Q&A Hero

Q: _____ is a loan between a parent and its subsidiary channeled through a financial intermediary, usually a large international bank. A) A fronting loan B) An equity loan C) A direct loan D) A security loan

Q: Part of the tax credit benefit that a parent company receives can be lost if the subsidiary s A) combined tax rate is higher than the parent s. B) local government views royalties as an expense. C) local tax rates on profits are extremely high. D) managers are controlled directly by the parent.

Q: _____ is the most common method by which firms transfer funds from foreign subsidiaries to the parent company. A) Issuance of long-term loans B) Payment of annual fee C) Issuance of bonds D) Payment of dividends

Q: Most banks charge _____ for moving cash from one location to another. A) a transfer fee B) an internal forward rate C) an accounting service fee D) an audit fee

Q: A tax haven is a country A) where companies benefit from establishing fully operating subsidiaries. B) that does not charge local companies for importing products from other countries. C) that does not charge taxes on the purchase or sale of any items. D) with an exceptionally low, or even no, income tax.

Q: A _____ between two countries is an agreement specifying which items of income will be taxed by the authorities of the country where the income is earned. A) tax deferral agreement B) fixed-rate treaty C) tax treaty D) free trade agreement

Q: Multilateral netting is used primarily to A) reduce transaction costs between subsidiaries. B) avail tax credit from governments. C) establish a tax treaty among multiple countries. D) reduce the fixed costs of establishing a subsidiary.

Q: By pooling cash resources centrally, firms can A) better handle short-term cash needs of subsidiaries. B) increase liquidity of independent subsidiaries. C) reduce the total size of the cash pool it must hold in liquid accounts. D) avoid government-imposed restrictions on capital flows.

Q: Money management decisions attempt to manage a firm s ____________ most efficiently. A) equity capital. B) fixed costs. C) working capital. D) equipment costs.

Q: A _____ specifies that parent companies are not taxed on foreign source income until they actually receive a dividend. A) bilateral agreement B) tax credit C) deferral principle D) tax treaty

Q: A _____ allows an entity to reduce the taxes paid to the home government by the amount of taxes paid to the foreign government. A) tax amnesty B) tax credit C) waiver D) tax treaty

Q: Pooling the cash of all the subsidiaries centrally A) lowers the interest rate earned. B) reduces the earning potential for firms. C) increases the interest rate paid. D) increases the earning potential for firms.

Q: Money management decisions attempt to manage the firm s _____ most efficiently. A) cash flow B) corporate expenses C) working capital D) corporate revenues

Q: Which of the following is an observation about the cost of capital? A) The cost of capital is typically higher in the global capital market. B) Domestic capital markets have more liquidity than global markets. C) Local debt financing raises the cost of capital if liquidity is limited. D) A local sale of equity is preferred to global sale by international firms.

Q: Critics of adjusting discount rates to reflect a location s riskiness argue that it A) does not penalize either distant or early cash flows enough. B) penalizes distant cash flows too heavily. C) does not penalize early cash flows enough. D) penalizes early cash flows too heavily.

Q: _____ is the technique financial managers use to try to quantify the benefits, costs, and risks of an investment. A) Capital budgeting B) External audit C) Transfer pricing D) Control system analysis

Q: Extensive empirical studies have shown that A) there is only a short-run relationship between a country s relative inflation rates and changes in exchange rates; no long-run relationship exists. B) there is a long-run relationship between a country s relative inflation rates and changes in exchange rates. C) that there exists both short-run and long-run relationships between a country s relative inflation rates and changes in exchange rates. D) a country s relative inflation rates and changes in exchange rates are not related to each other.

Q: Political risk tends to be A) greater in countries experiencing social unrest or disorder. B) negligible for large multinational companies. C) less in countries experiencing social unrest or disorder. D) a consideration only for companies operating in third world countries.

