EXAM 2

Which of the following has the greatest amount of foreign-exchange reserves in the world? A) China B) Ireland C) Russia D) Taiwan

A) China

The central bank in the United States is the ________. A) Federal Reserve System B) U.S. Exchange Reserve C) Board of Governors D) U.S. Treasury

A) Federal Reserve System

Which of the following is most likely a true statement about using the Internet in supply chain management? A) The Internet is universally accessible. B) The Internet slows internal processes in a company. C) The Internet minimizes efficiency gains to a company's suppliers. D) The Internet prevents a deeper level of collaboration and communication.

A) The Internet is universally accessible.

Executives at Wilson Enterprises need to determine how to leverage and improve the firm's existing competencies on a global basis. What are the two most basic questions that they must answer? A) Which markets should we serve and where should production be located to serve those markets? B) What are the short-term competitive advantages of the project and what is the return on investment? C) What is the total investment required and what are the managerial resources needed to supervise the investment? D) What is the availability of land and what is the cost of labor?

A) Which markets should we serve and where should production be located to serve those markets?

The U.S. dollar is most likely traded widely because it is ________. A) a reserve currency held by many central banks B) one of the oldest and most stable currencies in the world C) monitored by the Bank of International Settlements and the U.S. Federal Reserve D) based on prices of the NYSE, which is the world's largest foreign-exchange center

A) a reserve currency held by many central banks

The primary result of the Jamaica Agreement was to ________. A) allow greater exchange-rate flexibility B) set austerity measures for debt control C) establish a system based on par values D) implement fixed exchange rates

A) allow greater exchange-rate flexibility

Which of the following BEST describes the special drawing right? A) an international reserve asset created to supplement members' existing reserve assets B) the official currency for international trade established by the World Bank C) a substitute for the fixed value of gold as determined by currency rates D) a contribution made by countries to join the IMF

A) an international reserve asset created to supplement members' existing reserve assets

In foreign-exchange markets, reporting dealers are ________. A) financial institutions that actively participate in local and global foreign-exchange markets B) located primarily in New York City since U.S. dollars are the most widely traded currency C) controlled by the Bank for International Settlements located in Switzerland D) hedge funds and pension funds monitored by the World Bank

A) financial institutions that actively participate in local and global foreign-exchange markets

Which term refers to money denominated in the currency of another nation or group of nations? A) foreign exchange B) foreign subsidy C) export tariff D) quota

A) foreign exchange

If a foreign currency is quoted in American terms (the direct quote) and the forward rate is greater than the spot rate, the foreign currency is selling at a ________. A) forward premium B) forward discount C) backward discount D) discounted premium

A) forward premium

What are the three levels of quality standards? A) general, industry-specific, and company B) general, international, and domestic C) employee, company, and customer D) company, international, and industry-specific

A) general, industry-specific, and company

An element of total quality management (TQM) that focuses on continuous improvement by identifying problems and enlisting employees to help eliminate them is known as ________. A) kaizen B) Six Sigma C) kanban D) acceptable quality level (AQL)

A) kaizen

Quality is defined as ________. A) meeting or exceeding the expectations of the customer B) meeting the everyday low price expected by the customer C) meeting international quality standards, such as ISO 9000 D) meeting internal quality standards

A) meeting or exceeding the expectations of the customer

Rather than an inspirational statement, a(n) ________ statement is meant to motivate people to act and specify the objectives that the firm needs to attain. A) mission B) vision C) expectation D) strategy

A) mission

A form of currency control that often applies to tourism because it limits the amount of currency that someone can get from the bank for foreign travel is known as ________. A) multiple exchange rates B) confidence C) quantity controls D) hard currency

A) multiple exchange rates

When GM moved some of its manufacturing operations to Mexico to be closer to the American market, they were doing what's known as ________. A) nearshoring B) cost-benefit analysis C) offshoring D) coordination

