Question: 1. If you worked for an international

> 1. What is the name of a specific type of contractual entry mode? 2. What is it called when companies use agreements to exchange intangible property? 3. A disadvantage of both management contracts and turnkey projects is what?

> The National Foreign Trade Council (NFTC), a nonprofit trade and industry group based in Washington DC, won a court battle against the state of Massachusetts. In a unanimous decision, the U.S. Supreme Court sided with the NFTC and struck down a Massachus

> 1. Export/import financing that presents the most risk for exporters is called what? 2. Export/import financing in which a bank acts as an intermediary without financial risk is called what? 3. Export/import financing in which the importer’s bank issues

> 1. What are the four steps, in order, involved in creating an export strategy? 2. When a company sells its products to intermediaries who then resell to buyers in a target market it is call what? 3. What is the name of a specific type of countertrade?

> 1. Collecting and analyzing original data and applying the results to current research needs is called what? 2. A trade show is the same thing as what? 3. A firm researching a very unfamiliar but potentially very profitable market might be best to do wha

> 1. Obtaining information that already exists within or outside the company is called what? 2. What are possible sources of secondary research data? 3. What are potential problems that can arise with the use of secondary research data?

> 1. The sensitivity of demand for a product relative to changes in income is called what? 2. What variable is commonly included in a market potential indicator? 3. How important is it for top managers to pay a visit to a market or site before making a fi

> 1. What is the first step in the screening process for potential markets and sites? 2. What forces should a company research when assessing a nation’s business environment? 3. Evaluating a product from a certain country as superior to similar products fr

> 1. What type of organizational structure tends to concentrate all international expertise in one division? 2. An organizational structure that divides worldwide operations according to a firm’s product areas is called what? 3. What do we call a group of

> 1. How a company divides its activities among separate units and coordinates activities among units is called what? 2. What type of decision making helps coordinate the operations of international subsidiaries? 3. What is the benefit of decentralized dec

> 1. What strategy involves adapting products and their marketing strategies to national markets to suit local preferences? 2. What is the benefit of using a global strategy? 3. Deciding on a general competitive strategy in the marketplace is the key to de

> 1. A written statement of why a company exists and what it plans to accomplish is called a what? 2. A special ability of a company that competitors find extremely difficult or impossible to equal is called a what? 3. Value-chain analysis involves separat

> You are a member of a World Trade Organization task force that is reviewing the recent banana conflict between the United States and the European Union. The European Union and the United States recently ended a nine-year battle over trade in bananas. The

> 1. An exchange rate system in which currencies float against one another with governments intervening to stabilize currencies at target rates is called what? 2. What do we call the arrangement whereby a nation lets its currency float within a margin arou

> 1. The gold standard is an example of what type of international monetary system? 2. What are the main advantages of the gold standard? 3. What is the name of the international monetary system that formed in 1944 following the demise of the gold standard

> 1. The principle that an identical item must have an identical price in all countries when price is expressed in a common currency is called what? 2. A unique aspect of purchasing power parity in the context of exchange rates is that it is only useful wh

> 1. For a country with a currency that is weakening (valued low relative to other countries), what will happen to the price of its exports and the price of its imports? 2. Unfavorable movements in exchange rates can be costly for business, so managers pre

> 1. Where does more than half of all global currency trading take place? 2. A currency used as an intermediary to convert funds between two other currencies is called what? 3. What is another name for a freely convertible currency? 4. Why do governments s

> 1. The numerator in a quoted exchange rate, or the currency with which another currency is to be purchased is called what? 2. What is the name given to the risk of adverse changes in exchange rates? 3. What do we call an exchange rate requiring delivery

> 1. What is the market in which currencies are bought and sold and their prices determined? 2. Insuring against potential losses that may result from adverse changes in exchange rates is called what? 3. What do we call the instantaneous purchase and sale

> 1. What type of financial instrument is traded in the international bond market? 2. The market of all stocks bought and sold outside the issuer’s home country is called what? 3. What does the Eurocurrency market consist of?