Q: Capital budgeting for a foreign project A) begins with an audit of the current cash flows. B) is vastly different from domestic capital budgeting. C) begins with converting all cash flow to Eurocurrency. D) uses the same theoretical framework that domestic capital budgeting uses.

Q: Transfer price refers to the A) price at which goods and services are transferred to a subsidiary. B) price at which the title of products is transferred to a customer. C) price at which a supplier provides raw materials to a firm. D) cost incurred when goods or services are transferred from one place to another.

Q: Lessard and Lorange refer to the company-generated forecast of future spot rates as the _____ rate. A) forward exchange B) internal forward C) initial exchange D) ending exchange

Q: According to Lessard and Lorange, the ending rate is the spot exchange rate A) forecast for the end of the budget period. B) when the budget is adopted. C) when no formal exchange rate exists. D) when the budget and performance are being compared.

Q: According to Lessard and Lorange, the _____ rate is the spot exchange rate forecast for the end of the budget period. A) projected B) initial C) ideal D) ending

Q: According to Lessard and Lorange, the _____ rate refers to the spot exchange rate when the budget is adopted. A) ending B) initial C) ideal D) projected

Q: The projected rate will typically be the _____ as determined by the foreign exchange market when firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency. A) transfer price B) forward exchange rate C) carrying cost D) foreign exchange rate

Q: The _____ is the main instrument of financial control in an organization. A) chief financial officer B) corporate accounting C) audit D) budget

Q: The International Accounting Standards Board A) can issue a new accounting standard if the majority of the board members agree. B) was formed to replace the Financial Accounting Standards Board. C) develops standards but has no power to enforce the standards. D) was formed to supervise the accounting practices that U.S. firms follow.

Q: Compliance to IASB standards is A) mandatory for countries that want to engage in international trade. B) enforced through the World Trade Organization. C) voluntary. D) enforced through the United Nations.

Q: The _____ has 16 members who are responsible for the formulation of new international financial reporting standards. A) U.S. Securities and Exchange Commission B) International Accounting Standards Board C) Office of Economic Analysis D) Financial Accounting Standards Board

Q: Which of the following was formed in March 2001 to replace the International Accounting Standards Committee (IASC)? A) U.S. Securities and Exchange Commission B) International Accounting Standards Board C) Office of Economic Analysis D) Financial Accounting Standards Board

Q: Financial management in an international business includes three sets of related decisions. Which of these involves making decisions about what activities to finance? A) investmentdecisions B) moneymanagement decisions C) multilateraldecisions D) financingdecisions

Q: Three sets of related decisions are involved in financial management in an international business. Which of these involves making decisions about how to fund the chosen activities? A) investment decisions B) financing decisions C) bilateral decisions D) money management decisions

Q: Accounting standards are A) rules for preparing financial statements. B) the levels of tax payments needed. C) the rules for performing an audit. D) the technical process of balancing accounts.

Q: Historically, financial reports prepared by firms in Germany A) reveal less information than reports of British or U.S. firms. B) contain detailed information required by individual investors. C) overvalued assets and undervalued liabilities. D) made more public disclosures compared to firms in other countries.

Q: The international trade secretariats have had tremendous success. ⊚ true ⊚ false

Q: In polycentric firms, the lack of managers mobility among national operations implies that pay can and should be kept country-specific. ⊚ true ⊚ false

Q: A firm s performance appraisal systems are an important element of its control systems. ⊚ true ⊚ false

Q: Where an expatriate community exists, firms often devote less effort to ensuring that the new expatriate family is quickly integrated into that group. ⊚ true ⊚ false

Q: Most managers believe that knowledge of a foreign language is necessary to succeed in an international posting. ⊚ true ⊚ false

Q: Selection is the first step in matching a manager with a job. ⊚ true ⊚ false

Q: In a seminal study, R.L. Tung revealed that for European firms, the top reason for expatriate failure was the inability of the manager to cope with larger overseas responsibilities. ⊚ true ⊚ false

