Objective type question on currency exchange rates

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Reference no: EM1312652

Objective type question on currency exchange rates and foreign subsidiaries.

1) The price that an acquiring company must pay for the acquired company is:

A) Book value

B) Market value

C) A higher price than market value

D) None of the above

2) Currency exchange rates tend to vary inversely with their ____________.

A) Interest rates

B) Cross rate

C) Purchasing power

D) Economic power

3) A fully owned foreign subsidiary is a form of MNC in which:

A) The MNC owns and operates the firm by itself.

B) The MNC has a partner in the foreign country.

C) The foreign government is cooperative.

D) None of the above

4) Combined leverage is the percentage change in relationship between sales and ____________.

A) Operating income

B) Operating leverage

C) Earnings per share

D) Breakeven point

5) If you win the lottery and you choose to have your proceeds distributed to you over a twenty-year time period, which calculation would you use to calculate the worth of those proceeds to you today?

A) Future value of a lump sum

B) Future value of an annuity

C) Present value of a lump sum

D) Present value of an annuity

6) When an MNC cannot produce an actual product in a foreign subsidiary due to political restrictions, it can export technology and knowledge through:

A) An exporter

B) A joint venture

C) An importer

D) A licensing agreement

7) Which of the following kinds of mergers lead to diversification benefits?

A) vertical

B) Conglomerate

C) horizontal

D) None of the above

Reference no: EM1312652

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