19

Student: ___________________________________________________________________________

1.

Many of the skills necessary for effective cash management are the same regardless of whether the firm
has only domestic operations or if it operates internationally.
True False

2.

The cash manager of a domestic firm should source funds internationally to obtain the lowest borrowing
cost and to place excess funds wherever the greatest return can be earned regardless of currency.
True False

3.

A netting center necessarily implies that the MNC has a central cash manager.
True False

4.

A multilateral netting system is beneficial in reducing the number of and the expense associated with
interaffiliate foreign exchange transactions.
True False

5.

A central cash manager has a global view of the most favorable borrowing rates and most advantageous
investment rates.
True False

6.

A centralized cash pool assists in reducing the problem of mislocated funds and in funds
mobilization.
True False

7.

A centralized cash management system with a cash pool can reduce the investment the MNC has in
precautionary cash balances, saving the firm money.
True False

8.

Efficient cash management techniques can

A. reduce the investment in cash balances and foreign exchange transaction expenses.
B. provide for maximum return from the investment of excess cash.
C. result in borrowing at lowest rate when a temporary cash shortage exists.
D. all of the above

9.

Cash management refers to

A. the decision to grant credit to customers or to remain "cash and carry".
B. the investment the firm has in transaction balances and precautionary balances.
C. a domestic firm's investment in foreign currency.
D. none of the above

10. Precautionary cash balances

A. are necessary in case the firm has underestimated the amount of cash need to cover transactions.
B. are necessary to cover scheduled outflows of funds during a cash budgeting period.
C. both a and b
D. none of the above
11. Precautionary cash balances
A. represent an increasingly-important source of interest income for many MNCs.
B. are necessary in case the firm has underestimated the amount needed to cover transactions.
C. are synonymous with speculative cash balances.
D. none of the above

12. Multinational cash management

A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
13. Good cash management boils down to
A investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is
. a temporary cash shortage.
B. investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary
cash shortage.
C. hedging currency exposure with judicious use of futures, forwards, and currency option contracts.
D. none of the above
ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into
consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States. For a
recent month, the following payments matrix of interaffiliate cash flows, stated in Singapore dollars, was
forecasted.

14. Calculate, in Singapore dollars, the amount that the interaffiliate foreign exchange transaction will be
reduced by with multilateral netting.
A. S$152,000
B. S$170,000
C. S$322,000
D. S$405,000
15. If foreign exchange transactions cost ABC 0.45 percent, what savings results from netting?
A. S$684
B. S$765
C. S$1,449
D. S$1,823

16. Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown at
left. Use BILATERAL netting to reduce the number of foreign exchange transactions by half.

A.

B.

C.

D. None of the above

17. Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown at
left. Use MULTILATERAL netting to reduce the number of foreign exchange transactions.

A.

B.

C.

D. None of the above

18. Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown
at left. Use MULTILATERAL netting WITH A CENTRAL DEPOSITORY to reduce the number of
foreign exchange transactions.

A.

B.

C.

D. None of the above

19. ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into
consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States. For a
recent month, the following payments matrix of interaffiliate cash flows, stated in Singapore dollars, was
forecasted.

Which of the following is an accurate chart of their current situation?

A.

B.

C.

D.

20. Find the net exposure of the U.S. MNC with the following intra affiliate transactions shown:

A.
B.
C.
D.

$55
$65
$800
None of the above

21. Find the net exposure of the British subsidiary of the U.S. MNC with the following intra affiliate
transactions shown:

A. $40 out
B. $65 in
C. 20 out
D. None of the above
22. Benefits of a multilateral netting system include:
A The decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for
. a large international transfer of foreign exchange.
B. The reduction in the number of foreign exchange transactions and the associated cost of making fewer
but larger transactions.
C. The reduction in intra-company float, which is frequently as high as five days even for wire transfers.
DThe benefits that accrue from the establishment of a formal information system, which serves as the
. foundation for centrally managing transaction exposure and the investment of excess funds.
E. All of the above
23. With a CENTRALIZED CASH DEPOSITORY
A. there is less chance for an MNC's funds to be denominated in the wrong currency.
B. the central cash manager has a global view of the MNC's overall cash position.
C. there is less chance of mislocated funds.
D. All of the above
24. With a CENTRALIZED CASH DEPOSITORY
A. a MNC can facilitate fund mobilization.
B. system-wide excess cash are invested at the most advantageous rates.
C. system-wide cash shortages are borrowed at the most advantageous rates.
D. all of the above

