1. Each ADR represents ________ of the shares of the underlying foreign stock.

a. 1

b. a multiple

c. 100

d. ADRs have nothing to do with foreign stocks.

2. The five strategic motives driving the decision to invest abroad and become an MNE (market seekers, raw material seekers, production efficiency seekers, knowledge seekers, and political safety seekers) are mutually exclusive.

True

False

3. Systematic risk:

a. none of the other answers

b. is the standard deviation of a security's return.

c. is measured with beta.

d. is measured with standard deviation.

4. An example of economies of scale in financing include:

a. being able to access the Euroequity, Eurobond, and Eurocurrency markets.

b. all of the other answers

c. being able to use large-scale plant and equipment.

d. being able to ship product in shiploads or carloads.

5. A major cost avoided in the eurocurrency markets is the payment of deposit insurance fees, such as:

a. Office of the Comptroller of the Currency - OCC

b. Federal Deposit Insurance Corporation – FDIC

c. World Bank – WB

d. International Monetary Fund – IMF