国际财务管理徐虹chapter13 exercise

国际财务管理徐虹chapter13 exerciseChapter 13 Ⅰ MULTIPLE CHOICES 1. Not all countries allow MNCs the freedom to net payments, A) The U.S., Canada, and Great Britain allow only netting between each other B) Some countries require the MNC to ask permission, and some countries limit netting ...

Chapter 13 Ⅰ MULTIPLE CHOICES 1. Not all countries allow MNCs the freedom to net payments, A) The U.S., Canada, and Great Britain allow only netting between each other B) Some countries require the MNC to ask permission, and some countries limit netting C) But that is fine, since netting typically has costs that outweigh the benefits for a MNC D) All of the above may be correct. 2. Your firm has a subsidiary in a foreign country which has placed restrictions on its own currency, limiting its conversion into other currencies. What is up with that? A) The MNC should shut down operations in protest B) This is known as blocked funds C) This will not affect the MNC since the accounting numbers in the consolidated financial statements will not change D) None of the above 3. Which will reduce the number of foreign exchange transaction the most for a MNC? A) Multilateral netting B) Bilateral netting C) Fish netting D) None of the above. 4. Under multilateral netting A) Each affiliate nets all its inter-affiliate receipts against all its disbursements. It then transfers or receives the balance, respectively, if it is the net payer or receiver B) Each pair of affiliates determines the net amount due between them, and only the net amount is transferred C) No inter-affiliate payments are made or even computed, since no real cash flows are involved D) All of the above 5. One benefit of a centralized cash depository is A) The MNC's investment in precautionary cash balances can be substantially reduced without a reduction in its ability to cover unforeseen expenses B) Each affiliate will have greater autonomy in managing its own cash balances C) Exchange rate restrictions can be easily circumvented D) None of the above Ⅱ QUESTIONS 1.Describe the key factors contributing to effective cash management within a firm. Why is the cash management process more difficult in a MNC? Ⅲ TRANSLATION FOR THE TERMS AND PARAGRAPHS 1. 双边冲销、中心现金库、转移价格 2. A centralized cash pool assists in reducing the problem of mislocated funds and in funds mobilization. A central cash manager has a global view of the most favorable borrowing rates and most advantageous investment rates. Ⅳ CALCULATION AND ANALYSIS Affiliate A sells 5,000 units to Affiliate B per year. The marginal income tax rate for Affiliate A is 25 percent and the marginal income tax rate for Affiliate B is 40 percent. The transfer price per unit is currently $2,000, but it can be set at any level between $2,000 and $2,400. Derive a formula to determine how much annual after-tax profits can be increased by selecting the optimal transfer price?

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