Question 1

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.

Accepted Answer

The twin agency problems are caused by corporate insiders (such as executives and board members) acting in their own interests rather than those of the firm, and rulers of sovereign states also acting in their own self-interest to protect their country's economy and political stability. These conflicts can limit financial globalization by creating barriers and restrictions on international investments and transactions. Attorneys and unsavory customs officials may also contribute to these issues, but they are not the main causes of the twin agency problems.

Question 2

Today it is widely assumed that there are NO LIMITS to financial globalization.

Accepted Answer

While many believe in the benefits of financial globalization, there is a growing recognition of its limitations and potential negative consequences, leading to increasing calls for regulation and reform.

Question 3

The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.

Accepted Answer

The statement suggests that the growth of insiders' influence and self-enrichment is negatively impacting the growth of financial globalization.

Question 4

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:

Accepted Answer

The phase referred to in the question is known as the international trade phase, where countries engage in the exchange of goods and services across borders through imports and exports. The other options (domestic phase, multinational phase, and import-export banking phase) do not accurately describe this particular phase of globalization.

Question 5

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.

Accepted Answer

In the domestic stage of globalization, a firm typically only operates in its domestic market and therefore all financial transactions are conducted in its domestic currency.

Question 6

The authors describe a process for development of a MNE that begins with a purely domestic phase, followed by the multinational phase, and topping out with the international trade phase.

Accepted Answer

The statement describes a process in reverse order. The correct process for development of a MNE typically begins with the international trade phase, followed by the multinational phase, and then finally a purely domestic phase.

Question 7

A firm in the International Trade Phase of Globalization:

Accepted Answer

A firm in the International Trade Phase of Globalization bears direct foreign exchange risk, meaning they are exposed to fluctuations in exchange rates when making payments or receiving receipts in foreign currency units. Options A and B do not accurately describe the firm's approach to foreign currency transactions.

Question 8

The authors describe the multinational phase of globalization for a firm as one characterized by the:

Accepted Answer

The multinational phase of globalization for a firm is characterized by the ownership of assets and enterprises in foreign countries, indicating a deeper level of international business involvement than merely trading or potential competition.

Question 9

The authors argue that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance.

Accepted Answer

The statement says that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance, which implies that this is a true statement.

Question 10

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

Accepted Answer

The authors did not mention foreign consumer method of payment preferences as an increase in the demands of financial management services due to increased globalization by the firm. The other options (evaluating the credit quality of foreign buyers and sellers, credit risk management, and evaluating foreign exchange risk) were all mentioned as increased demands.

Question 11

Describe the structural and managerial changes and challenges experienced by a firm as it moves its operations from domestic to global (globalization process).

Accepted Answer

The answer of Describe the structural and managerial changes and...

Question 12

Typically, a "greenfield" investment abroad is considered an investment having a greater foreign presence than a joint venture with a foreign firm.

Accepted Answer

A greenfield investment refers to the establishment of a new business or facility in a foreign country, while a joint venture involves partnering with a foreign company to create a new business entity. As such, a greenfield investment usually involves a greater foreign presence as the company is starting operations from scratch in a new market.

Question 13

The objectives and responsibilities of the modern multinational have grown significantly more complex in the twenty-first century. Develop and argument as to why this is the case.

Accepted Answer

The answer of The objectives and responsibilities of the modern...

Quiz 1: Multinational Financial Management: Opportunities and Challenges