics. D. extended, so that their profits can increase. E. to be the same for government patent holders as for multinational companies.

B. creates unfair competition based on lower costs, which undermines social support systems to the worker.

Social dumping occurs when an exporting country: ␣ ␣ A.imposes an export tax on domestic businesses that export, to compensate for the opportunity cost to the domestic market. B. creates unfair competition based on lower costs, which undermines social support systems to the worker. C. target-markets to specific vulnerable groups in the importing country. D. exports goods that are not sellable in the domestic environment due to hazards and safety issues. E. two of the above.

D. two of the above.

Standardization of law: ␣ ␣ A. would challenge international business because IB would lose protection. B. would make IB work more smoothly because uniform, predictable laws would result. C. has been progressing in some areas, such as taxation, but there is a long road forward. D. two of the above. E. all of A, B, and C

A. all of B, C, and D.

Standards are a way to establish nontariff barriers, and examples are: ␣ ␣ A. all of B, C, and D. B. Japan's refusal to import light mayonnaise. C. Canada's categorization of orange juice with added calcium as a drug and subject to special requirements. D. the prohibition of imported drugs at the consumer level in the United States. E. two of B, C, and D.

B. aid export businesses or protect domestic businesses from imports.

Subsidies are problematic because they: ␣ ␣ A. are administered as a form of political patronage. B. aid export businesses or protect domestic businesses from imports. C. encourage nationalization. D. violate UN agreements. E. two of the above.

A. currencies at specified rates at specified times in the future.

Swap contracts are agreements to exchange: ␣ ␣ A. currencies at specified rates at specified times in the future. B. equity shares in the future at today's rates. C. supplier information to ensure competitive pricing. D. B and C.

C. how the foreign operations of a company are organized.

Tax liability on foreign earnings is controlled by: ␣ ␣ A. the tax treaties in place between the two relevant countries. B. the tax rates in the local jurisdictions. C. how the foreign operations of a company are organized. D. negotiations between the company and the host country.

A. if the firm can achieve a lower tax burden than its competitors, it can generate higher revenues and then lower its prices or pay higher wages and dividends

Taxation is a financial force in that: ␣ ␣ A. if the firm can achieve a lower tax burden than its competitors, it can generate higher revenues and then lower its prices or pay higher wages and dividends. B. governments, which enact taxes, are formal institutions that enforce tax law via force. C. businesses are compelled by foreign governments to pay taxes. D. it is not controlled by the firm.

B. file claims in U.S. courts for violations of international law that may have occurred beyond U.S. borders.

The Alien Tort Statute allows foreigners to: ␣ ␣ A. sue in U.S. courts for residency in the United States. B. file claims in U.S. courts for violations of international law that may have occurred beyond U.S. borders. C. file claims in U.S. courts for alleged violations of foreign laws. D. file claims against other foreign nationals for violations of U.S. EEOC law. E. avoid prosecution from U.S. laws as long as they live, work, and have citizenship in another country.

B. quite undervalued, since the Chinese Big Mac is almost 50 percent less expensive than the U.S.-dollar Big Mac.

The Economist's Big Mac index (May 2010) suggests that against the dollar, the Chinese yuan is: ␣ A. trading fairly, since the Big Mac prices are similar. B. quite undervalued, since the Chinese Big Mac is almost 50 percent less expensive than the U.S.-dollar Big Mac. C. is overvalued, since the Big Mac sells for almost 50 percent less in Chinese currency than in U.S. dollars. D. trading at a historical premium.

C. brought the discussion of bribery into the open, which has, overall, been positive.

The FCPA has: ␣ ␣ A. hurt American business because managers cannot use bribes anymore. B. challenged the creativity of American managers and consultants to develop ways to work around the FCPA. C. brought the discussion of bribery into the open, which has, overall, been positive. D. resulted in American foreign business going to Japanese and German businesses. E. eliminated bribery in international business.

E. uncertainties that make its application problematic.

The FCPA includes: ␣ ␣ A. wording consistent with the United Kingdom Bribery Act to facilitate application globally. B. specific explicit rules with clear definitions of terms that U.S. companies must follow in their foreign operations. C. all accounting processes, including the accounting of transfer payments. D. foreign tax liabilities and other adjustments specific to business outside the home country. E. uncertainties that make its application problematic.

