International Financial Management MCQs and Notes

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📊 International Financial Management
Q. Countertrade represents foreign trade:
  • (A) restrictions imposed by the government on imports from another country.
  • (B) restrictions imposed by the government on exports sent from the country.
  • (C) transactions that force the sales of goods of one country to be linked to the purchase or exchange of goods from the country.
  • (D) financing provided to an exporter in exchange for goods provided to the creditor by the exporter.
💬 Discuss
✅ Correct Answer: (C) transactions that force the sales of goods of one country to be linked to the purchase or exchange of goods from the country.
📊 International Financial Management
Q. A bill of exchange requesting the bank to pay the face amount upon presentation of documents is a:
  • (A) banker's acceptance.
  • (B) time draft.
  • (C) letter of credit.
  • (D) sight draft.
💬 Discuss
✅ Correct Answer: (D) sight draft.
📊 International Financial Management
Q. With _______, the exporter ships the goods to the importer while still retaining actual title to the merchandise.
  • (A) a letter of credit arrangement
  • (B) an open account arrangement
  • (C) a draft arrangement
  • (D) a consignment arrangement
💬 Discuss
✅ Correct Answer: (D) a consignment arrangement
📊 International Financial Management
Q. A ________ provides a summary of freight charges and conveys title to the merchandise.
  • (A) letter of credit
  • (B) banker's acceptance
  • (C) bill of lading
  • (D) bill of exchange
💬 Discuss
✅ Correct Answer: (C) bill of lading
📊 International Financial Management
Q. Consider an exporter that is willing to send goods to the importer without a guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by the value of the exported goods. This reflects:.
  • (A) accounts receivable financing.
  • (B) forfaiting.
  • (C) factoring.
  • (D) a letter of credit.
💬 Discuss
✅ Correct Answer: (A) accounts receivable financing.
📊 International Financial Management
Q. Consider an exporter that sells its accounts receivables off to another firm that becomes responsible for obtaining cash from the various importers. This reflects:
  • (A) accounts receivable financing.
  • (B) consignment.
  • (C) factoring.
  • (D) a letter of credit.
💬 Discuss
✅ Correct Answer: (C) factoring.
📊 International Financial Management
Q. When economic conditions of two countries are ________, then a firm would _______ its risk by operating in both countries instead of concentrating just in one.
  • (A) highly correlated; reduce
  • (B) not highly correlated; reduce
  • (C) not highly correlated; not reduce
  • (D) none of the above
💬 Discuss
✅ Correct Answer: (C) not highly correlated; not reduce
📊 International Financial Management
Q. To enter markets where superior profits are possible, an MNC should:
  • (A) acquire a competitor that has controlled its local market.
  • (B) establish a subsidiary or acquire a competitor in a new market.
  • (C) establish a subsidiary in a market where tougher trade restriction will adversely affect the firm's export volume.
  • (D) establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based.
💬 Discuss
✅ Correct Answer: (A) acquire a competitor that has controlled its local market.
📊 International Financial Management
Q. When a firm perceives that a foreign currency is ________, the firm may attempt direct foreign investment in that country, as the initial outlay should be relatively _______.
  • (A) overvalued; high
  • (B) overvalued; low
  • (C) undervalued; high
  • (D) undervalued; low
💬 Discuss
✅ Correct Answer: (D) undervalued; low
📊 International Financial Management
Q. Which of the following is not true regarding host government attitudes towards foreign direct investment (FDI)?
  • (A) Host governments may offer incentives to MNCs in the form of subsidies in certain circumstances.
  • (B) Host governments generally perceive FDI as a remedy to eliminate a country's political problems.
  • (C) The ability of a host government to attract FDI is dependent on the country's markets and resources.
  • (D) Some types of FDI will be more attractive to some governments than to others.
💬 Discuss
✅ Correct Answer: (B) Host governments generally perceive FDI as a remedy to eliminate a country's political problems.

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