25. Not all countries allow MNCs the freedom to net payments,
A. by limiting netting, more needless foreign exchange transactions flow through the local banking
system.
B. MNCs can avoid these restrictions by using a Centralized Cash Depository.
C. MNCs can avoid these restrictions by using wire transfers.
D. both b and c
26. With regard to cash management systems in practice, studies suggest that the benefits of a multilateral
netting system include
A the decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for
. a large international transfer of foreign exchange.
B. the savings in administrative time.
C. the reduction in intra company float, which is frequently as high as five days, even for wire transfers.
D. all of the above
27. Several international banks offer multilateral netting software packages. These packages
A. calculate the net currency positions of each affiliate.
B. can integrate the netting function with foreign exchange exposure management.
C. only work on the Mac platform.
D. both a and b
28. MNCs can reduce their exchange rate expense
A. by using bilateral netting.
B. by using a centralized cash management system.
C. by using multilateral netting.
D. all of the above
29. Which of the following statements about multilateral netting system are correct?
(i) - Each affiliate nets all its interaffiliate receipts against all its disbursements
(ii) - Each affiliate transfers or receives a balance, depending on whether it is a net payer or receiver
(iii) - The net funds to be received by the affiliates will equal the net disbursements to be made by the
affiliates
(iv) - Only two foreign exchange transactions are necessary since the affiliates' net receipts will always be
equal to zero
(v) - Only two foreign exchange transactions are necessary since the affiliates' net disbursements will
always be equal to zero
A. (i) and (ii)
B. (i), (ii), and (iii)
C. (i), (ii), (iii), and (iv)
D. (i), (ii), (iii), and (v)
30. Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the standard
deviation of the portfolio of cash held by the centralized depository for the following affiliate members:

A.
B.
C.
D.

$34,960.33
$139,841.33
$104,880.88
None of the above

31. Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the minimum cash
balance to have if the firm follows a conservative policy of having three standard deviations of cash for
precautionary purposes

A.
B.
C.
D.

$34,960.33
$314,642.65
$104,880.88
None of the above

32. If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A 2,000
when the exchange rate is $1.10 = 1.00. The net payment between A and B should be
A. 1,091 from B to A.
B. 1,091 from A to B.
C. $1,200 from B to A.
D. None of the above
33. For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

Use multilateral netting to find the net payment from the British affiliate to the U.S. affiliate.
The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency.
A. $60
B. $20
C. $0
D. None of the above
34. The U.S. IRS allows transfer prices to be set using Comparable uncontrolled price method. This method
requires
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
35. The U.S. IRS allows transfer prices to be set using the resale price method
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.

36. The U.S. IRS allows transfer prices to be set using the cost plus approach
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
37. For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency. Use
multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

38. For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $2.00 = 1.00; affiliates get paid in home currency. Use
multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

39. Simplify the following set of intra company cash flows for this U.S. Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A. Zero.
B. One.
C. Two.
D. Three.
E. Four.
40. Simplify the following set of intra company cash flows for this Swiss Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A. Zero.
B. One.
C. Two.
D. Three.
E. Four.
41. Which will reduce the number of foreign exchange transaction the most for a MNC?
A. Multilateral netting
B. Bilateral netting
C. Fish netting
D. None of the above

42. Under multilateral netting

A each affiliate nets all its inter-affiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is the net payer or receiver.
B. each pair of affiliates determines the net amount due between them, and only the net amount is
transferred.
C. no inter-affiliate payments are made or even computed, since no real cash flows are involved.
D. all of the above
43. One benefit of a centralized cash depository is
A the MNC's investment in precautionary cash balances can be substantially reduced without a reduction
. in its ability to cover unforeseen expenses.
B. each affiliate will have greater autonomy in managing its own cash balances.
C. exchange rate restrictions can be easily circumvented.
D. none of the above
44. If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A 2,000
when the exchange rate is $1.50 = 1.00. The net payment between A and B should be closest to
A. $2,000 from B to A.
B. 2,000 from A to B.
C. $1,000 from B to A.
D. none of the above
45. For the U.S. affiliate shown below, net all its inter-affiliate receipts against all its disbursements.
Use the following exchange rates.

