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web.groovymark@gmail.com
- December 7, 2024
Question 01
Which financing source involves raising small amounts of capital from a large number of investors, typically through an online platform?
a) Venture capital
b) Crowdsourcing
c) Angel investors
d) Personal contacts
Answer: b) Crowdsourcing
Explanation:
Crowdsourcing allows entrepreneurs and businesses to gather small amounts of capital from many investors, often through online platforms, making it easier to fund projects without relying on traditional funding sources.
Question 02
What is the main benefit of using a forward contract in international business?
a) To speculate on currency fluctuations
b) To hedge against exchange rate risk
c) To engage in short-term currency trading
d) To invest in foreign bonds
Answer: b) To hedge against exchange rate risk
Explanation:
A forward contract allows businesses to lock in a specific exchange rate for future transactions, protecting them from potential losses due to fluctuations in currency values.
Question 03
Which economic integration stage establishes a common external tariff on non-member countries?
a) Free trade area
b) Customs union
c) Common market
d) Economic union
Answer: b) Customs union
Explanation:
A customs union eliminates trade barriers between member countries and imposes a common external tariff on imports from non-member countries.
Question 04
Which agreement helps protect intellectual property rights in the global market?
a) WTO
b) TRIPS
c) GATT
d) NAFTA
Answer: b) TRIPS
Explanation:
The TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) establishes international standards for the protection of intellectual property, helping businesses safeguard their inventions, trademarks, and copyrights across borders.
Question 05
Which type of FDI (Foreign Direct Investment) involves a company establishing new operations in a foreign country where no prior business existed?
a) Brownfield investment
b) Portfolio investment
c) Horizontal FDI
d) Greenfield investment
Answer: d) Greenfield investment
Explanation:
Greenfield investment refers to when a company builds new facilities and operations in a foreign country from the ground up, often creating new jobs and infrastructure.
Question 06
What is the primary focus of a multidomestic strategy in international business?
a) Standardizing products across all markets
b) Offering unique products tailored to each market
c) Centralizing all decision-making in the home country
d) Reducing operational costs through economies of scale
Answer: b) Offering unique products tailored to each market
Explanation:
A multidomestic strategy focuses on adapting products and services to meet the specific needs and preferences of each local market, allowing businesses to better cater to cultural and consumer differences.
Question 07
What is the primary goal of using a hedging strategy in international finance?
a) To profit from currency fluctuations
b) To minimize potential losses from adverse price movements
c) To increase the return on foreign investments
d) To speculate on commodity prices
Answer: b) To minimize potential losses from adverse price movements
Explanation:
Hedging involves using financial instruments to protect against potential losses from price fluctuations in assets such as currencies, commodities, or interest rates.
Question 08
Which cultural dimension in Hofstede’s framework measures the extent to which a society accepts unequal distribution of power?
a) Individualism
b) Uncertainty avoidance
c) Power distance
d) Masculinity
Answer: c) Power distance
Explanation:
Power distance refers to the degree to which less powerful members of a society accept and expect power to be distributed unequally. In high power distance cultures, hierarchy and authority are more accepted.
Question 09
What is the purpose of the General Data Protection Regulation (GDPR)?
a) To enforce intellectual property rights across the EU
b) To protect personal data of individuals within the EU
c) To regulate financial transactions within Europe
d) To promote free trade within the European Union
Answer: b) To protect personal data of individuals within the EU
Explanation:
The GDPR is a comprehensive data protection regulation in the European Union that requires companies to obtain explicit consent from individuals before collecting and processing their personal data.
Question 10
Which stage of economic integration allows free movement of goods, services, capital, and labor between member countries?
a) Free trade area
b) Customs union
c) Common market
d) Economic union
Answer: c) Common market
Explanation:
A common market allows for the free movement of goods, services, capital, and labor among member countries, facilitating greater economic cooperation and integration.
