Introduction to International Financial Management by Prof. Dilrukshi Yapa Abeywardhana
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Questions and Answers

Which of the following is NOT a factor that might determine trade when countries become increasingly homogeneous?

  • Economies of scale
  • Cultural predilections
  • Differences in factor endowments across countries (correct)
  • Historical accidents

    • What is the role of improved communications in the context of multinational firms?

  • It reduces the need for diversification
  • It facilitates the trading of intermediate commodities across borders (correct)
  • It allows for better management of foreign exchange risk
  • It enables the sharing of risk across borders

    • Which of the following is NOT mentioned as a financial issue for multinational firms?

  • Financing foreign units
  • Mergers and acquisitions (correct)
  • Managing working capital and the internal financial system
  • Foreign exchange risk management

    • What is the role of the multinational corporation in the context of factor differences across countries?

    <p>It represents the movement of capital across countries</p> Signup and view all the answers

    What is the role of economies of scale in the context of multinational firms?

    <p>It necessitates the existence of a transnational entity</p> Signup and view all the answers

    Which of the following is NOT mentioned as a factor that contributes to the development of international finance?

    <p>Protectionist trade policies</p> Signup and view all the answers

    What is the role of cultural predilections and historical accidents in the context of multinational firms?

    <p>They are factors that might determine trade when countries become increasingly homogeneous</p> Signup and view all the answers

    What is the role of the need for diversification in the context of multinational firms?

    <p>It contributes to the development of international finance</p> Signup and view all the answers

    Which of the following is NOT mentioned as a financial issue for multinational firms?

    <p>Dividend payout decisions</p> Signup and view all the answers

    What is the role of government policies in the context of multinational firms?

    <p>They are factors that might determine trade when countries become increasingly homogeneous</p> Signup and view all the answers

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