C. is the nominal rate minus the expected inflation rate.

The Fisher effect states that the real interest rate: ␣ ␣ A. is the nominal rate plus the recorded inflation rate. B. is the only measure to use in calculating PPP. C. is the nominal rate minus the expected inflation rate. D. is the difference between the nominal rate and the inflation rate.

A. carried the discussion of transparency and corruption out into the open.

The Foreign Corrupt Practices Act has: ␣ A. carried the discussion of transparency and corruption out into the open. B. impaired American competitiveness abroad. C. jailed legions of corrupt foreign executives in the United States. D. introduced clear, concise terminology into the discussion of corruption. E. been based on the United Kingdom Bribery Act.

B. prohibits bribery by American companies abroad.

The Foreign Corrupt Practices Act is U.S. legislation that: ␣ ␣ A. outlines bribery practices that are allowed abroad but not in the United States. B. prohibits bribery by American companies abroad. C. allows bribery in foreign dealings when culturally sanctioned. D. outlines and prohibits foreign bribery practices by foreign nationals in foreign nations. E. clearly states the basis for illegal bribery.

B. special drawing rights, an international reserve asset

The SDR is: ␣ A. a special deposit for corporate reimbursement. B. special drawing rights, an international reserve asset. C. a special deficit refund, made to compensate for currency devaluation. D. a paper credit issued by the Bank for International Settlements.

B. eventually, reserve currencies will run deficits, which will lead to lack of confidence in the currency.

The Triffin paradox suggests that: ␣ ␣ A. reserve currencies can never run deficits. B. eventually, reserve currencies will run deficits, which will lead to lack of confidence in the currency. C. the more a currency is held in reserves, the stronger it is. D. the U.S. dollar could never be a reserve currency.

B. and the criminal penalties apply to foreign companies even if the conspiracy took place outside the United States.

The U.S. antitrust law contains both civil and criminal penalties: ␣ A. neither of which can be applied outside the United States. B. and the criminal penalties apply to foreign companies even if the conspiracy took place outside the United States. C. but their application to foreign companies is limited to actions that have taken place within the United States. D. and they can be administered by foreign courts. E. and they are enforced through the United Nations

D. a private organization.

The U.S. body that establishes accounting standards, the FASB, is: ␣ A. a branch of the U.S. government. B. elected by seat holders on the NYSE. C. appointed by the chair of the U.S. House of Representatives Banking Committee. D. a private organization.

D. B and C.

The U.S. current account deficit can be explained by: ␣ A. citizens of other nations wanting to hold dollars because the dollar is a stable currency. B. foreigners wanting to invest in the United States. C. U.S. citizens importing more than they are exporting. D. B and C.

B. interested, because transfer pricing has tax implications for the host governments— hence the IRS guidelines.

The U.S. government's attitude toward transfer pricing on subsidiary transactions in foreign locations is:␣ ␣ A. uninterested, because these transactions are outside the United States and, thus, beyond U.S. jurisdiction. B. interested, because transfer pricing has tax implications for the host governments— hence the IRS guidelines. C. neither interested nor uninterested, because, although there are tax implications for the host country, the . U.S. tax authorities feel comfortable exercising their authority globally. D. uninterested, because foreign taxes are of no interest to them.

A. sugar.

The United States allocates quotas to 40 countries for specific tonnages of: ␣ ␣ A. sugar. B. roast beef. C. malt beer. D. soybeans E. two of the above.

A. both apply antitrust law extraterritorially.

The United States and the EU: ␣ ␣ A. both apply antitrust law extraterritorially. B. both oppose the Japanese Anti-Monopoly Law. C. share a commitment to the per se concept in law. D. two of the above. E. all of A, B, and C.

C. 1916.

The United States became one of the first countries to prohibit dumping into its own market, in: ␣ A. 2006. B. 1856. C. 1916. D. 1776. E. none of the above.

D. A and B.

The United States is moving toward convergence with IASB standards: A. and is the only major economy that does not follow them now. B. and expects to be harmonized by 2015. C. although the goal is long term, over 50 years. D. A and B.

