MIB Master of International Business MCQ 2

Question 1

Which theory suggests that countries should specialize in producing goods for which they have a lower opportunity cost compared to other countries?

Accepted Answer

Comparative advantage

Answer

Comparative advantage, developed by David Ricardo, holds that trade is beneficial when each country specializes in goods with a lower relative opportunity cost.

Question 2

A US company sells goods to a German buyer with payment due in euros in 90 days. Which risk does the US company primarily face?

Accepted Answer

Transaction exposure

Answer

Transaction exposure arises from contractual obligations in a foreign currency where exchange-rate movements affect the cash value received.

Question 3

The World Trade Organization's dispute settlement mechanism is BEST described as:

Accepted Answer

A binding arbitration system backed by authorized trade retaliation

Answer

The WTO DSU allows winning parties to impose authorized retaliatory tariffs if a losing member does not comply with panel rulings.

Question 4

A multinational firm that adapts its products, marketing, and operations to each local market is pursuing which strategy?

Accepted Answer

Multi-domestic strategy

Answer

A multi-domestic strategy maximizes local responsiveness by tailoring offerings to each country's unique preferences and conditions.

Question 5

Which financial instrument allows a corporation to lock in a future exchange rate for a specific date and amount, obligating both parties to complete the transaction?

Accepted Answer

Forward contract

Answer

A forward contract is a customized, over-the-counter agreement that obligates both counterparties to exchange currencies at a predetermined rate on a set date.

MIB - Master of International Business Practice Test

MIB - Master of International Business Practice Test

MIB Master of International Business MCQ 2