1.6 The globalization process

The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the

• domestic phase
• multinational phase
• international trade phase
• import-export banking phase

The authors describe the multinational phase of globalization for a firm as one characterized by the

• ownership of assets and enterprises in foreign countries
• potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars
• imports from foreign suppliers and exports to foreign buyers
• requirement that all employees be multilingual

A firm in the International Trade Phase of Globalization

• makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units
• receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units
• bears direct foreign exchange risk
• none of the above

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?

• evaluation of the credit quality of foreign buyers and sellers
• foreign consumer method of payment preferences
• credit risk management
• evaluation of foreign exchange risk

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm

• rulers of sovereign states and unsavory customs officials
• corporate insiders and attorneys
• corporate insiders and rulers of sovereign states
• attorneys and unsavory customs officials

Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency

• True
• False

Typically, a "greenfield" investment abroad is considered an investment having a greater foreign presence than a joint venture with a foreign firm

• True
• False

The authors argue that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance

• True
• False

The authors describe a process for development of a MNE that begins with a purely domestic phase, followed by the multinational phase, and topping out with the international trade phase

• True
• False

Today it is widely assumed that there are NO LIMITS to financial globalization

• True
• False