A. the accounts being double-entry, so they are always balanced.

The balance part of the BOP is explained by: ␣ ␣ A. the accounts being double-entry, so they are always balanced. B. imbalances showing immediately. C. actions governments take to achieve the balance. D. none of the above.

B. a country's transactions with the rest of the world.

The balance-of-payments account is a record of: ␣ ␣ A. the total tangible trade flows of a country over a five-year period. B. a country's transactions with the rest of the world. C. a country's total debt service payments during a one-year period. D. the outstanding balance of a country's debt payments for the fiscal year.

D. current, capital, and reserves.

The balance-of-payments account is divided into the following three major subaccounts: ␣ ␣ A. trade, capital, and debt. B. cash flow, assets, and reserves. C. services, cash flow, and debt. D. current, capital, and reserves.

B. debt and equity.

The capital structure of the firm can be raised externally through: ␣ ␣ A. leveraging and bonds. B. debt and equity. C. debt and retained earnings. D. retained earnings and bonds.

C. more complex, because currencies vary, as do national-level regulations.

The cash flow management of a global firm, compared to that of a domestic firm, is: ␣ A. exactly the same: moving money is moving money. B. less complex, because the sums are larger and the process is centralized. C. more complex, because currencies vary, as do national-level regulations. D. more complex, because the number of subsidiaries or branches is larger.

A. to harm done by the designer/manufacturer without the need to prove negligence.

The concept of strict liability, as found in the U.S. legal system, applies: ␣ A. to harm done by the designer/manufacturer without the need to prove negligence. B. to harm done within narrow limits, considering the design of the product. C. to children harmed by products in both the United States and the EU. D. strictly to harm caused by the designer/manufacturer, so no penalties outside of damages can be awarded. E. none of the above.

D. merchandise, services, and unilateral transfers.

The current account on the BOP has three subaccounts: A. export, import, and capital. B. tangible exports, tariff revenues, and capital. C. fixed assets, current liabilities, and long-term debt. D. merchandise, services, and unilateral transfers.

A. allows purchasers to lock in purchases of currencies at known rates.

The forward currency market: ␣ ␣ A. allows purchasers to lock in purchases of currencies at known rates. B. provides governments a way to manage their currency's value. C. makes trading in several currencies more efficient. D. helps managers manage domestic debt.

D. the currency in which cash flows, pricing, expenses, and financing are denominated.

The functional currency of a foreign operation is: ␣ ␣ A. the currency of the parent company. B. the currency of the host country. C. whichever currency the company chooses to declare as the functional currency. D. the currency in which cash flows, pricing, expenses, and financing are denominated.

C. the real cost of borrowing in capital markets.

The inflation rate determines: A. the capital structure of the firm. B. the growth rate of sales. C. the real cost of borrowing in capital markets. D. the equilibrium point.

B. the real price of borrowing in capital markets.

The inflation rate determines: ␣ ␣ A. a currency's strengthening. B. the real price of borrowing in capital markets. C. locations for outsourcing. D. import substitution regimes.

A. predict exchange rate movement.

The international Fisher effect says that interest rate differentials: ␣ ␣ A. predict exchange rate movement. B. can be used to determine purchasing power parity. C. are an example of the law of one price. D. illustrate Pareto optimality.

D. the expected change in their exchange rates.

The international Fisher effect says that the interest rate differentials in any two currencies reflect: ␣ ␣ A. the ratio of their inflation rates minus COL B. arbitrary differences in the two economies. C. PPP differences in the two economies. D. the expected change in their exchange rates.

B. what method to use for the translation, current rate or temporal.

The key issue related to translation exposure is: ␣ ␣ A. the local interest rates. B. what method to use for the translation, current rate or temporal. C. strategic planning. D. A and C.

D. established after several trials in which central bankers set rates incorrectly and speculators corrected . them in the markets, and it was formalized after the fact in the IMF's Jamaica Agreement.

The present floating exchange rate system was: ␣ ␣ A. designed by the IMF and implemented flawlessly in 1973. B. established by the major trading nations in 19721 after Nixon closed the gold window. C. implemented in tandem with a reintroduction of the gold standard. D. established after several trials in which central bankers set rates incorrectly and speculators corrected . them in the markets, and it was formalized after the fact in the IMF's Jamaica Agreement.

