Risk that firms and individuals may encounter in an international. It ranges from unexpected changes in tax rules to outright expropriation of assets held by foreigners.

• Political Risk

• Market risk

• Foreign exchange risk

• Tax risk

When firms and individuals are engaged in cross-border transactions, they are potentially exposed to a kind of risk, that they would not normally encounter in purely domestic transactions.

• Political risk

• Market risk

• Foreign exchange risk

• Tax risk

When a country specializes in some products, it may not produce other products, so trade between countries is essential. This is the argument made by the classical:

• the theory of comparative advantage

• the perfect markets theory

• the product cycle theory

• the imperfect markets theory

The commonly held theories as to why fi rms become motivated to expand their business internationally are:

• (1) The theory of relativity, (2) the imperfect markets theory, and (3) the product cycle theory.

• (1) the theory of comparative advantage, (2) the imperfect markets theory, and (3) the product cycle theory.

• (1) the theory of comparative advantage, (2) the imperfect markets theory, and (3) the cash conversion cycle theory.

• (1) the theory of comparative advantage, (2) the perfect markets theory, and (3) the product cycle theory.

The real world suffers from ____________ market conditions where factors of production are somewhat immobile. There are costs and often restrictions related to the transfer of labor and other resources used for production.

• imperfect

• perfect

• democratic

• restricted

According to this theory, fi rms become established in the home market as a result of some perceived advantage over existing competitors, such as a need by the market for at least one more supplier of the product.

• The perfect markets theory

• The theory of relativity

• The cash cycle theory.

• Product cycle theory.

It is a relatively conservative approach that can be used by fi rms to penetrate markets (by exporting) or to obtain supplies at a low cost (by importing), this approach entails minimal risk because the fi rm does not place any of its capital at risk.

• International trade

• Licensing

• Franchising

• Joint venture

Conflict of goals between a firm’s managers and shareholders is often referred to as:

• Agency problema

• Potential benefits

• Expand a subsidiary

• Shareholders

This strategy allows firms to penetrate foreign markets without a major investment in foreign countries, however it obligates a firm to provide a specialized sales or service strategy, support assistance, and possibly an initial investment in the franchise in exchange for periodic fees.

• Licensing

• Joint venture

• Franchising

• International trade

The common monetary policy for the euro zone is now formulated by the ____________________ that is located in Frankfurt and closely modeled after the Bundesbank, the German central bank.

• European Central Bank

• American Central Bank

• German Central Bank

• World Central Bank