Q: Expatriate failure refers to a manager s failure to understand host-country cultural norms and values, leading to ineffective work. ⊚ true ⊚ false

Q: The geocentric approach is the most popular because it is the least expensive to implement. ⊚ true ⊚ false

Q: A geocentric approach tends to weaken local responsiveness. ⊚ true ⊚ false

Q: Cultural myopia refers to a firm s failure to understand host-country cultural differences that require different approaches to marketing and management. ⊚ true ⊚ false

Q: The most popular staffing policy is the ethnocentric approach. ⊚ true ⊚ false

Q: HRM professionals have a critically important strategic role. ⊚ true ⊚ false

Q: Trade unions around the world A) developed simultaneously and in coordination with each other. B) are widely varied in their structure. C) have virtually the same ideology. D) employ the same union structure.

Q: Unions bargaining power is A) largely derived from their ability to threaten to disrupt production. B) rooted in their government backing. C) largely derived from their ability to control corporate managers. D) rooted in their financial resources.

Q: What was the long-term goal of international trade secretariats (ITSs)? A) to increase the competition between national unions B) to be able to bargain transnationally with multinational firms C) to accommodate wide variation in union structure D) to be able to regulate multinationals with regard to labor policies

Q: Which of the following is an action taken by organized labor to respond to the increased bargaining power of multinational corporations? A) trying to establish international labor organizations B) increasing competition between national unions C) lobbying the European Union for legislation to restrict multinationals D) trying to achieve international regulations on multinationals through such organizations as the United Nations

Q: A _____ may be paid to ensure that the expatriate can afford the same quality of housing in the foreign country as in the home country. A) cost-of-living allowance B) hardship allowance C) housing allowance D) differential allowance

Q: A _____ may be paid to ensure that the expatriate enjoys the same standard of living in the foreign location as at home. A) housing allowance B) hardship allowance C) cost-of-living allowance D) differential allowance

Q: What is the most common approach to expatriate pay? A) balance sheet approach B) net-to-net approach C) host-country approach D) cost-based approach

Q: When a reciprocal tax treaty is not in force, the firm typically A) pays the difference the higher income tax rate makes on the expatriates take-home pay into a 401k plan. B) pays the expatriate s income tax in the home country. C) reduces the expatriate s take-home pay to cover the difference in tax rates. D) pays the expatriate s income tax in the host country.

Q: An expatriate s base salary typically A) varies from the base salary for a similar position in the home country. B) is paid half in the home-country currency and half in the local currency. C) is in the same range as the base salary for a similar position in the home country. D) is paid in Eurocurrency.

Q: If a firm is serious about building an _____, it may have to pay its international executives the same basic salary irrespective of their country of origin or assignment. A) expatriate community B) international cadre C) inpatriate community D) international corps

Q: _____ makes it difficult to evaluate the performance of expatriate managers objectively. A) Cultural relativism B) Internal documentation C) Unintentional bias D) Others-orientation

Q: When evaluating expatriates, home-country managers usually rely on A) the manager s ability to develop cross-cultural awareness. B) hard data such as market share. C) the ability of the expatriate to work with local managers. D) a set of subjective criteria such as interpersonal skills.

Q: _____ makes it difficult to evaluate the performance of expatriate managers objectively. A) Unintentional bias B) Lack of proximity C) Intentional bias D) Inadequate hard data

Q: Management development programs aim to A) facilitate an ethnocentric approach to staffing. B) reduce job rotations of managers. C) build a formal management network. D) build a unifying corporate culture.

Q: Practical training is A) provided to foster an appreciation for the host country s culture. B) aimed at helping expatriates improve their communication skills. C) aimed at helping expatriate managers to build relationships in the host country. D) aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country.

