International Financial Management MCQ

International Financial Management MCQ

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  • 17th Apr, 2021

International Financial Management MCQ

Following are mostly asked International financial management MCQ test that are designed for professionals like you to crack you interviews. You can take this International financial management online test before appearing to you real interview. This International financial management quiz there are around 30+ multiple choice questions on International financial management with four options.

1) The commonly accepted goal of the MNC is to:

  • A. maximize shareholder wealth
  • B. maximize short-term earnings
  • C. maximize international sales
  • D. minimize risk

2) Which of the following is not a form of corporate control that could reduce agency problems for an MNC?

  • A. hostile takeover threat
  • B. stock options
  • C. investor monitoring
  • D. All of these

3) Which of the following theories suggests that firms seek to penetrate new markets over time?

  • A. product cycle theory
  • B. imperfect markets theory
  • C. theory of comparative advantage
  • D. None

4) 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:

  • A. True
  • B. False

5) According to the text, products and services are generally becoming .......... standardized across countries, which tends to ........... the globalization of business:

  • A. less; discourage
  • B. less; encourage
  • C. more; encourage
  • D. more; discourage

6) The Single European Act of 1987:

  • A. reduced efficiency in most industries
  • B. increased competition in most industries
  • C. reduced competition in most industries
  • D. eliminated competition in many industries

7) .......... are most commonly classified as a direct foreign investment:

  • A. Licensing agreements
  • B. Exporting transactions
  • C. Purchases of international stocks
  • D. Foreign acquisitions

8) 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:

  • A. True
  • B. False

9) A centralized management style for an MNC results in relatively high agency costs:

  • A. True
  • B. False

10) Which of the following is true?

  • A. Some countries may prohibit forms of leading and lagging
  • B. Some countries may prohibit netting
  • C. Both A & B
  • D. None of these

11) The most useful measure of an MNC's liquidity is its:

  • A. amount of securities held as investments
  • B. potential access to funds
  • C. cash balance
  • D. political risk rating

12) The international Fisher effect suggests that:

  • A. the effective yield on short-term securities of high inflation countries is greater than the yield on short-term domestic securities
  • B. if foreign tax rates equal domestic tax rates, the exchange rates of different currencies will change by the same degree
  • C. the effective yield on short-term foreign securities should, on average, equal the yield on short-term domestic securities
  • D. if domestic income grows faster than foreign income, the effective yield on short-term foreign securities is higher than short-term domestic securities

13) Recently, the UK experienced an annual balance of trade representing a ...........

  • A. deficit
  • B. large surplus (exceeding £100 billion)
  • C. small surplus
  • D. level of zero

14) An increase in the current account deficit will place .......... pressure on the home currency value, other things equal.

  • A. upward or downward (depending on the size of the deficit)
  • B. no
  • C. downward
  • D. upward

15) Which of the following would likely have the least direct influence on a country's current account?

  • A. national income
  • B. a tax on income earned from foreign stocks
  • C. inflation
  • D. exchange rates

16) The North American Free Trade Agreement (NAFTA) increased restrictions on:

  • A. direct foreign investment in Mexico by U.S. firms
  • B. trade between Canada and Mexico
  • C. trade between Canada and the U.S
  • D. none

17) The primary component of the current account is the:

  • A. unilateral transfers
  • B. balance of trade
  • C. balance of capital market flows
  • D. balance of money market flows

18) A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

  • A. lower trade restrictions around the world
  • B. uniform worker health laws
  • C. uniform environmental standards around the world
  • D. increased trade restrictions outside of North America

19) The World Bank's Multilateral Investment Guarantee Agency (MIGA):

  • A. provides loans to developing countries
  • B. offers various forms of import insurance
  • C. offers various forms of political risk insurance
  • D. offers various forms of exchange rate risk insurance

20) A tariff is a maximum limit on imports:

  • A. True
  • B. False

21) The Bank of England may use a stimulative monetary policy with least concern about causing inflation if the pound's value is expected to:

  • A. weaken
  • B. remain stable
  • C. strengthen
  • D. none of the above will have an impact on inflation

22) As foreign exchange activity has grown:

  • A. central bank intervention has become less effective
  • B. central bank intervention has become more effective
  • C. central bank intervention has become more frequent
  • D. None of these

23) Which of the following are examples of currency controls?

  • A. prohibition of remittance of funds
  • B. import restrictions
  • C. ceilings on granting credit to foreign firms
  • D. All of these

24) As opposed to transaction exposure, managing economic exposure involves developing a ......... solution:

  • A. immediate
  • B. short-term
  • C. long-term
  • D. All of these

25) An effective way for an MNC to assess its economic exposure is to look at the firm's:

  • A. income statement
  • B. retained earnings
  • C. level of stockholder's equity
  • D. liquidity

26) If a UK parent is setting up a French subsidiary, and funds from the subsidiary will be periodically sent to the parent, the ideal situation from the parent's perspective is a ____ after the subsidiary is established:

  • A. stable euro
  • B. weak euro
  • C. strengthening euro
  • D. both b and c

27) Assume the parent of a UK-based MNC plans to completely finance the establishment of its US subsidiary with existing funds from retained earnings in UK operations. According to the text, the discount rate used in the capital budgeting analysis on this project should be most affected by:

  • A. the cost of borrowing funds in the U.S
  • B. the parent's cost of capital
  • C. the cost of borrowing funds in the U.K
  • D. Both A and C

28) A firm considers an exporting project and will invoice the exports in pounds. The expected cash flows in pounds would be more difficult if the currency of the foreign country is.........

  • A. volatile
  • B. fixed
  • C. stable
  • D. None

29) Other things being equal, firms from a particular home country will engage in more international acquisitions if they expect foreign currencies to ............. against their home currency, and if their cost of capital is relatively...........

  • A. depreciate; high
  • B. depreciate; low
  • C. appreciate; high
  • D. appreciate; low

30) The impact of blocked funds on the net present value of a foreign project will be greater if interest rates are ............... in the host country and there are .......... investment opportunities in the host country:

  • A. very low; limited
  • B. very low; numerous
  • C. very high; limited
  • D. very high; numerous

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