The paper “ International Financial Management - International Trade, Risk, and the Role of Banks” is an informative example of the case study on finance & accounting. Which of the following theories suggests that firms seek to penetrate new markets over time? Which of the following is an example of direct foreign investment? a. Theory of comparative advantage. b. Product cycle theory. c. Imperfect markets theory. d. None of the above 2. Which of the following is an example of direct foreign investment? a. Exporting to a country. b. Establishing licensing arrangements in a country. c. Purchasing existing companies in a country. d. Investing directly (without brokers) in foreign stocks. 3.
The demand for U. S. exports tends to increase when: a. Economic growth in foreign countries decreases. b. The currencies of foreign countries strengthen against the dollar. c. U. S. inflation rises. d. None of the above. 4. Which of the following factors probably does not directly affect a country's capital account and its components? a. Inflation b. Interest rates c. Withholding taxes on foreign income d. Exchange rate movements 5. An increase in U. S. interest rates relative to German interest rates would likely ____ the U. S. demand for euros and ____ the supply of euros for sale. a. Reduce; increase b. Increase; reduce c. Reduce; reduce d. Increase; increase 6. Under a fixed exchange rate system: a. A foreign exchange market does not exist. b. Central bank intervention in the foreign exchange market is not necessary. c. Central bank intervention in the foreign exchange market is often necessary. d. Central bank intervention in the foreign exchange market is not allowed. 7.
Countries that have adopted the euro must agree on a single ____ policy. a. Monetary b. Fiscal c. Worker compensation d. Foreign relations 8. If a firm does not have foreign subsidiaries, it is not subject to ____. a. Transaction exposure b. Economic exposure c. A and B d. Translation exposure
Niepmann, F & Schmidt, T. 2013. International Trade, Risk and the Role of Banks. Accessed Nov. 9, 2014. < http://www.newyorkfed.org/research/staff_reports/sr633.pdf >