Q: Firms pursuing _____ strategy increasingly are using management development as a strategic tool. A) a localization B) a global standardization C) a transnational D) an international

Q: Training can help a manager and spouse cope with issues of adjusting to the foreign environment. _____ is aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country. A) Language training B) Practical training C) Others-orientation training D) Cultural training

Q: _____ is considered the language of world business. A) Chinese B) English C) Spanish D) Hindi

Q: Historically, most international businesses have been A) more concerned with training than with management development. B) focused on smoothly transitioning their home-country nationals back from foreign postings to home postings. C) more concerned with management development than with training. D) less focused on training their home-country nationals for foreign postings than with training home-country managers.

Q: _____ refers to the relationship between the country of assignment and how well an expatriate adjusts to a particular posting. A) Cultural toughness B) Self-orientation C) Perceptual ability D) Others-orientation

Q: Which of the following is one of the factors that impact a spouse adjusting to expatriation? A) the inability of the spouse to get a job in the foreign country due to poor training and education B) laws against spouses freely coming and going from their home in the foreign country C) spouses not being welcomed into the expatriate community D) language differences making it difficult for a spouse to make new friends and feeling trapped at home

Q: The premature return of an expatriate manager to his or her home country is known as A) repatriation. B) inpatriation. C) expatriate failure. D) outpatriation.

Q: Which of the following issues was not addressed by Mendenhall and Oddou s study? A) expatriate failure due to a spouse s inability to adjust B) expatriate failure due to a manager s lack of self-esteem C) expatriate failure due to lack of relationship development D) expatriate failure due to a manager s inability to empathize

Q: In a seminal study, R.L. Tung found that for managers of European firms, the biggest impediment to expatriate success was the A) manager s inability to cope with larger overseas responsibilities. B) lack of adequate technical training. C) inability of the spouse to adjust. D) manager s inability to adjust.

Q: _____ is the ability to understand why people of other countries behave the way they do. A) Others-orientation B) Cultural myopia C) Perceptual ability D) Cultural toughness

Q: Which dimension of Mendenhall and Oddou s study suggests that an expatriate with high self-esteem, self-confidence, and mental well-being is likely to succeed in a foreign job posing? A) self-orientation B) others-orientation C) cultural toughness D) perceptual ability

Q: Mendenhall and Oddou s others-orientation dimension, in their study on what predicts success in foreign jobs postings, refers to the A) expatriate s self-esteem, self-confidence, and mental well-being. B) expatriate s ability to interact effectively with host-country nationals. C) expatriate s ability to understand why people of other countries behave the way they do. D) relationship between the country of the assignment and how well an expatriate adjusts to a particular posting.

Q: In a seminal study, R.L. Tung found that for Japanese multinationals, the biggest impediment to expatriate success was A) the inability of the spouse to adjust. B) inadequate compensation. C) the manager s inability to cope with larger overseas responsibilities. D) the lack of adequate technical training.

Q: In a seminal study, R.L. Tung found that among American multinationals, the biggest impediment to expatriate success was the A) inability of the spouse to adjust. B) manager s inability to adjust. C) manager s inability to cope with larger overseas responsibilities. D) lack of adequate technical training.

Q: A citizen of France who moves to the United States to work at Ford is a(n) A) a host-country national. B) a local. C) an inpatriate. D) an acquired citizen.

Q: Expatriate managers who lack _____ tend to treat foreign nationals as if they were home-country nationals. A) self-orientation B) cultural toughness C) others-orientation D) perceptual ability

Q: Broadly speaking, a geocentric approach is compatible with A) an international strategy. B) both global standardization and transnational strategies. C) a localization strategy. D) both an international and a localization strategy.

Q: A polycentric approach to staffing is one in which A) host-country nationals are recruited to manage subsidiaries while parent-company nationals occupy key positions at corporate headquarters. B) standard psychological tests are used to assess perceptual ability and cultural toughness, when selecting a manager for foreign posting. C) all key management positions are filled by parent-company nationals. D) the best people, regardless of nationality, are recruited to fill key positions throughout the organization.