FIN 4110 Exam 1 Clemson University UPDATED Actual Questions and CORRECT Answers
4 views 0 purchase
Course
FIN 4110
Institution
FIN 4110
FIN 4110 Exam 1 Clemson University
UPDATED Actual Questions and
CORRECT Answers
3 Functions of Money - CORRECT ANSWER- 1. Medium of exchange
2. Unit of account
3. Store of value
Multinational Corporation - CORRECT ANSWER- a company with production and
distribution facilities in more than 1...
FIN 4110 Exam 1 Clemson University
UPDATED Actual Questions and
CORRECT Answers
3 Functions of Money - CORRECT ANSWER✔✔- 1. Medium of exchange
2. Unit of account
3. Store of value
Multinational Corporation - CORRECT ANSWER✔✔- a company with production and
distribution facilities in more than 1 country
Reasons to globalize - CORRECT ANSWER✔✔- find new markets; lower costs; utilize
different resources/materials
Raw Material Seekers - CORRECT ANSWER✔✔- the earliest multinationals; exploit
markets in other countries
Market Seekers - CORRECT ANSWER✔✔- produce and sell in foreign markets (ex. IBM,
McDonald's, Nestle)
Cost Minimizers - CORRECT ANSWER✔✔- seek lower cost production abroad in order to
remain cost competitive
2 Types of Cost Minimization - CORRECT ANSWER✔✔- 1. Offshoring: production by
foreign affiliate
2. Outsourcing: production by foreign 3rd party
Costs of Globalization - CORRECT ANSWER✔✔- 1. lost manufacturing jobs in U.S.
2. major plant closings
3. high paying union jobs replaced with low paying service jobs
, 3 Requirements for Arbitrage - CORRECT ANSWER✔✔- 1. no risk
2. can't use any personal money
3. instantaneous return
Market Efficiency - CORRECT ANSWER✔✔- prices reflect all relevant information
Capital Asset Pricing - CORRECT ANSWER✔✔- equates risk and return; investors expect
compensation for systematic risk
2 Types of Risk - CORRECT ANSWER✔✔- 1. Systematic: undiversifiable (risk premium)
2. Unsystematic: diversifiable (no risk premium)
Exchange Rate - CORRECT ANSWER✔✔- price of one unit of currency expressed as a
certain price in local currency
Factors that impact exchange rates - CORRECT ANSWER✔✔- 1. Interest Rates
2. Inflation
3. Political Uncertainty
4. GDP Growth
Asset Market Model - CORRECT ANSWER✔✔- the exchange rate between 2 currencies
represents the price that just balances the relative supplies and demands for assets
denominated in the 2 currencies
2 Characteristics of Money - CORRECT ANSWER✔✔- 1. Store of Value
2. Store of Liquidity
Central Bank - CORRECT ANSWER✔✔- nation's official monetary authority; has the sole
power to create money
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller MGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
