Concept – Country-Specific Risks in International Business

Multinational Business Finance

Eiteman, Stonehill, and Moffett

16th Edition

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

Concept – Disadvantages of Licensing vs. FDI

Multinational Business Finance

Eiteman, Stonehill, and Moffett

16th Edition

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.

Concept – Fronting Loan Features in International Subsidiaries

Multinational Business Finance

Eiteman, Stonehill, and Moffett

16th Edition

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.

Concept – Owner-Specific Advantages in OLI Framework

Multinational Business Finance

Eiteman, Stonehill, and Moffett

16th Edition

What are the essential attributes of owner-specific advantages in the OLI (Ownership, Location, Internalization) framework?

• A. not easily copied.
• B. firm-specific.
• C. transferable to foreign subsidiaries.
• D. all of the above