7. (TCO E) Other things being equal, firms from a particular home country will e

Question

7. (TCO E) Other things being equal, firms from a particular home country will engage in more international acquisitions if they expect foreign currencies to _____ against their home currency and if their cost of capital is relatively _____. (Points : 5)        appreciate; low
       appreciate; high
       depreciate; high
       depreciate; low Question 8.8. (TCO F) Which is not a way in which agency problems can be reduced through corporate control? (Points : 5)        Acquisition of a foreign subsidiary
       Monitoring by large shareholders
       Threat of hostile takeover
       Executive compensation Question 9.9. (TCO I) With a(n) _____, the exporter ships the goods to the importer while still retaining actual title to the merchandise. (Points : 5)        letter of credit arrangement
       open account arrangement
       draft arrangement
       consignment arrangement Question 10.10. (TCO G) Which is an example of economic exposure but not an example of transaction exposure? (Points : 5)        An increase in the dollar's value hurts a U.S. firm's domestic sales, because foreign competitors are able to increase their sales to U.S. customers.
       An increase in the pound's value increases the U.S. firm's cost of British pound payables.
       A decrease in the peso's value decreases a U.S. firm's dollar value of peso receivables.
       A decrease in the Swiss franc's value decreases the dollar value of interest payments on a Swiss deposit sent to a U.S. firm by a Swiss bank. 7. (TCO E) Other things being equal, firms from a particular home country will engage in more international acquisitions if they expect foreign currencies to _____ against their home currency and if their cost of capital is relatively _____. (Points : 5)        appreciate; low
       appreciate; high
       depreciate; high
       depreciate; low

Explanation / Answer

Q 7 Correct Answer A, appreciate; low

Q8 Correct Answer, Acquisition of a foreign subsidiary

Q9 Correct Answer, consignment arrangement

Q10 Correct Answer, An increase in the dollar's value hurts a U.S. firm's domestic sales, because foreign competitors are able to increase their sales to U.S. customers.

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