Firm A from the table below is considering a merger with a competitor in its industry. However, the firm wishes to avoid proposing a merger with the competitor if it's likely to be challenged by the Department of Justice (DOJ) on the grounds that it exceeds guidelines for acceptable changes. Given this, which of firm A's competitors has the largest percentage market share it could merge with while staying within DOJ guidelines?

A. F

B. G

C. D

D. C

Which one of the following is a political risk to the assets and cash flows of MNCs?

A. Exchange rate fluctuation

B. A downturn in the economy

C. A change in the MNC's capital structure

D. Enactment of new taxation

Your firm wants to convert $1.4 million Australian into U.S. dollars in purchase in 12 months. The spot rate is $0.9704 equals $1 Australian. The inflation rates in Australia and the United States are expected to be 6 percent and 2 percent, respectively. Using the concept of purchasing power parity (PPP) as it relates to future exchange rates, what will be the difference in costs between completing the transaction now and doing it in 12 months?

A. $42,568

B. $60,242

C. $36,821

D. $51,266

Which of the following is not one of the basic approaches used in monitoring company managers to minimize the impact of the agency problem?

A. Monitor managers' actions

B. Appoint an ethics specialist to the board of directors

C. Make the managers owners

D. Ignore it if the amount of money involved is negligible

The uncertainty that relates to future cash flows is referred to as

A. risk.

B. friction.

C. the agency problem.

D. liability.

Your company has invested $540,000 U.S. in purchasing real estate in Argentina. The peso exchange rate at the time of the transaction was 1 peso = $0.2484. If the Argentinean peso is subsequently devalued to $0.2186, what would be the loss in U.S. dollars because of currency fluctuation?

A. $59,243.12

B. $102,824.72

C. $64,782.61

D. $72,831.24

Which one of the following is a type of financial distress?

A. Misallocation of capital

B. Workout

C. Technical insolvency

D. Economies of scope

Adam Smith attributed his belief that individuals pursuing their own economic self-interest would result in the greatest good for society over the long term to

A. economies of scale.

B. securitization.

C. the time value of money (TVM).

D. the invisible hand.