> 1. What is the purpose of the international capital market? 2. Unbundling and repacking hard-to-trade financial assets into more marketable financial instruments is called what? 3. What is the characteristic of an offshore financial center?

> 1. What are the stated aims of the Association of Southeast Asian Nations (ASEAN)? 2. The stated aims of which organization is not to build a trading bloc but instead to strengthen the multilateral trading system? 3. What is the name of the grouping of

> You are managing director of your U.S. firm’s subsidiary in southern France. The social welfare states of Western Europe were founded in the Second World War with specific ethical considerations in mind: reduce social and economic inequality, improve liv

> 1. Canada, Mexico, and the United States belong to the regional trading bloc called what? 2. What countries belong to the regional trading bloc called CAFTA-DR? 3. What is the name of Latin America’s most powerful regional trading bloc?

> 1. What is the name of the official single currency of the European Union? 2. A country may receive membership in the European Union once it meets what is called the what? 3. Why did nations belonging to the European Free Trade Association not want to jo

> 1. What is it called when countries in a region cooperate to reduce or eliminate barriers to the international flow of products, people and capital? 2. What are the names of the lowest and highest levels of regional economic integration? 3. An increase i

> 1. What policy instruments can host countries use to promote FDI? 2. What policy instruments can home countries use to promote FDI? 3. Ownership restrictions and performance demands are policy instruments used by whom to do what? 4. Differential tax rate

> 1. The national accounting system that records all receipts coming in to a nation and all payments to entities in other countries is called what? 2. Why might a host country intervene in foreign direct investment? 3. Why might a home country intervene in

> 1. Where adequate facilities are not present in a market, a firm may decide to undertake what? 2. A system in which a product’s components are made where cost of producing a component is lowest is called what? 3. What do we call the situation in which a

> 1. What imperfections are relevant to the discussion of market imperfections theory? 2. Location, ownership, and internationalization advantages combine which FDI theory? 3. Which FDI theory depicts a firm establishing a dominant market presence in an in

> 1. The purchase of physical assets or significant ownership of a company abroad to gain a measure of management control is called what? 2. What are the main drivers of foreign direct investment flows? 3. Why might a company engage in a cross-border merge

> 1. The first system of multilateral agreements to promote free trade was called what? 2. What are the main goals of the World Trade Organization? 3. Exporting a product at a price that is lower than that normally charged domestically or one that is lower

> 1. Why might a government impose a tariff on a product? 2. Why might a government impose a quota on a product? 3. A stipulation that a portion of a product be sourced domestically is called what?

> You are the proprietor of a fledgling computer graphics company in Shanghai, China. The sophisticated business application software you need for your business normally sells for 2,900 renminbi (around $350) at computer stores in Shanghai and online. But

> 1. Financial assistance from a government to domestic producers is called what? 2. What are the hoped-for outcomes of a foreign trade zone? 3. What are some of the ways that governments provide export financing?

> 1. Free trade is the pattern of imports and exports that occurs in the what? 2. For what political reasons does a government intervene in trade? 3. What are some economic reasons why a government intervenes in trade? 4. Some people see the products of wh

> 1. Chrysler engineers helped Toyota develop its Sienna minivan. In return, Toyota provided input on automobile production techniques to Chrysler. Why do you think Chrysler was willing to share its minivan know-how with a key competitor? 2. Considering fi

> 1. If you were Stephan Loerke, of the World Federation of Advertisers, how would you argue for the EU to enact stricter advertising laws? 2. Do you personally agree with the case you made above? 3. Thinking of a specific product sold in industrialized na

> 1. What strengths did AT&T bring to its joint venture with Unisource? 2. Can you think of any potential complications that could arise in the AT&T–Unisource joint venture? 3. Assess the formation of Global One, Unisource, and other partnerships in this c

> 1. When company founder Kamprad decided to expand into China his decision was not based on market research but, rather, on his own intuition. How well is IKEA doing in China? Did Kamprad’s decision pay off? 2. Relying on topics covered in this chapter, w