The net inter-affiliate cash flow for the U.S. affiliate is

A. $0.
B. -$135.
C. $135.
D. $405.
E. $90.

46. The U.S. IRS allows transfer prices to be set using comparable uncontrolled price method. This method is
difficult to apply in practice because many factors enter into the pricing of goods and services. Examples
include
A. differences in the terms of sale.
B. differences in quantity and or quality sold.
C. differences in location or date of sale.
D. all of the above
47. Ad valorem duties are best described as
A. an ad valorem duty is a percentage tax levied at customs on the assessed value of the imported good.
B. a value-added tax on domestic production.
C. a percentage tax levied at customs on the value added by shipping the good.
D. none of the above
48. According to a recent survey by Ernst and Young, the most important tax issue that multinational
enterprises now face is
A. transfer pricing.
B choice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of expense items.
Cchoice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of income recognition.
D. none of the above
49. Which of the following statements about transfer pricing is true?
A. The higher the transfer price, the larger the gross profits of the transferring division relative to the
receiving division.
B Very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value
. (APV) of that subsidiary's capital expenditure appear less attractive.
C Very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value
. (APV) of that subsidiary's capital expenditure appear less attractive.
D. Both a and b
50. The lower the transfer price
A. the higher the net profit reported by the MNC.
B. the lower the gross profit of the transferring division relative to the receiving division.
C. the higher the gross profit of the receiving division relative to the transferring division.
D. none of the above
51. Multinational cash management
A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
52. In reference to establishing "transfer prices" between the affiliates of an MNC, which of the following
relates to the "resale" price approach?
A. Comparable uncontrolled price between unrelated firms.
B The price at which the good is resold by the distribution affiliate is reduced by an amount to cover
. overhead costs and a reasonable profit.
C. Assumes that the manufacturing cost is readily available.
D. Is based on financial and economic models and econometric techniques.

53. "Unbundling fund transfers" from an MNC and to its affiliates refers to the following activity:
Ainstead of lumping all costs into a single transfer price, for the MNC (parent firm) to recognize the cost
. of the physical good and each service separately that it provides to its affiliates.
Bin addition to charging for the cost of the physical good, for the parent firm to charge for technical
. training of the affiliates' staff, cost of worldwide advertising, royalty, licensing fee, and technology,
whenever applicable, to facilitate for the MNC to present and support to the taxing authority of a host
country that each charge is legitimate and can be well substantiated.
C. used for removing blocked funds from a host country that is enforcing foreign exchange restrictions.
D. all of the above
Affiliate X sells 10,000 units to Affiliate Y per year. The marginal tax rates for X and Y, respectively, are
20 percent and 30 percent. The transfer price per unit is currently set at $1,000, but it can go as high as
$1,250.
54. Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.
A. $250,000
B. $500,000
C. $1,000,000
D. $1,250,000
55. Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise. Calculate the increase
in annual after-tax profits if the higher transfer price of $1,250 per unit is used.
A. $50,000
B. $100,000
C. $125,000
D. $250,000
56. Which term correctly describes the following situation? When a country imposes exchange restrictions on
its own currency, limiting conversion to other currencies, a MNC's frustrated remittance of profits from a
subsidiary would be
A. blocked funds.
B. stopped funds.
C. constipated funds.
D. money down the toilet.
57. On blocked funds strategy is
A. transferring personnel from corporate headquarters to the subsidiary offices.
B. using the national airlines of the host country when possible for the international travel of all MNC
executives.
C. holding business conferences of the MNC in the host country, where all expenses are paid by the local
subsidiary.
D. all of the above
58. Reasons for a country to impose exchange restrictions on its own currency, limiting conversion to other
currencies include
A. enticing more foreign investment from MNCs.
B. for a variety of reasons, the country may find itself short of foreign currency reserves.
C. creating a home-grown business climate.
D. all of the above
59. Why can blocked funds can be detrimental to all concerned?
A Host countries want to attract foreign industries that benefit their economic development; blocked
. funds make MNCs less willing to invest.
B. MNCs should not be expected to make beneficial investment where they may not be able to receive an
appropriate return.
C. Local competitors may be able to reap monopoly profits.
D. Both a and b