A) nearshoring

A city or country that provides large amounts of funds in currencies other than its own is a(n) ________. A) offshore financial center B) ADR facilitator C) interbank market D) currency regulator

A) offshore financial center

Which of the following is a characteristic of most offshore financial centers? A) political stability B) services for residents C) accounting scandals D) a lack of legal expertise

A) political stability

Elison Enterprises is planning international geographic expansion. A manager at Elison has been given the task of scanning for locations primarily to ________. A) reduce the number of options available to a manageable number for further detailed analysis B) assure the compatibility between the mode of corporate operation and the country C) assure that all countries within a region have similar investment climates D) decide whether to use a concentration or a diversification strategy

A) reduce the number of options available to a manageable number for further detailed analysis

The major objective of the European Central Bank is to ________. A) set monetary policy for EU countries that adopt the euro B) ensure that EU interest rates are equal to U.S. rates C) control taxes as a means of monitoring EU debt D) reduce spending by EU countries

A) set monetary policy for EU countries that adopt the euro

Why is management of international human resources more difficult than directing human resources at the domestic level? A) the challenge of adjusting for political, cultural, legal, and economic differences between countries B) the challenge posed by managers in other countries that aim to achieve global objectives for the company no matter the costs imposed on national objectives C) the greater similarity among foreign subsidiaries than among domestic subsidiaries in terms of dependence on headquarters for resources D) the complications posed by dealing with competing agendas from different labor unions in different countries

A) the challenge of adjusting for political, cultural, legal, and economic differences between countries

Growing demand for expatriates stems from which of the following trends? A) the emergence of developing countries as high-growth markets B) the resurgence of developed countries as high-growth markets C) the reduced need for localized expatriate assignments D) the longer-term assignments created in response to the global credit crisis

A) the emergence of developing countries as high-growth markets

The United States should NOT be subject to IFRS for all of the following reasons EXCEPT ________. A) the United States should have the most stringent reporting standards B) GAAP is less comprehensive than IFRS C) retraining would be necessary for publicly traded firms D) there is more than one set of IFRS

B) GAAP is less comprehensive than IFRS

Executives at a U.S. firm are debating whether to start a new operation in Russia or acquire an existing one. Which of the following factors best supports a decision to start up a new operation in Russia? A) The Russian government places restrictions on the outward transfer of foreign capital. B) Labor relations at existing Russian firms are poor and difficult to change. C) Russia's currency is weak and stock market prices are significantly depressed. D) Existing companies have goodwill and positive brand recognition in Russia.

B) Labor relations at existing Russian firms are poor and difficult to change.

Which legislation has forced companies to establish more stringent internal controls over their financial reporting? A) Davis-Bacon Act B) Sarbanes-Oxley Act C) Norris-LaGuardia Act D) McCarran-Ferguson Act

B) Sarbanes-Oxley Act

Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union? A) The annual government budget must be no greater than 3% of GDP. B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries. C) The annual government budget deficit could be no greater than 60% of GDP. D) The annual inflation rate must remain within 5.5% of the four best-performing EU countries.

B) The annual inflation rate must remain within 1.5% of the three best-performing EU countries.

Before the strong emphasis on zero defects, U.S. companies operated under the premise of ________, which allowed a level of poor quality with the assumption that service warranties and repair facilities would deal with product defects. A) Six Sigma B) acceptable quality level C) just-in-time inventory management (JIT) D) ISO 9000

B) acceptable quality level

Stella, who works and lives in San Diego, wants to send money to her mother who lives in a small village south of Puerto Vallarta, Mexico. Stella typically uses Western Union to handle the transaction. Which of the following is the most likely reason that Stella uses Western Union? A) no fees B) convenience C) low exchange rates D) cross rate capability

B) convenience

Albert, an employee at Morgan Stanley, has been given the task of handling the foreign exchange for a customer who is moving from Brazil to Switzerland in one week. Which of the following should Albert most likely use when exchanging the client's Brazilian reais for Swiss francs? A) spot rate B) cross rate C) currency option D) current U.S. rate