> 1. Argentina’s peso was linked to the U.S. dollar through a currency board for ten years before it was cut loose. Why did Argentina peg its currency to the dollar in the first place? 2. Companies encounter many difficulties in adapting their strategies t

> 1. How do you think countries with a high volume of exports to the United States, such as Mexico, would respond to stricter food-safety rules? Do you think such measures are a good way to stem the tide of food-related illnesses? Why or why not? 2. Some p

> 1. What are the pros and cons of Mercedes’ decision to abandon the culture and some of its home country practices? 2. What do you think were the chief factors involved in Mercedes’ decision to undertake FDI in the United States rather than build the M-cl

> 1. People love finding a bargain on their favorite items while shopping. But few people would likely want those items made in the home market (and expanding employment) if it meant paying a higher price for them. Do you agree with this sentiment? Explain

> You are the vice president of operations for a U.S.-based software firm that is exploring building a software design operation in India. Typically when international firms enter the Indian market, they quickly learn how a caste system can affect business

> 1. As the first to set up an international air express business in 1969, DHL had the first-mover advantage over other companies. Is being a first mover as advantageous for a service company such as DHL, as it is for a manufacturing company such as Boeing

> 1. Why do you think the Cuban government requires non-Cuban businesses to hire and pay workers only through the government? 2. Suppose Cuba’s government collapses and the nation embarks on a path of economic transition. How might Cuba’s experience diffe

> 1-What more do you think that the international business community could do to protect intellectual property rights? 2. Are international companies simply afraid to speak out against counterfeiting in potentially lucrative emerging markets for fear of be

> 1. Some people outside the United States say teens exposed to large doses of U.S. youth culture on MTV will identify less with their own societies and teens in developing countries will want Western goods they cannot afford. MTV’s response: “It’s just fu

> 1. In addition to those mentioned in the case, what are some other advantages associated with the hiring of local managers in emerging markets? 2. What steps should a company take to ensure that, if taken to court, it can demonstrate that staffing cuts h

> You are an expatriate manager at a manufacturing facility in Asia on your first assignment abroad. You are aware of increasing concern among your employees (mostly young women) about wages that barely permit them to live at subsistence level. The plant i

> You are special assistant to the governor of a southeastern U.S. state in which unemployment (especially in rural areas) is well above the national average. After nearly three years in office and elected on a pledge to attract industry and create jobs, t

> You are chief operating officer of a U.S.-based telecommunications firm considering a joint venture inside China with a Chinese firm. The consultant you hired to help you through the negotiations has just informed you that ethical concerns can arise when

> 1. In the debate over jobs and wages, opponents of globalization say that it does what? 2. In the debate over jobs and wages, supporters of globalization say that it does what?

> 1. What is the value of goods and services that all nations of the world export every year? 2. A business that has direct investments in the form of marketing or manufacturing subsidiaries abroad in multiple countries is called a what? 3. A born global f

> 1. Evidence suggests that globalization can help developing nations boost incomes for their poorest citizens in what part of the debate over inequality? 2. In the debate over inequality between nations, evidence suggests that developing nations that are

> Research Project. Imagine that you and several of your classmates own a company that manufactures cheap sunglasses. To lower production costs, you choose to move your factory from your developed country to a more cost-effective nation. 1. What elements

> 1. The national competitive advantage theory states that a nation’s competitiveness in an industry depends on the capacity of the industry to do what? 2. The four main components of the Porter diamond are: (1) factor conditions, (2) demand conditions,

> 1. What is the main thrust of new trade theory? 2. The economic and strategic advantage gained by being the first company to enter an industry is called what?

