Sample Questions

PART I – SINGLE CHOICE QUESTIONS

Please write your selection in the left boxes.

1. Which of the following statements about international business is INCORRECT?(A) MNE is a company headquartered in one country but with operations in at least two other countries.(B) The world is still not flat given cultural-, political- and other institutional differences.(C) FDI and trade are two major examples of international business activities.

2. Which of the following statement about international business activities is INCORRECT?(A) FDI differs from portfolio investment in that the former pursues influence.(B) Trade is the net balance between total exports and total imports.(C) Trade is the addition of total exports and total imports.

3. Which of the following example is a Non-legal/extra government Macro country risk?(A) Newly-elected government with new policies on tax regimes.(B) Military attacks from neighbor nations.(C) Theft or abuse of intellectual property rights.

4. Which of the following discussions about NAFTA is INCORRECT?(A) Compared to the EU, NAFTA is not a pure free trade agreement since all members still own independent

trade policies.(B) NAFTA is the 1994 modification of the 1988 US-Canada-Mexico FTA agreement.(C) NAFTA did not lead to significant American job losses to Mexico.

5. Which of the following descriptions about integration strategies is INCORRECT?(A) A combination of forward and backward integrations can raise a firm’s profit margin in the value chain.(B) A combination of horizontal and forward integrations can raise a firm’s profit margin in the value chain.(C) Horizontal-only integration can raise a firm’s scale but cannot increase its profit margin in the value chain.

1 of 3

PART II – SHORT ESSAY

Question 1You own a production base in Mooresville, the US, a sales subsidiary in Tokyo, Japan, and a profit settlement center in Hong Kong SAR. You plan to maximize your total retained profit through your profit settlement center. The final market price in the end customer market in Tokyo and the cost of production in Mooresville are given in the following table. The effective tax rate in the three locations are also given. How would you price intra-firm exports of intermediate goods manufactured in Mooresville to the next stage in Tokyo? The spot exchange rates are ¥13/HK$ and HK$7.75/US$. All profits should be translated into the HK$. Please keep two decimal places.

Mooresville, US Hong Kong SAR Tokyo, JapanSales US$ 1 million HK$12 million ¥156 millionCosts of sales US$ 1 million HK$7.75 million ¥156 millionProfit 0 HK$4.25 million 0Tax rate (effective)

40% 0% 38%

Net profit 0 HK$4.25 million 0

In an effort to hedge foreign currency risk, you had previously bought two forward call options to exercise optional exchange rates at ¥12/HK$ and HK$7.85/US$ at no cost. Given the same spot rate as in question 1, you can choose to exercise neither, exercise one of them, or exercise both. All profits should be translated into HK$. Please keep two decimal places.

Please provide steps of your calculation (4%) and identify whether the final strategy is: a) exercise nether; b) exercise ¥12/HK$ but not HK$7.85/US$; c) exercise HK$7.85/US$ but not ¥12/HK$; or d) exercise both (1%).

For detailed steps, see your class assignment on transfer pricing/hedging.

Question 2Please write an essay (within two pages, single space) on the following industry/simulation project

Pick one country of those Ronnie Bryant (Regional Partnerships) presented.  You work for the City of Charlotte’s economic development department and are asked to create an itinerary for a company visiting Charlotte from the country you selected.  This company is interested in entering the U.S. market and has heard the Southeastern U.S. can be the best point of entry.  They will be visiting Richmond, Charlotte and Atlanta – in that order.  You have 2 days with the client and will be picking them up at 7am from CLT, Thursday morning, and returning them to CLT at 7pm Friday evening for their flight to Atlanta.

Please put together a 2-day itinerary that would help make the case for a Charlotte location and address topics that would be most important to them, as a foreign investor looking to gain access to the U.S. market.   You have very little information to go by, as the company is very busy and has not given many parameters to their search.

The basic things you do know are this:

Midsize, family owned machinery manufacturer in business for 40+ years; Company already has a few customers in the U.S.; Sales in U.S. market are growing; Concerns about U.S. location include commuting, cost of doing business, ability to find quality workers and

seemingly complicated tax structure; Concerned about culturally fitting into the community.

2 of 3

3 of 3

4 of 3

Survey questions

Please list the names of your team mates and rank each one’s overall contribution throughout the semester (1 being the most important in the team).

Name: ____________________________ ([1] [2] [3] [4] [5])Name: ____________________________ ([1] [2] [3] [4] [5])Name: ____________________________ ([1] [2] [3] [4] [5])Name: ____________________________ ([1] [2] [3] [4] [5])Name: ____________________________ ([1] [2] [3] [4] [5])Name: ____________________________ ([1] [2] [3] [4] [5])

5 of 3