B) cross rate

Amazon relies on the Internet to join together suppliers with companies and companies with customers. Amazon is most likely using ________. A) value-added networks B) e-commerce C) electronic data interchange D) private technology exchange

B) e-commerce

Which of the following was NOT a result of the Smithsonian Agreement? A) revaluation of currencies other than the dollar against gold B) establishment of par values the quota system C) devaluation of the dollar against gold D) widening of exchange-rate flexibility

B) establishment of par values the quota system

The relationship between the value of the Brazilian and Chinese currencies is known as the ________. A) stock price B) exchange rate C) foreign-exchange market D) purchasing power parity

B) exchange rate

If Toranaga-san, who works for a Japanese trading company that operates in Japanese yen, wanted to purchase Spanish castanets from a company in Barcelona and needed euros to complete the transaction, he would use the ________ to gain access to spot euros. A) stock market B) foreign-exchange market C) New York Stock Exchange D) international export market

B) foreign-exchange market

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate, known as the ________. A) spot rate B) forward rate C) option rate D) reverse transaction rate

B) forward rate

Fully convertible currencies are also called ________. A) external currencies B) hard currencies C) unlimited currencies D) soft currencies

B) hard currencies

Ongoing research confirms that MNEs with superior ________ practices correlate to high productivity, value creation, and a competitive advantage. A) human resource B) human capital C) expatriate D) parent-country

B) human capital

The purchasing power parity theory claims that a change in relative ________ between two countries must cause a change in ________ in order to keep the prices of goods in two countries fairly similar. A) exchange rates; inflation B) inflation; exchange rates C) interest rates; inflation D) interest rates; exchange rates

B) inflation; exchange rates

Mona, a native of India, is employed by IBM in the firm's facility in New Delhi. Mona is best described as a(n) ________. A) expatriate B) local C) third-country national D) home-country national

B) local

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________. A) quota B) par value C) gold standard D) nominal interest rate

B) par value

A black market exists when ________. A) a country closely monitors and adjusts the foreign-exchange rate B) people pay more for hard currency than the official rate C) a country is running a budget surplus D) a country is experiencing a recession

B) people pay more for hard currency than the official rate

A company's location should be flexible enough to ________. A) implement concentration strategies instead of diversification strategies B) respond to new opportunities and withdraw from less profitable ones C) import from anywhere in the world to a single production location D) export anywhere in the world from a single production location

B) respond to new opportunities and withdraw from less profitable ones

Which of the following is a characteristic of India that discourages MNE investment? A) slow market growth B) restrictive labor laws C) poor communication infrastructure D) government controlled market

B) restrictive labor laws

HRM refers to the range of activities that a company, whether solely domestic or thoroughly global, undertakes to ________. A) direct its strategy B) staff its operations C) improve its responsiveness D) integrate business functions

B) staff its operations

Which EU country has NOT adopted the euro? A) Germany B) France C) Denmark D) Greece

C) Denmark

________ is a form of locking the value of a country's currency onto another currency. A) Managed floating B) Monetarization C) Dollarization D) Floating

C) Dollarization

Giga-Mart has an IT system that links the firm's suppliers, manufacturers, customers, and intermediaries. Giga-Mart most likely has a(n) ________, A) TQM (total quality management) B) JIT (just-in-time) C) EDI (electronic data interchange) D) ERP (enterprise resource planning)

C) EDI (electronic data interchange)

In which of the following transactions is one currency swapped for another on one date and then swapped back on a future date? A) reverse transaction B) spot transaction C) FX swap D) outright forward transaction

C) FX swap

________ refers to the activities that an organization carries out to put the right person into the right job in the right place at the right time for the right salary. A) Work force analysis B) Staff development C) Human resource management D) Leadership planning

C) Human resource management

Why is London most likely the top market for trading foreign exchange? A) The British pound is the world's top trading currency. B) Most multinational firms are headquartered in London. C) London is uniquely positioned geographically in terms of time zones. D) British traders have always been the most sophisticated in the world.

