finance

TEST BANK

Chapter 1
Introduction

1. Which of the following is the primary objective of a firm? A. employees' benefits B. satisfaction of customers C. satisfaction of suppliers D. prompt payment to creditors
* E. maximize stockholder wealth

2. Financial risk involves ___. A. fluctuation in exchange rates B. different interest and inflation rates C. balance of payments position D. A and B
* E. A, B, and C

3. Three sweeping changes include ___. A. the end of Cold War B. industrialization and growth of the developing world C. the creation of the North American Trade Agreement D. increased globalization
* E. A, B, and D

4. Managers are generally defined as ___. A. stockholders
* B. agents C. creditors D. suppliers E. customers

5. Which of the following is not one of seven principles of global finance? A. market imperfection B. risk-return tradeoff C. portfolio effect D. comparative advantage
* E. company advantage

6. Incentives for multinational company managers include the following except ___. A. stock options B. bonuses C. perquisites D. salary increases
* E. vacation

7. Environmental factors affecting international operations are as follows except ___. A. foreign customs B. foreign economic factors C. foreign political situations D. foreign legal aspect
* E. international distance

8. Three major risks in international business are ___. A. political, financial and weather B. economic, political and people
* C. political, financial and regulatory D. accounting, management and information E. marketing, ethics and political

9. Conflicts of interest for multinational corporations do not include ___. A. the interests of sovereign governments may be different B. the goals of multinationals are divergent from host countries C. some conflicts may