The North American Free Trade Agreement is an example of A) a beggar-thy-neighbor trade policy. B) a preferential trade arrangement. C) a multinational quota system. D) a general agreement on tariffs and trade. ANSWER B
Date: September 9th, 2020
A firm must spend $10 million today on a project that is expected to bring in annual revenues of $1.5 million for the next 10 years (beginning at the end of year 1). a. If the firm’s cost of capital is 5%, what is the NPV of this project? b. If the firm’s cost of […]
Date: September 9th, 2020
The spot exchange market is for ________ delivery, whereas a forward contract permits a firm to buy or sell currency for ________ delivery. A) future; immediate B) local; distant C) immediate; future D) long-term; short-term ANSWER C
Date: September 9th, 2020
One of the major effects of trade liberalization has been A) the liberal use of tariffs and quotas. B) an increase in the use of beggar-thy-neighbor trade policies. C) the globalization of supply chains. D) an increase in the world price for most goods. ANSWER C
Date: September 9th, 2020
You deposit $10,000 in a savings account today. If the interest rate is 3%, what is the value in 20 years? What will be an ideal response? ANSWER FV = PV(1 + i)n = 10,000(1.03)20 = $18,061
Date: September 9th, 2020
If an expansion proposal is accepted, allowing an otherwise idle (and useless) machine with a market value and book value of $2,000 to be utilized, should it be recorded as a cash outflow, and if so, how much? What will be an ideal response? ANSWER Yes, $2,000
Date: September 9th, 2020
Which of the following represents a capital budgeting problem for multinational corporations but not for domestic corporations? A) determining the cost of capital B) calculating after-tax cash flows C) selecting the appropriate risk-adjusted rates of return D) None of the above ANSWER D
Date: September 9th, 2020
Which of the following would be an example of FDI? A) A Brazilian investor buys German government bond. B) An American buys a new Swedish car. C) An Italian firm builds a plant in Nebraska. D) A Canadian investor buys a French equity. ANSWER C
Date: September 9th, 2020
If a foreign producer sells a good in a country at a lower price than in its home market, this is called A) a countervailing duty. B) a tariff offset. C) dumping. D) a reverse tariff. ANSWER C
Date: September 9th, 2020
A motive for FDI includes A) the extraction of natural resources. B) a multinational corporation attempting to jump over trade restrictions. C) high transportation costs. D) All of the above ANSWER D
Date: September 9th, 2020