C) London is uniquely positioned geographically in terms of time zones.

Which of the following most accurately compares the techniques of scanning versus detailed analysis of countries? A) Scanning is used for planning and detailed analysis is used for control. B) Detailed analysis is used to consider countries overlooked in the scanning process. C) Scanning considers a large number of countries so that only the most promising ones undergo a detailed analysis. D) Scanning compares one country to another, whereas detailed analysis compares regions within a single country.

C) Scanning considers a large number of countries so that only the most promising ones undergo a detailed analysis.

________ is the framework that managers apply to determine the competitive moves and business approaches that run the company. A) Competition B) Growth C) Strategy D) Vision

C) Strategy

The ________ is the currency most widely used as a reserve asset. A) euro B) Japanese yen C) U.S. dollar D) British pound

C) U.S. dollar

Historically, what is the top remittance-receiving country in Latin America? A) Brazil B) Mexico C) Uruguay D) Venezuela

C) Uruguay

Which of the following would have the LEAST influence on price setting in the foreign-exchange market? A) Morgan Stanley B) Deutsche Bank C) Western Union D) JP Morgan

C) Western Union

A company that makes a foreign investment largely to acquire knowledge is most likely to use ________ as a means of expansion. A) a greenfield investment B) internalization C) an acquisition D) a licensing agreement

C) an acquisition

Home-country nationals are ________. A) used a great deal abroad by polycentric companies B) citizens of the countries in which they are working C) citizens of the country where the company is headquartered D) noncitizens of the countries in which they are working

C) citizens of the country where the company is headquartered

Which of the following handles the majority of all foreign-exchange activities? A) multinational enterprises B) commodities exchanges C) commercial banks D) regional banks

C) commercial banks

A greenfield investment is another name for a company's decision to ________. A) acquire an interest in an existing foreign operation B) implement sustainable marketing practices C) construct a new facility in a foreign market D) build a facility for a local company

C) construct a new facility in a foreign market

Governments use a multiple exchange rate system to ________. A) increase their budget surplus B) reduce exports C) control foreign-exchange convertibility D) limit deposit requirements

C) control foreign-exchange convertibility

The Japanese approach to quality is total quality management (TQM), which stresses which of the following principles? A) employee involvement, commitment to international standards, and customer satisfaction B) customer satisfaction, continuous improvements, and warranties C) customer satisfaction, employee involvement, and continuous improvements D) employee involvement, continuous improvements, and commitment to international quality standards

C) customer satisfaction, employee involvement, and continuous improvements

A(n) ________ is the price of a currency. A) tariff B) quota C) exchange rate D) subsidy

C) exchange rate

A foreign-exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date as specified in a standardized contract to all participants in the specified market is known as a(n) ________. A) spot contract B) forward contract C) futures contract D) equity currency contract

C) futures contract

Hard currencies are usually ________. A) not fully convertible B) undesirable assets C) highly liquid D) unstable

C) highly liquid

If inflation in the United States is relatively higher than inflation in Japan, and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar, it should most likely ________. A) allow its currency to rise against the dollar B) allow its currency to fall against the dollar C) increase the supply of yen in the market D) decrease the supply of yen in the market

C) increase the supply of yen in the market

Which of the following problems with the euro most likely worsened the financial crisis in Greece? A) excessive flexibility with interest rates B) cultural disagreements on labor reform C) lack of uniform fiscal regulation standards D) unclear policies of the European Central Bank

C) lack of uniform fiscal regulation standards

Which of the following is a characteristic of most offshore financial centers? A) strict domestic regulation B) minimal banking activities C) large foreign currency markets D) nominal or non-existent tax rates

C) large foreign currency markets

Deciding whether to establish production facilities in many different countries or in one centralized location is part of the ________. A) cultural matrix B) Six Sigma process C) manufacturing configuration D) innovation matrix

