Question

1. Multiple choice question                                                                                         Points:2

A) Which of the following is not a way in which agency problems can be reduced through corporate control?

a.	Stock compensation.	c.	Acquisition of a foreign subsidiary.
b.	Threat of hostile takeover.	d.	Monitoring by large shareholders

B) The World Bank's Multilateral Investment Guarantee Agency (MIGA):

a.	Offers various forms of export insurance.
b.	Offers various forms of import insurance.
c.	Offers various forms of exchange rate risk insurance.
d.	Provides loans to developing countries.
e.	Offers various forms of political risk insurance.

C) A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

a.	Increased trade restrictions outside of North America.
b.	Lower trade restrictions around the world.
c.	Uniform environmental standards around the world.
d.	Uniform worker health laws.

D)

______________ is (are) income received by investors on foreign investments in financial assets (securities).

a.	Portfolio income	c.	Unilateral transfers
b.	Direct foreign income	d.	Factor income

Answer 1

ANswer 1 C

Acquisition of forign subsidy does not resolve the agency cost. The other three will effectively reduce the agency problme.

Answer 2. E

The primary role of the MIGA is to provide the political risk insurance to the lenders and the investors.

Answer 3 B

The main objective of the GATT 1993 was to lower the trade restrictions around the world and as a result Worild Trade Organisation is created.

Answer 4 A

Portfolio income is the incoem recived by the investor by investing in foreign companies or financial securities.