Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 21, Problem 2DQ
Summary Introduction
To explain:Â The commonly made allegations against the foreign affiliates of multinational firms and MNCs.
Introduction:
Multinational firm:
It is a business organization that operates in at least more than one country other than the one in which it has been incorporated.
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Chapter 21 Solutions
Foundations of Financial Management
Ch. 21 - Prob. 1DQCh. 21 - Prob. 2DQCh. 21 - List the factors that affect the value of a...Ch. 21 - Prob. 4DQCh. 21 - Differentiate between the spot exchange rate and...Ch. 21 - What is meant by translation exposure in terms of...Ch. 21 - Prob. 7DQCh. 21 - Prob. 8DQCh. 21 - Prob. 9DQCh. 21 - Prob. 10DQ
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- 5. Agencies that facilitate international trade Which of the following is true about the Overseas Private Investment Corporation (OPIC)? OPIC does not provide services to exporters. OPIC insures direct U.S. investments in foreign countries against various types of risks. OPIC was formed in the later 1800's. Most OPIC loans are short-term.arrow_forwardMultinational corporations are exposed to higher risks that primarily come from two significant sources: (1) exchange rate risk and (2) political or country risk. An example of would be having property expropriated without adequate compensation. Which of the following are steps a company can take to reduce potential loss from expropriation? Check all that apply. Finance the subsidiary with local capital which reduces the local government's incentive to expropriate the multinational company's property. O Lock in the dollar return by selling currency in the forward market. Structure operations so that the subsidiary is only valuable as a part of the integrated corporate system. This reduces the risk exposure for the integrated company.arrow_forwardIf international trade barriers were removed, how would it impact the PPP and the IFE? Would they be more likely to hold? Please explain.arrow_forward
- What is the difference between technology risk and operational risk? How does internationalizing the payments system among banks increase operational riskarrow_forwardi need the answer quicklyarrow_forwardIf a firm does not have foreign subsidiaries, it is not subject to ____. Group of answer choices transaction exposure economic exposure translation exposure A and Barrow_forward
- 1. What impact would harmonization of national accounting standards have on international businesses? 2. Are U.S. firms at a competitive disadvantage because they cannot use accounting reserves as German firms do?arrow_forwardWhat potential sanctions does the SEC have against a CPA firm?arrow_forwardA sudden change in power can result in a regime that is hostile to foreign investment that is a primary example of an (n) _______ barrier ?arrow_forward
- 13 XYZ Corporation is a U.S.-based corporation. It has decided to move some of its accounting operations abroad. The company will continue to use U.S. GAAP for external reporting purposes. Should the company insist that the employees located in the international locations follow the U.S.-based corporate culture? Explain?arrow_forwardQuestion 2 The Liability of Foreigness (LOF) is the inherent disadvantage of foreign firms experience in host countries because of their non-native status. Assume that you are the owner of a small and reasonable profitable firm,would you consider expanding oversea? Elaborate your point of view by relate with the issues of foreign market entryarrow_forwardDo you believe that the current international accounting standard-setting arrangements, based around the IASB, are at risk of regulatory capture? Why or why not?arrow_forward
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