Objective type question on currency exchange rates and foreign subsidiaries.

1)  The price that an acquiring company must pay for the acquired company is:

   A) Book value

   B) Market value

   C) A higher price than market value

   D) None of the above

2)  Currency exchange rates tend to vary inversely with their ____________.

   A) Interest rates

   B) Cross rate

   C) Purchasing power

   D) Economic power

3)  A fully owned foreign subsidiary is a form of MNC in which:

   A) The MNC owns and operates the firm by itself.

   B) The MNC has a partner in the foreign country.

   C) The foreign government is cooperative.

   D) None of the above

4)  Combined leverage is the percentage change in relationship between sales and ____________.

   A) Operating income

   B) Operating leverage

   C) Earnings per share

   D) Breakeven point

5)  If you win the lottery and you choose to have your proceeds distributed to you over a twenty-year time period, which calculation would you use to calculate the worth of those proceeds to you today?

   A) Future value of a lump sum

   B) Future value of an annuity

   C) Present value of a lump sum

   D) Present value of an annuity

6)  When an MNC cannot produce an actual product in a foreign subsidiary due to political restrictions, it can export technology and knowledge through:

   A) An exporter

   B) A joint venture

   C) An importer

   D) A licensing agreement

7)  Which of the following kinds of mergers lead to diversification benefits?

   A) vertical

   B) Conglomerate

   C) horizontal

   D) None of the above