Assume a firm has $5 million of overseas profits that are invested in U.S. financial assets. These profits have not been repatriated. Given this, the firm is prohibited from using any of the $5 million to:   Multiple Choice   build a new factory in Europe.   pay bonuses to its foreign managers.   acquire new equipment for installation in its Asian plant.   pay dividends.   invest in euros.

Pulaski Inc. wants to establish a new subsidiary in Colombia that will sell cell phones to Colombian customers and remit earnings back to the U.S. parent. The value of this project will be favorably affected if the value of the peso ____ while it establishes the new subsidiary and ____ when the subsidiary starts operations. appreciates; appreciates   depreciates; appreciates   appreciates; depreciates   depreciates; depreciates

Multinational 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.

56. Jensen Co. wants to establish a new subsidiary in Mexico that will sell computers to Mexican customers and remit earnings back to the U.S. parent. The value of this project will be favorably affected if the value of the peso ____ while it establishes the new subsidiary and ____ when the subsidiary starts operations. A. depreciates; appreciates B. appreciates; appreciates C. appreciates; depreciates D. depreciates; depreciates

(6)(a)Identify the revenue and cost related motives for direct foreign investment. (b)Suppose a U.S. based MNC plans to invest in a new plant either in the U.S or in Zambia. The MNC intends to invest 30% of its investment spending in this new plant while the remainder is devoted to the firm's existing structure in the U.S. The characteristics of the proposed new project are given below: If located in U.S If located in Zambia Mean expected annual returns on investment 25% 25% Standard deviation of expected annual returns on investment 0.09 0.11 Correlation of expected annual returns on investment with returns on prevailing U.S business 0.80 -0.05 Determine, with robust quantitative explanation, which location will best provide the firm with a more stable flow of revenue.

ABC Inc. is a U.S. firm with annual export sales to Canada of about C$500 million.  Its main competitor is XYZ Inc., also based in the United States, with a subsidiary in Canada that generates about C$500 million in annual sales.  Any earnings generated by the subsidiary are reinvested to support its operations.  Based on the information provided, which company is subject to a higher degree of translation exposure?  Explain.

Vitro-X in Malaysia has a subsidiary in Japan. Hence, Vitro-X receives Japanese Yen from the subsidiary, but this has negatively affected company value of Vitro-X, probably because of __________. A. appreciation of the Japanese Yen B. lowering of Japanese interest rates C. depreciation of the Japanese Yen D. weaker Japanese economy

Your company located in the US imports raw materials from Europe. If the European Central Bank announces to lower the Euro exchange rate, what impact do you expect to see in your business?   A. Your company will pay higher US dollar costs to import from Europe.     B. Your company will pay lower US dollar costs to import from Europe.   C. The Euro exchange rate doesn't have any impact on your company.   D. It should reduce your competitiveness in your home market.

Assume that an U.S. firm wants to engage in international business without making a major investment in the foreign country. Which method is LEAST appropriate in this situation?​   A. ​licensing   B. acquisition of an existing firm in the foreign country   C. ​exporting   D. ​franchising

Baxter, a US Company, has a 100% owned subsidiary in Japan. The functional currency for the subsidiary is the Japanese yen. The Japanese subsidiary purchases merchandise on credit from a Swiss company, with payment due in US dollars. Between the date of purchase and the due date of the payable, the swiss franc strengthens against the US dollar and the Japanese yen weakens against the US dollar. What will be the result to Baxter. A) There will be a foreign exchange loss B) There will be no foreign exchange gain or loss C) There will be both a foreign exchange gain and loss D) Juno will need to enter into a hedge to reduce its foreign currency exposure E) There will be a foreign exchange gain