Which of the following is NOT identified as a primary country-specific risk by the authors?
A. Thin equity base
B. Cultural differences
C. Protectionism
D. Transfer risk
Which option does NOT represent a potential drawback of licensing when compared to Foreign Direct Investment (FDI)?
A. possible loss of quality control
B. establishment of a potential competitor in third-country markets
C. possible improvement of the technology by the local licensee, which then enters the original firm’s home market
D. All of the above are potential disadvantages to licensing.
Which option does NOT describe a common attribute of a fronting loan provided to an international subsidiary?
A. The lending bank is located in the subsidiary’s country.
B. The bank lends to the subsidiary firm an amount equal to the parent deposit at a slightly higher interest rate.
C. The parent makes a deposit equal to the size of the desired loan into a large commercial bank.
D. All of the above are typical characteristics of a fronting loan.
What are the essential attributes of owner-specific advantages in the OLI (Ownership, Location, Internalization) framework?
Is it true that a country can respond to the possibility of blocked funds by taking action before investing, during operations, or by investing in local assets that retain their value?
A. True
B. False
Determine the exchange rate in Brussels and the exchange rate in New York.
Your numbers will vary.
Determine the percentage change in the value of the peso and then comment on the peso’s fluctuations.
Your numbers will vary.
How can Embraer manage its currency exposure given a contract to produce and deliver four aircraft to a U.S. airline for $ million, while also needing to pay foreign suppliers $ million for inputs one year from now?
Your numbers will vary.
Najafi purchased a Korean firm and has Korean won due in six months. Determine the amount that Najafi would pay without a hedge, with a forward hedge, with a money market hedge, and finally, the amount Najafi will pay with an option hedge. Make a recommendation as to which hedge should be used if the Won is expected to be weaker and stronger relative to the dollar.
Your numbers will vary.
How did Siam Cement’s aggressive growth strategy and the devaluation of the Thai baht lead to enormous losses during the Asian crisis in 1997?
Your numbers will vary.