Question 11
What is the key characteristic of a venture capitalist?
a) Provides small amounts of capital to numerous ventures
b) Focuses on large, established businesses
c) Seeks high returns by investing in early-stage startups
d) Operates as part of a government financial institution
Answer: c) Seeks high returns by investing in early-stage startups
Explanation:
Venture capitalists provide capital to early-stage companies with high growth potential, typically in exchange for equity. They seek significant returns on their investments as the company grows.
Question 12
Which financing method involves selling company shares to the public?
a) Crowdsourcing
b) Private equity
c) Initial public offering (IPO)
d) Debt financing
Answer: c) Initial public offering (IPO)
Explanation:
An IPO is when a company offers its shares to the public for the first time, allowing it to raise capital from a broader range of investors in the stock market.
Question 13
What is the primary advantage of using an export strategy in international business?
a) Reduced transportation costs
b) Avoiding tariffs in foreign markets
c) Entering new markets without establishing operations abroad
d) Gaining control over the supply chain
Answer: c) Entering new markets without establishing operations abroad
Explanation:
Exporting allows businesses to expand into new markets without the need to set up physical operations in foreign countries, making it a cost-effective and lower-risk strategy for global expansion.
Question 14
What is the role of the World Trade Organization (WTO)?
a) To enforce labor standards globally
b) To resolve trade disputes between member nations
c) To provide development loans to poor countries
d) To manage exchange rates between countries
Answer: b) To resolve trade disputes between member nations
Explanation:
The WTO oversees international trade agreements and resolves trade disputes between member countries to ensure fair and smooth global trade practices.
Question 15
What is the main goal of corporate social responsibility (CSR)?
a) To maximize shareholder value
b) To ensure compliance with local laws
c) To promote ethical business practices and contribute to societal goals
d) To reduce operational costs
Answer: c) To promote ethical business practices and contribute to societal goals
Explanation:
Corporate social responsibility (CSR) focuses on ethical business practices that benefit society, such as sustainability, environmental protection, and community engagement.
Question 16
Which global organization is responsible for providing loans to developing countries for infrastructure projects?
a) International Monetary Fund (IMF)
b) World Trade Organization (WTO)
c) World Bank
d) International Finance Corporation (IFC)
Answer: c) World Bank
Explanation:
The World Bank provides financial and technical assistance to developing countries for infrastructure projects such as transportation, education, and healthcare, aiming to reduce poverty and promote economic development.
Question 17
What is the primary focus of an ethnocentric approach to global human resource management?
a) Hiring local talent to manage operations abroad
b) Centralizing decision-making in the host country
c) Relying on home-country nationals for key management positions
d) Promoting diversity within the workforce
Answer: c) Relying on home-country nationals for key management positions
Explanation:
An ethnocentric approach to HR management involves filling key managerial positions in foreign subsidiaries with employees from the home country, often to maintain consistency with the parent company’s culture and practices.
Question 18
Which pricing strategy involves setting a high initial price to maximize profits before lowering it over time?
a) Penetration pricing
b) Skimming pricing
c) Competitive pricing
d) Cost-plus pricing
Answer: b) Skimming pricing
Explanation:
Skimming pricing is a strategy where a company sets a high price for a new product at launch to maximize short-term profits before gradually lowering the price to attract more price-sensitive customers.
Question 19
What is the main goal of transfer pricing within multinational corporations?
a) To simplify currency exchange transactions
b) To reduce taxes by shifting profits to low-tax jurisdictions
c) To standardize prices across all markets
d) To control product quality
Answer: b) To reduce taxes by shifting profits to low-tax jurisdictions
Explanation:
Transfer pricing is used by multinational corporations to allocate profits between subsidiaries in different countries, often to take advantage of lower tax rates in certain jurisdictions.
Question 20
What is the primary focus of a push supply chain strategy?
a) Producing goods in response to consumer demand
b) Minimizing inventory to reduce costs
c) Producing goods in advance based on forecasted demand
d) Tailoring production schedules to local market needs
Answer: c) Producing goods in advance based on forecasted demand
Explanation:
A push supply chain strategy involves producing goods based on anticipated demand, with the goal of having products readily available for consumers before actual demand arises.