60. When engaged in bilateral netting

A. total interaffiliate receipts will always equal total interaffiliate disbursements.
B. we can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. all of the above
61. Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B.
We can reduce the number of foreign exchange transactions among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. All of the above
62. Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net receiver or payer respectively.
D. All of the above
63. Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts need not always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. All of the above
64. Bilateral netting can reduce the number of foreign exchange transactions among a MNC with N affiliates
to
A.
.
B.
.
C.
.
D. None of the above.
65. Mislocated funds are defined as:
A. Funds being found in the wrong account.
B. Funds being denominated in the wrong currency.
C. Funds being invested with the wrong maturity.
D. None of the above

66. A firm keeps a precautionary cash balance to cover unexpected transactions during the budget period.
The size of this balance depends on how safe the firm desires to be in its ability to meet unexpected
transactions.
A. The larger the precautionary cash balance, the greater is the firm's ability to meet unexpected
expenses.
B. The larger the precautionary cash balance, the less is the risk of financial embarrassment and loss of
credit standing.
C. The larger the precautionary cash balance, the greater the potential opportunity cost.
D. All of the above
67. The formula for the standard deviation of cash held by the centralized depository for N affiliates is
A.
B.
C.
D.

The formula assumes that interaffiliate cash flows have a correlation coefficient of -1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of +1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of 0.
None of the above

68. Some countries allow interaffiliate transactions to be settled only on a gross basis. That is,
A all receipts for a settlement period must be grouped into a single large receipt and all disbursements
. must be grouped into a single large payment.
B. all receipts and disbursements for a settlement period must be handled individually.
C.all receipts and disbursements for a settlement period must be netted against each other and then a
single large payment is made.
D each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
69. Not all countries allow MNCs the freedom to net payments,
A. the U.S., Canada, and Great Britain allow only netting between each other.
B. some countries require the MNC to ask permission, and some countries limit netting.
C. but that is fine, since netting typically has costs that outweigh the benefits for a MNC.
D. all of the above may be correct
Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

70. Find the net cash flow in (out of) the U.S. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
71. Find the net cash flow in (out of) the Canadian affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above

72. Find the net cash flow in (out of) the German affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
73. Find the net cash flow in (out of) the U.K. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

74. Find the net cash flow in (out of) the U.S. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
75. Find the net cash flow in (out of) the Canadian affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
76. Find the net cash flow in (out of) the German affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above
77. Find the net cash flow in (out of) the U.K. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

78. Find the net cash flow in (out of) the U.S. affiliate.
A. $0 in or out
B. $5,000 out
C. $10,000 in
D. $15,000 out
E. None of the above
79. Find the net cash flow in (out of) the Canadian affiliate.
A. $0 in or out
B. $20,000 out
C. $15,000 in
D. $30,000 out
E. None of the above
80. Find the net cash flow in (out of) the German affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
81. Find the net cash flow in (out of) the U.K. affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
82. Find the net cash flow for the entire firm
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above

83. Simplify the following set of intra company cash flows for this Swiss Firm
Consider the following exchange rates.

84. Simplify the following set of intra company cash flows for this Swiss Firm
Consider the following exchange rates.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

85. Fill out the following figure with the initial situation shown in the table.

86. Using your results to the last question, use bilateral netting.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

87. Fill out the following figure with the initial situation shown in the table.

88. Using your results to the last question, use bilateral netting to simplify.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

89. Fill out the following figure with the initial situation shown in the table.

90. Using your results to the last question, use bilateral netting to simplify.

91. Using your results to the last question, use multilateral netting to simplify.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

92. Fill out the following figure with the initial situation shown in the table.

93. Using your results to the last question, use bilateral netting to simplify.

94. Using your results to the last question, use multilateral netting to simplify.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

95. Fill out the following figure with the initial situation shown in the table.

96. Using your results to the last question, use bilateral netting to simplify.

97. Using your results to the last question, use multilateral netting to simplify.

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

98. Fill out the following figure with the initial situation shown in the table.

99. Using your results to the last question, use bilateral netting to simplify.

100.Using your results to the last question, use multilateral netting to simplify.

