International Management Final

The purpose of capital budgeting is to defer payment for goods and services received from the parent firm.

False

Which of the following is an advantage of franchising to the franchisee?

Use of a well-known, recognizable brand name

In a master franchising agreement, the master franchisee has the right to subfranchise to other independent businesses and thus assume the role of the local franchisor.

True

Which of the following is characteristic of cross-border contractual relationships?

When compared to FDI, they are less susceptible to volatility and risk and tend to bring both parties a predictable stream of revenue.

Turnkey contracting is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.

True

Economic exposure results from exchange-rate fluctuations that affect ________.

product pricing

Global equity market refers to ________.

stock exchanges worldwide where investors and firms meet to buy and sell shares of stock

Multilateral netting would enable an MNE with numerous subsidiaries to ________.

consolidate intracorporate cash transfers and reduce transaction fees

Which of the following is an example of franchising?

A U.S-based quick-service restaurant gives rights to another business to use its entire business system in exchange for compensation and royalties.

Which of the following is provided by the licensor in a licensing agreement?

A combination of intellectual property and technical information and assistance

Which of the following statements is true of international leasing?

A major advantage for the focal firm (the lessor) is the ability to gain quick access to target markets, while putting assets to use in earning profits.

Which of the following is an example of licensing?

An American electronics firm has given the right to use a new process for manufacturing eBook readers to an electronics manufacturer in Canada.

Equity financing comes from either of two sources: (1) loans from banks and other financial intermediaries, or (2) the sale of corporate bonds to individuals or institutions.

False

Which of the following statements is true of the global money market?

It refers to the collective financial markets worldwide where firms and governments raise short-term financing.

________ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset.

Royalty

Which of the following terms is used to refer to compensation paid to the owner of intellectual property?

Royalty payment

Transaction exposure occurs when ________ are denominated in foreign currencies.

accounts receivable

Cross-licensing often occurs in dynamic industries such as semiconductor and chemical industries in order to ________.

avoid research duplication and build on each other's innovations

Debt financing comes from ________.

loans from financial intermediaries

Debt financing can add value to a firm because ________.

some governments allow firms to deduct interest payments from their taxable income.