> 1. The international product life cycle theory says that a company will begin by exporting its product and later undertake “what” as the product moves through its life cycle? 2. List the three stages that a product goes through according to the internati

> You are executive director of Qualitative Research Consultants Association (QRCA), an organization designed to assist market research practitioners. As part of their membership agreement, QRCA members agree to abide by a nine-point code of ethics that fo

> You are the CEO of a major U.S. apparel company that contracts work to garment manufacturers abroad. Employees of the contractors report 20-hour workdays, pay lower than the minimum wage, overcrowded living conditions, physically abusive supervisors, and

> The financial statements for THE Bank are shown below: a. Calculate THE Bank’s earning assets. b. Calculate THE Bank’s ROA. c. Calculate THE Bank’s total operating income. d. Calculate THE Bank&aci

> National Bank has the following balance sheet (in millions) and has no off-balance-sheet activities. a. What is the CET1 risk-based ratio? b. What is the Tier I risk-based capital ratio? c. What is the total risk–based capital ratio?

> A bank has a balance sheet as shown below. At the beginning of the month, the bank has $15,141,000 in its loan portfolio and $183,000 in the allowance for loan losses. During the month, management estimates that an additional $5,200 of loans will not be

> The financial statements for BSW National Bank (BSWNB) are shown below: Income Statement BSW National Bank Interest income ………………&ac

> The financial statements for First National Bank (FNB) are shown below: a. Calculate the dollar value of FNB’s earning assets. b. Calculate FNB’s ROA. c. Calculate FNB’s asset utilization ratio. d

> Two depository institutions have composite CAMELS ratings of 1 or 2 and are “well capitalized.” Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Institution A has average

> A bank is considering two securities: a 30-year Treasury bond yielding 7 percent and a 30-year municipal bond yielding 5 percent. If the bank’s tax rate is 30 percent, which bond offers the higher tax equivalent yield?

> Consider a GNMA mortgage pool with principal of $20 million. The maturity is 30 years with a monthly mortgage payment of 10 percent per year. Assume no prepayments. a. What is the monthly mortgage payment (100 percent amortizing) on the pool of mortgages

> What is the impact on GNMA pricing if a pass-through is not fully amortized? What is the present value of a $10 million pool of 15-year mortgages with an 8.5  percent per year monthly mortgage coupon if market rates are 5  percent? The GNMA guarantee fee

> Consider $100 million of 30-year mortgages with a coupon of 5 percent per year paid quarterly. a. What is the quarterly mortgage payment? b. What are the interest and principal repayments over the first year of life of the mortgages? c. Construct a 30-ye

> Tree Row Bank has assets of $150 million, liabilities of $135 million, and equity of $15 million. The asset duration is six years and the duration of the liabilities is four years. Market interest rates are 10 percent. Tree Row Bank wishes to hedge the b

> Consider $200 million of 30-year mortgages with a coupon of 10 percent paid quarterly. a. What is the quarterly mortgage payment? b. What are the interest repayments over the first year of life of the mortgages? What are the principal repayments? c. Cons

> An FI is planning to issue $100 million in commercial loans. It will finance all of it by issuing demand deposits. a. What is the minimum capital required if there are no reserve requirements? b. What is the minimum demand deposits it needs to attract in

> An FI is planning the purchase of a $5 million loan to raise the existing average duration of its assets from 3.5 years to 5 years. It currently has total assets worth $20 million, $5 million in cash (0 duration), and $15 million in loans. All the loans

> City Bank has made a 10-year, $2 million loan that pays annual interest of 10 percent per year. The principal is expected at maturity. a. What should it expect to receive from the sale of this loan if the current market rate on loans is 12 percent? b. Th

> A bank has made a three-year, $10 million loan that pays annual interest of 8 percent. The principal is due at the end of the third year. a. The bank is willing to sell this loan with recourse at an 8.5 percent discount rate. What should it receive for t

> Use the data provided for Gotbucks Bank Inc. to answer this question. Notes to the balance sheet: Currently, the fed funds rate is 8.5 percent. Variable-rate loans are priced at 4 percent over LIBOR (currently at 11 

> Consider the following. a. Calculate the leverage-adjusted duration gap of an FI that has assets of $1 million invested in 30-year, 10 percent semiannual coupon Treasury bonds selling at par and whose duration has been estimated at 9.94 years. It has lia

> Consider the following. a. What is the duration of a two-year bond that pays an annual coupon of 10 percent and whose current yield to maturity is 14 percent? Use $1,000 as the face value. b. What is the expected change in the price of the bond if intere

> Use the following information about a hypothetical government security dealer named J.P. Groman. (Market yields are in parentheses; amounts are in millions.) a. What is the re pricing or funding gap if the planning period is 30 days? 91 days? 2 years?

