International Finance And Treasury - Study Mode

[#246] One of generally prevalent aspects conflicting with recognition of ambition of an MNC is existence of
Correct Answer

(A) Agency problem

Explanation

Solution: One of generally prevalent aspects conflicting with recognition of ambition of an MNC is existence of Agency problem. The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests.

[#247] Agency problem is between
Correct Answer

(C) Manager and Shareholders

Explanation

Solution: Agency problem is between manager and shareholders. The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests. In corporate finance, the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders.

[#248] Most unsafe mode by which firms perform worldwide business is
Correct Answer

(D) The establishment of new subsidiaries

Explanation

Solution: Most unsafe mode by which firms perform worldwide business is the establishment of new subsidiaries. Firms can also penetrate foreign markets by establishing new operations in foreign countries to produce and sell their products.

[#249] Which of following is not a cause for global investment?
Correct Answer

(D) International investments have less political risk than domestic investments.

Explanation

Solution: International investments have less political risk than domestic investments is not a cause for global investment. International investing involves selecting global investment instruments as part of a geographically diversified portfolio. People often invest internationally to broaden diversification and spread investment risk among foreign markets and companies.

[#250] Greater exposure bigger the
Correct Answer

(D) Risk

Explanation

Solution: Greater exposure bigger the risk. Gross exposure is a measure that indicates total exposure to financial markets, thus providing an insight into the amount at risk that investors are taking on. The higher the gross exposure, the bigger the potential loss (or gain).