Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The commonly accepted goal of the MNC is to:
a. | maximize short-term earnings. | b. | maximize shareholder
wealth. | c. | minimize risk. | d. | A and C. | e. | maximize
international sales. |
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2.
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Which of the following is not a form of corporate control that could reduce
agency problems for an MNC?
a. | stock options | b. | hostile takeover threat | c. | investor
monitoring | d. | all of the above are forms of corporate control that could reduce agency problems for
an MNC |
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3.
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Which of the following theories suggests that firms seek to penetrate new
markets over time?
a. | theory of comparative advantage | c. | product cycle
theory | b. | imperfect markets theory | d. | none of the above |
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4.
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According to the text, products and services are generally becoming _______
standardized across countries, which tends to _______ the globalization of business.
a. | more; encourage | c. | less; discourage | b. | more; discourage | d. | less; encourage |
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5.
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The Single European Act of 1987:
a. | reduced competition in most industries | c. | reduced efficiency in most
industries | b. | eliminated competition in many industries | d. | increased competition in most
industries |
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6.
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_____________ are most commonly classified as a direct foreign
investment.
a. | Foreign acquisitions | c. | Licensing agreements | b. | Purchases of international
stocks | d. | Exporting
transactions |
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7.
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Which of the following is not mentioned in the text as a constraint interfering
with the MNC goal?
a. | economic constraints | c. | regulatory constraints | b. | environmental
constraints | d. | ethical
constraints |
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8.
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Which of the following is not a way in which agency problems can be reduced
through corporate control?
a. | executive compensation | c. | acquisition of a foreign subsidiary | b. | threat of hostile
takeover | d. | monitoring by
large shareholders |
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True/False
Indicate whether the
statement is true or false.
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9.
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Licensing is the process by which a firm provides its technology (copyrights,
patents, trademarks, or trade names) in exchange for fees or some other specified benefits.
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10.
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Due to the larger opportunity set of funding sources around the world from which
an MNC can choose, an MNC may be able to obtain capital at a lower cost than a purely domestic
firm.
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11.
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One of the most prevalent factors conflicting with the realization of the goal
of an MNC is the existence of agency problems.
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12.
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A centralized management style for an MNC results in relatively high agency
costs.
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