C) manufacturing configuration

When a company has improved its operations efficiency so much that it decide to move back to its home country, this is called ________. A) nearshoring B) offshoring C) onshoring D) outsourcing

C) onshoring

International managers most likely need to understand how to evaluate international geographic alternatives because ________. A) they usually have a surplus of resources and need to take advantage of all opportunities B) many regional trading groups prohibit companies from outside of the trading group from manufacturing in more than one member country C) the commitment of resources to one locale may require forgoing projects in other locales D) decreased worldwide transportation costs and increased trade liberalization now allow companies to serve worldwide markets from a single production location

C) the commitment of resources to one locale may require forgoing projects in other locales

) A(n) ________ outlines a firm's ultimate goal and its guiding values in broad terms. A) mission B) strategy C) vision D) imperative

C) vision

The value of the SDR is currently based on the ________. A) euro B) U.S. dollar C) weighted average of four currencies D) weighted average of six currencies

C) weighted average of four currencies

Which of the following countries is an important offshore financial center? A) Turks and Caicos B) Mexico C) South Korea D) Bermuda

D) Bermuda

An example of a third-country national is a ________. A) dual citizen (Canadian and U.S. citizenship) working for a Mexican company in Mexico B) Canadian citizen working for a U.S. company in Canada C) U.S. citizen working for a U.S. company in Canada D) Canadian citizen working for a U.S. company in Mexico

D) Canadian citizen working for a U.S. company in Mexico

Which of the following is NOT one of the top four locations for trading foreign exchange? A) London B) New York C) Tokyo D) Hong Kong

D) Hong Kong

What is the main information-related challenge in global supply chain management? A) The Internet is growing too quickly in emerging markets. B) Few countries are technologically advanced. C) The industrial equipment and food/agriculture industries use e-commerce more than industries such as defense and motor vehicles. D) Many emerging market networks cannot be managed through the Internet because of the lack of technology.

D) Many emerging market networks cannot be managed through the Internet because of the lack of technology.

Fortis Manufacturing Systems uses a highly focused system of quality control that takes a statistical approach and scrutinizes the firm's entire production system. Fortis most likely uses ________. A) total quality management B) acceptable quality levels C) just-in-time processes D) Six Sigma processes

D) Six Sigma processes

Which type of exchange rate arrangement is based on supply and demand? A) soft peg B) hard peg C) crawling D) floating

D) floating

If a foreign currency is quoted in American terms (the direct quote) and the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a ________. A) forward premium B) backward discount C) backward premium D) forward discount

D) forward discount

Which of the following trends has LEAST likely led to the increased demand for expatriate talent? A) market developments B) technology changes C) globalization D) nationalism

D) nationalism

All of the following are ways to control currency convertibility EXCEPT ________. A) import licenses B) multiple exchange rates C) import deposits D) purchasing power parity

D) purchasing power parity

In order to join the IMF, a country must contribute a certain sum of money, called a ________. A) special drawing right B) trade balance C) monetary reserve D) quota

D) quota

Which of the following is the largest source of foreign-exchange income in Mexico? A) FDI B) tourism C) foreign aid D) remittance income

D) remittance income

In the spot market, the ________ is the difference between the bid and offer rates and is the trader's profit margin. A) bid B) offer C) cross rate D) spread

D) spread

The industry organization (IO) paradigm reports that, on average, the BEST predictor of firm strategy is the ________. A) company's stockpile of assets, skills, and capabilities B) aggressiveness of a company's marketing objectives C) link between a company's products and processes D) structure of the industry in which it competes

D) structure of the industry in which it competes

Because many regional trading groups prohibit companies from producing in more than one member country, companies need to understand how to evaluate international geographic alternatives. T/F

F

The IMF's primary role is to identify exchange rate regimes. T/F

F

The SDR is equal in value to the U.S. dollar. T/F

F

The IMF uses the quota system to determine how much a country may borrow from the Fund. T/F

T