D. trending upward.

The price of gold since about 1200 A.D. has been: ␣ ␣ A. trending downward. B. flat, keeping its value. C. wildly fluctuating. D. trending upward.

B. raise the price of imports, to protect domestic goods.

The primary motivation of tariffs is to: ␣ A. raise government revenue at the cost of importers. B. raise the price of imports, to protect domestic goods. C. punish countries over political issues. D. encourage foreign consumption. E. none of the above.

D. A, B, and C.

The process of transferring value across borders is complex because it involves: ␣ ␣ A. currency exchange rates. B. restrictions on the movement of funds. C. differing tax systems. D. A, B, and C.

D. all of the above.

The reasons a government may nationalize a firm include: A. to extract more money from the firm. B. to increase the firm's profitability. C. to preserve jobs. D. all of the above. E. two of A, B, and C.

C. to preserve jobs.

The reasons a government may nationalize a firm include: A. to get government contracts. B. to promote the ideology of capitalism. C. to preserve jobs. D. all of the above. E. two of A, B, and C.

A. the efficient market approach, the fundamental approach, and the technical approach.

The three main approaches to exchange rate forecasting are: ␣ ␣ A. the efficient market approach, the fundamental approach, and the technical approach. B. the efficient market approach, the random walk hypothesis, and the pragmatic approach. C. the random walk hypothesis, the pragmatic approach, and the fundamental approach. D. none of the above.

A. VAT, income tax, and withholding tax.

The three major taxes governments use to generate revenue are: ␣ ␣ A. VAT, income tax, and withholding tax. B. sales tax, VAT, and income tax. C. property tax, VAT, and sales tax. D. income tax, property tax, and sales tax.

B. concentrate much more on CRA in making decisions about foreign activities.

The trend for firms in regard to country risk assessment (CRA) is to: A. avoid it as an added cost in competitive markets. B. concentrate much more on CRA in making decisions about foreign activities. C. use CRA in obviously dangerous locations, but only in those situations. D. all of the above. E. two of A, B, and C.

D. all goods and is indirect, collected from the value adder.

The value-added tax is levied on: ␣ ␣ A. luxury items and paid by the consumer. B. export items only and thus a direct tax. C. nonessential goods and paid by the consumer. D. all goods and is indirect, collected from the value adder.

B. It is a significant consideration.

What is the role of the home country in risk assessment? ␣ ␣ A. It has no role. B. It is a significant consideration. C. It is used initially, but then more micro issues become the focus of CRA. D. None of the above. E. Two of A, B, and C.

B. when transactions are made in foreign currencies and when foreign subsidiaries consolidate their results back to corporate financial reports.

There are two points at which operating in a foreign currency raises issues for accounting: ␣ A. when debt is incurred and when foreign payrolls are run. B. when transactions are made in foreign currencies and when foreign subsidiaries consolidate their results back to corporate financial reports. C. when the currency fluctuates and when the local inflation rate changes. D. when the interest and inflation rates change.

D. A and B.

Translation exposure would not occur with firms that: ␣ A. do not have foreign operations. B. operate in the same currency, their home market currency, everywhere. C. use their home market language in all foreign operations. D. A and B.

C. evade allocated quotas.

Transshipping is used to: ␣ ␣ A. reduce shipping costs, like consolidation. B. avoid import administration. C. evade allocated quotas. D. all of the above. E. two of A, B, and C.

A. France, Italy, and Japan.

These countries prefer debt to equity by large margins: A. France, Italy, and Japan. B. United Kingdom, Italy, and United States. C. United States, Canada, and United Kingdom. D. Japan, United States, and United Kingdom.

B. the International Convention for the Protection of Industrial Property.

Trade names are protected under: ␣ A. national laws in all UN member countries. B. the International Convention for the Protection of Industrial Property. C. many local laws in most countries, so illegal trademark use is a local issue. D. long-standing convention, but no legal agreements. E. the UN's Office of Harmonization.

