Foreign Direct Investment And Cross-border Acquisitions

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Question 1
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True/False

In the early 1980s,Honda,the Japanese automobile company,built an assembly plant in Marysville,Ohio,and began to produce cars for the North American market.As the production capacity at the Ohio plant expanded,Honda began to export its U.S.-manufactured cars to Japan.

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False

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Question 2
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True/False

Shareholders of U.S.targets experience higher wealth gains when they are acquired by foreign firms than when acquired by U.S.firms.

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False

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Question 3
Free
True/False

Cross-border acquisitions are generally found to be synergy-generating corporate activities.

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False

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Question 4
Free
Multiple Choice

Under a 1981 Voluntary Trade Agreement Japanese automobile manufacturers were not allowed to increase their exports to the U.S.market.As a result

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A

they exited the market.

B

Honda was motivated to circumvent the trade barriers.

C

Honda's FDI may have been part of an overall corporate strategy designed to bolster their competitive position vis-à-vis their domestic rivals such as Toyota.

D

both b) and c)

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Question 5
Free
Multiple Choice

Following Honda's FDI in the U.S.,

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A

The U.S.government imposed a Voluntary Trade Agreement under which Japanese automobile manufacturers were not allowed to increase their exports to the U.S.market.

B

Toyota and Nissan made direct investments in America.

C

Sales of Hondas declined.

D

none of the above

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Question 6
Multiple Choice

Honda's decision to build a plant in Ohio

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A
was welcomed by the United Auto Workers.
B
was encouraged by assistance from the state of Ohio, including improved infrastructure around the plant and abatement of property taxes.
C
involved setting up a special foreign trade zone that allowed Honda to import auto parts from Japan at a reduced tariff rate.
D
all of the above
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Question 7
Multiple Choice

When firms undertake FDI,

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A
they become MNCs.
B
they reduce their tax rate since they can tell each country that they do business in that they paid their taxes in other countries.
C
the can exploit workers by paying them below-market wages in depreciating currencies.
D
all of the above
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Question 8
Multiple Choice

Prior to Honda's decision to build a plant in Ohio,

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A
the Japanese government had been urging the automobile companies to begin production in the United States.
B
the Japanese government had been urging the automobile companies to keep production in Japan.
C
the Japanese government imposed import quotas on U.S.-made automobiles.
D
none of the above
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Question 9
Multiple Choice

FDI can take the form of

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A
Greenfield investment.
B
cross-border M&A.
C
establishing new production facilities in a foreign country.
D
all of the above
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Question 10
Multiple Choice

The Ford Motor Company recently acquired Mazda,a Japanese auto maker,and Jaguar,a British auto maker.

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A
This is an example of cross-border M&A.
B
This was a Greenfield investment.
C
both a) and b)
D
none of the above
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Question 11
Multiple Choice

Firms become multinational

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A
when they undertake foreign direct investments (FDI).
B
with the establishment of new production facilities in foreign countries such as Honda's Ohio plant.
C
when they become involved in mergers with and acquisitions of existing foreign businesses.
D
all of the above
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Question 12
Multiple Choice

The United States is the largest initiator,of FDI.The largest recipient of FDI is

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A
also the United States.
B
France.
C
Germany.
D
China.
E
none of the above
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Question 13
Multiple Choice

According to a recent UN survey,the world FDI stock grew at what rate relative to worldwide exports of goods and services?

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A
The world FDI stock grew twice as fast as worldwide exports of goods and services.
B
The world FDI stock grew at the same rate as worldwide exports of goods and services.
C
The world FDI stock grew half as fast as worldwide exports of goods and services.
D
None of the above
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Question 14
Multiple Choice

During the five-year period 2004-2008,total annual worldwide FDI outflows amounted to

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A
About $1,423 million on average.
B
About $1,423 billion on average.
C
About $1,423 trillion on average.
D
None of the above
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Question 15
Multiple Choice

During the five-year period 2004-2008,

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A
China received the largest amount of FDI inflows.
B
India received the largest amount of FDI inflows.
C
Mexico received the largest amount of FDI inflows.
D
the United States received the largest amount of FDI inflows.
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Question 16
Multiple Choice

Japan plays a major role as an exporter of FDI.As a recipient of FDI,

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A
Japan receives as much FDI as it exports, making it a major player on both fronts.
B
Japan plays a relatively minor role, reflecting a variety of legal, economic, and cultural barriers to FDI.
C
Japan's receipts of FDI are third in the world.
D
None of the above
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Question 17
Multiple Choice

MNCs might have been lured to invest in China not only by lower labor and material costs but also

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A
by China's lower labor and material costs.
B
by the desire to preempt the entry of rivals into China's potentially huge market.
C
by the Kung Pao chicken.
D
by the desire to see, if not buy, all the tea in China.
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Question 18
Multiple Choice

The third most important host country for FDI is

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A
the United States.
B
Japan.
C
China.
D
Mexico.
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Question 19
Multiple Choice

MNCs have invested in China

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A
by lower material costs.
B
by lower labor costs.
C
by a desire to preempt the entry of rivals into China's potentially huge market.
D
all of the above
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Question 20
Multiple Choice

FDI stocks

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A
are the common shares of multinational companies that invest abroad.
B
are mutual funds that invest in FDI.
C
represent the accumulation of previous years' FDI flows.
D
at the sum total of current year FDI flows.
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