> A bank has the following balance sheet: Suppose interest rates rise such that the average yield on rate-sensitive assets increases by 45 basis points and the average yield on rate-sensitive liabilities increases by 35 basis points. a. Calcu

> Hedge Row Bank has the following balance sheet (in millions): The duration of the assets is six years and the duration of the liabilities is four years. The bank is expecting interest rates to fall from 10 percent to 9 percent over the next year. a. Wh

> Consider the following balance sheet for Watchovia Bank (in millions): a. What is Watchovia’s expected net interest income at year-end? b. What will net interest income be at year-end if interest rates rise by 2Â&nbs

> Consider the following balance sheet for Watch over Savings Inc. (in millions): a. What is Watch over’s expected net interest income at year-end? b. What will be the net interest income at year-end if interest rates rise b

> Consider the following balance sheet positions for a financial institution: (LG 22-1) Rate-sensitive assets = $200 million; Rate-sensitive liabilities = $100 million. Rate-sensitive assets = $100 million; Rate-sensitive liabilities = $150 million. Rate-s

> Two banks are being examined by regulators to determine the interest rate sensitivity of their balance sheets. Bank A has assets composed solely of a 10-year $1 million loan with a coupon rate and yield of 12 percent. The loan is financed with a 10-year,

> Use the following balance sheet information to answer this question. a. What is the average duration of all the assets? b. What is the average duration of all the liabilities? c. What is the FI’s leverage-adjusted duration gap? What i

> An insurance company issued a $90 million one-year, zero coupon note at 8 percent add-on annual interest (paying one coupon at the end of the year) and used the proceeds plus $10 million in equity to fund a $100 million face value, two-year commercial lo

> Calculate the re pricing gap and impact on net interest income of a 1 percent increase in interest rates for the following positions: a. Rate-sensitive assets = $100 million; Rate-sensitive liabilities = $50 million. b. Rate-sensitive assets = $50 millio

> An investment fund has $1 million in cash and $9 million invested in securities. It currently has 1 million shares outstanding. a. What is the NAV of this fund? b. Assume that some of the shareholders decide to cash in their shares of the fund. How many

> An investment fund has the following assets in its portfolio: $40 million in fixed-income securities and $40 million in stocks at current market values. In the event of a liquidity crisis, it can sell its assets at a 96 percent discount if they are dispo

> A DI has $10 million in T-bills, a $5 million line of credit to borrow in the repo market, and $5 million in excess cash reserves (above reserve requirements) with the Fed. The DI currently has borrowed $6 million in fed funds and $2 million from the Fed

> An FI holds a 15-year, $10,000,000 par value bond that is priced at 104 and yields 7 percent. The FI plans to sell the bond but for tax purposes must wait two months. The bond has a duration of 9.4 years. The FI’s market analyst is predicting that the Fe

> A DI has assets of $10 million consisting of $1 million in cash and $9 million in loans. It has core deposits of $6 million. It also has $2 million in subordinated debt and $2 million in equity. Increases in interest rates are expected to result in a net

> Consider the balance sheet for the DI listed below: The DI is expecting a $15 million net deposit drain. Show the DI’s balance sheet under these two conditions: a. The DI purchases liabilities to offset this expected drain

> Banc Two has the following balance sheet (in millions of dollars): Calculate the NSFR for BancTwo. Assets Liabilities and Equity Cash $ 20 Stable retail deposits $ 190 Less stable retail Deposits at the Fed deposits CDs maturing in 6 145 months 30

> First Bank has the following balance sheet (in millions of dollars): Calculate the NSFR for FirstBank. Assets Liabilities and Equity $ 12 Stable retail deposits $ 55 19 Less stable retail deposits Cash Deposits at the Fed 20 Unsecured wholesale Tre