D. two of the above.

Trade obstacles are considered to be legal forces because: ␣ ␣ A. they often are based on legislation. B. their compliance is costly to the firm and the consumer. C. they are imposed by a formal institution and noncompliance can carry punishment. D. two of the above. E. all of A, B, and C.

E. all of A, B, and C.

Trademarks can be: ␣ ␣ A. a color. B. a sound. C. a design. D. two of the above. E. all of A, B, and C.

B. the firm has transactions in a foreign currency.

Transaction exposure occurs when: ␣ ␣ A. the value of the currency changes between when the asset or liability is recorded and when results are consolidated. B. the firm has transactions in a foreign currency. C. the firm's strategic projections use a currency value that has changed. D. the recorded value of an asset or liability changes between its being reported and its consolidation.

B. moving profits and blocked royalties from high-tax to low-tax subsidiaries.

Transfer pricing may serve as a vehicle for: ␣ A. moving blocked goods from one country to another. B. moving profits and blocked royalties from high-tax to low-tax subsidiaries. C. manager motivation. D. A, B, and C.

B. to all firms, including extraterritorially.

U.S. antitrust law is applied: ␣ ␣ A. to all firms based in the United States, but not others. B. to all firms, including extraterritorially. C. only to U.S.-owned firms with assets in the United States. D. to all firms, as long as they have assets in the United States. E. all of the above.

A. may involve civil and criminal penalties.

Unlike antitrust or competition proceedings in the EU, in the United States such proceedings: ␣ ␣ A. may involve civil and criminal penalties. B. are heard at the local level. C. involve the top management team. D. are headed by a three-judge panel. E. two of the above.

B. exporting country's government.

Unlike quotas, voluntary export restraints (VERs) are imposed by the: ␣ ␣ A. importing country's government. B. exporting country's government. C. either the importing or exporting country's government; what matters is that they are voluntary. D. the importing company. E. none of the above.

B. will differ from U.S. law and must be understood.

Usually, it is reasonable to assume that foreign law: ␣ ␣ A. will be similar to U.S. law. B. will differ from U.S. law and must be understood. C. won't matter because you and your trading partner will agree to arbitrate. D. will be biased against the foreigner. E. will vary but that U.S. law will take precedence.

D. UN and WTO agencies or programs that focus on IP.

WIPO and TRIPS represent: ␣ A. patent harmonization agreements in Southeast Asia and the EU, respectively. B. anticounterfeiting agreements in Korea and North America, respectively. C. WTO and UN agreements on IP. D. UN and WTO agencies or programs that focus on IP. E. international governments during litigation at the World Court.

A. UN agency that administers intellectual property treaties and advises countries on intellectual property- related administrative issues.

WIPO is a: A. UN agency that administers intellectual property treaties and advises countries on intellectual property- related administrative issues. B. WTO group opposed to patent extension and pro-generic. C. part of the Club of Rome that lobbies for longer patent periods. D. a research arm of the fuel cartel that has been advocating longer patent protection for biofuel processing systems. E. creation of the Paris Union.

B. A subsidiary with the parent company having at least 50 percent ownership and control

What is a controlled foreign corporation? ␣ ␣ A. A foreign company with one major stockholder in a foreign country B. A subsidiary with the parent company having at least 50 percent ownership and control C. An FDI in which foreign owners own the corporation fully D. A centralized structure for foreign ownership

B. its simplicity.

What is appealing about the gold standard is: ␣ ␣ A. everyone loves gold. B. its simplicity. C. its transportability. D. its carrying costs.

B. VAT is indirect; income tax is direct.

What is the essential difference between an income tax and a VAT? ␣ A. VAT is European; income tax is American. B. VAT is indirect; income tax is direct. C. VAT is greater than income tax. D. VAT is reimbursable; income tax is not.

D. To reduce transaction costs and increase efficient use of funds

What is the purpose of multilateral netting? ␣ A. To increase market penetration B. To increase levels of standardization C. To decrease inflation risk D. To reduce transaction costs and increase efficient use of funds

D. all of the above.

Zimbabwe is an example of: ␣ ␣ A. a richly endowed country that has suffered because of government instability. B. a government that expropriated private property, that is, nationalized it, and then redistributed it. C. a country whose leadership stole the 2008 election. D. all of the above. E. two of A, B, and C.