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
You start working at age 20 and you plan to deposit $5,000 in a savings account every year for the next 45 years. a. At the end of this time, how much money will you have if the interest rate is 5%? b. You decide that’s not enough money. How much will you have to […]
Date: September 9th, 2020
You win the $20 million state lottery, and you have a choice of taking an amount of money per year for the next 20 years or a flat payment now. The flat payment that the state offers you is $9.82 million. a. What discount rate is the state using? b. Should you take the money […]
Date: September 9th, 2020
Which of the following is not an argument in favor of the globalization of business? A) More efficient use of resources lowers operating costs and selling prices. B) More products are made available and new markets are opened. C) Economic and political security are enhanced. D) Technology transfers improve living standards in poorer countries. […]
Date: September 9th, 2020
How can a warranty at the seller’s expense signal that a product is of high quality? What will be an ideal response? ANSWER If the product is of low quality, the warranty would be very costly to the seller since a low-quality product would need more repairs than a high-quality product.
Date: September 9th, 2020
An aircraft company has signed a contract to deliver a plane 3 years from now. The price they will receive at the end of 3 years is $20 million. If the firm’s cost of capital is 6%, what is the present value of this payment? What will be an ideal response? ANSWER PV = […]
Date: September 9th, 2020
The use of sensitivity analysis will generally result in A) the calculation of a certainty equivalent NPV. B) the calculation of a best case, a base case and a worst case. C) the calculation of the coefficient of variation. D) the calculation of the probability of the maximum profit. ANSWER B
Date: September 9th, 2020
A drawback in the use of sensitivity analysis in capital budgeting decisions is that it doesn’t A) permit evaluating alternative outcomes. B) provide estimates of net present values. C) assign probability values to outcomes. D) consider different possible rates of discount. ANSWER C
Date: September 9th, 2020
