Financial Goals And Corporate Governance

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Questions Bank

Multinational Financial Management: Opportunities and Challenges
The International Monetary System
The Balance of Payments
Financial Goals and Corporate Governance
The Foreign Exchange Market
International Parity Conditions
Foreign Currency Derivatives: Futures and Options
Interest Risk and Swaps
Foreign Exchange Rate Determination and Intervention
Transaction Exposure
Translation Exposure
Operating Exposure
Global Cost and Availability of Capital
Funding the Multinational Firm
Multinational Tax Management
International Trade Finance
Foreign Direct Investment and Political Risk
Multinational Capital Budgeting and Cross-Border Acquisitions

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Question 1

Free

Multiple Choice

Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the following is NOT identified by the authors as typical controlling shareholders?

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the government (for example, privatized utilities)

institutions (such as banks in Germany)

family (such as in France)

All of the above were identified by the authors as controlling shareholders.

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Question 2

Free

Multiple Choice

Which of the following is NOT typically associated with the public ownership of business organizations?

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the state

the government

families

civil society

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Question 3

Free

Multiple Choice

Which of the following is NOT typically associated with the private ownership of business organizations?

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the government

families

individuals

publicly traded, widely-held organizations

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Question 4

Free

Multiple Choice

State Owned Enterprises (SOEs):

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are a form of public ownership.

are created for commercial activities rather than civil or social activities.

are the dominant form of business organization in some countries.

are all of the above.

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Question 5

Free

Multiple Choice

The problems that may arise due to the separation of ownership and management in large business organizations are known as:

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separation anxiety.

the agency problem.

corporate disconnect theory.

none of the above

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Question 6

Multiple Choice

Privatization is a term used to describe:

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firms that are purchased by the government.

government operations that are purchased by corporations and other investors.

firms that do not use publicly available debt.

non-public meetings held by members of interlocking directorates.

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Question 7

Multiple Choice

"Maximize corporate wealth":

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is the primary objective of the non-Anglo-American model of management.

as a management objective treats shareholders on a par with other corporate stakeholders such as creditors, labor, and local community.

has a broader definition than just financial wealth.

all of the above

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Question 8

Multiple Choice

The Shareholder Wealth Maximization Model (SWM):

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combines the interests and inputs of shareholders, creditors, management, employees, and society.

is being usurped by the Stakeholder Capitalism Model as those types of MNEs dominate their global industry segments.

clearly places shareholders as the primary stakeholder.

is the dominant form of corporate management in the European-Japanese governance system.

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Question 9

Multiple Choice

The Stakeholder Capitalism Model (SCM):

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clearly places shareholders as the primary stakeholder.

combines the interests and inputs of shareholders, creditors, management, employees, and society.

has financial profit as its goal and is often termed impatient capital.

is the Anglo-American model of corporate governance.

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Question 10

Multiple Choice

In the Anglo-American model of corporate governance, the primary goal of management is to:

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maximize the wealth of all stakeholders.

maximize shareholder wealth.

minimize costs.

minimize risk.

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Question 11

Multiple Choice

In finance, an efficient market is one in which:

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prices are assumed to be correct.

prices adjust quickly and accurately to new information.

prices are the best allocators of capital in the macro economy.

all of the above

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Question 12

Multiple Choice

Systematic risk can be defined as:

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the total risk to the firm.

the risk of the individual security.

the risk of the market in general.

the risk that can be systematically diversified away.

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Question 13

Multiple Choice

Unsystematic risk can be defined as:

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the total risk to the firm.

the risk of the individual security.

the added risk that a firm's shares bring to a diversified portfolio.

the risk of the market in general.

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Question 14

Multiple Choice

The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:

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market efficiency.

the SWM model.

agency theory.

the SCM model.

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Question 15

Multiple Choice

Under the Shareholder Wealth Maximization Model (SWM) of corporate governance, poor firm performance is likely to be faced with all but which of the following?

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sale of shares by disgruntled current shareholders

shareholder activism to attempt a change in current management

as a maximum threat, initiation of a corporate takeover

prison time for executive management

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Question 16

Multiple Choice

Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?

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the use of stock options to align the goals of shareholders and managers

the market for corporate control that allows for outside takeover of the firm

performance-based compensation for executive management

all of the above

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Question 17

Multiple Choice

Which of the following is NOT true regarding the stakeholder capitalism model?

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Banks and other financial institutions are less important creditors than securities markets.

Labor unions are more powerful than in the Anglo-American markets.

Governments interfere more in the marketplace to protect important stakeholder groups.

All of the above are TRUE.

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Question 18

Multiple Choice

The stakeholder capitalism model:

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typically avoids the flaw of impatient capital.

tries to meet the desires of multiple stakeholders.

may leave management without a clear signal about tradeoffs among the several stakeholders.

all of the above

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Question 19

Multiple Choice

Which of the following is generally NOT considered to be a viable operational goal for a firm?

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maintaining a strong local currency

maximization of after-tax income

minimization of the firm's effective global tax burden

correct positioning of the firm's income, cash flows and available funds as to country and currency

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Question 20

Multiple Choice

Which of the following operational goals for the international firm may be incompatible with the others?

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maintaining a strong local currency

maximization of after-tax income

minimization of the firm's effective global tax burden

Each of these goals may be incompatible with one or more of the others.

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