101.Many of the skills necessary for effective cash management are the same regardless of whether the firm
has only domestic operations or if it operates internationally.
True False
102.The cash manager of a domestic firm should source funds internationally to obtain the lowest borrowing
cost and to place excess funds wherever the greatest return can be earned regardless of currency.
True False
103.A netting center necessarily implies that the MNC has a central cash manager.
True False
104.A multilateral netting system is beneficial in reducing the number of and the expense associated with
interaffiliate foreign exchange transactions.
True False
105.A central cash manager has a global view of the most favorable borrowing rates and most advantageous
investment rates.
True False
106.A centralized cash pool assists in reducing the problem of mislocated funds and in funds
mobilization.
True False
107.A centralized cash management system with a cash pool can reduce the investment the MNC has in
precautionary cash balances, saving the firm money.
True False

108.Efficient cash management techniques can

A. reduce the investment in cash balances and foreign exchange transaction expenses.
B. provide for maximum return from the investment of excess cash.
C. result in borrowing at lowest rate when a temporary cash shortage exists.
D. all of the above
109.Cash management refers to
A. the decision to grant credit to customers or to remain "cash and carry".
B. the investment the firm has in transaction balances and precautionary balances.
C. a domestic firm's investment in foreign currency.
D. none of the above
110.Precautionary cash balances
A. are necessary in case the firm has underestimated the amount of cash need to cover transactions.
B. are necessary to cover scheduled outflows of funds during a cash budgeting period.
C. both a and b
D. none of the above
111.Precautionary cash balances
A. represent an increasingly-important source of interest income for many MNCs.
B. are necessary in case the firm has underestimated the amount needed to cover transactions.
C. are synonymous with speculative cash balances.
D. none of the above
112.Multinational cash management
A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
113.Good cash management boils down to
A investing excess funds at the most favorable interest rate and borrowing at the lowest rate when there is
. a temporary cash shortage.
B. investing excess funds at the lowest rate and borrowing at the highest rate when there is a temporary
cash shortage.
C. hedging currency exposure with judicious use of futures, forwards, and currency option contracts.
D. none of the above
114.Calculate, in Singapore dollars, the amount that the interaffiliate foreign exchange transaction will be
reduced by with multilateral netting.
A. S$152,000
B. S$170,000
C. S$322,000
D. S$405,000
115.If foreign exchange transactions cost ABC 0.45 percent, what savings results from netting?
A. S$684
B. S$765
C. S$1,449
D. S$1,823

116.Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown at
left. Use BILATERAL netting to reduce the number of foreign exchange transactions by half.

A.

B.

C.

D. None of the above

117.Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown at
left. Use MULTILATERAL netting to reduce the number of foreign exchange transactions.

A.

B.

C.

D. None of the above

118.Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown
at left. Use MULTILATERAL netting WITH A CENTRAL DEPOSITORY to reduce the number of
foreign exchange transactions.

A.

B.

C.

D. None of the above

119.ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them into
consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States. For a
recent month, the following payments matrix of interaffiliate cash flows, stated in Singapore dollars, was
forecasted.

Which of the following is an accurate chart of their current situation?

A.

B.

C.

D.

120.Find the net exposure of the U.S. MNC with the following intra affiliate transactions shown:

A.
B.
C.
D.

$55
$65
$800
None of the above

121.Find the net exposure of the British subsidiary of the U.S. MNC with the following intra affiliate
transactions shown:

A. $40 out
B. $65 in
C. 20 out
D. None of the above
122.Benefits of a multilateral netting system include:
A The decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for
. a large international transfer of foreign exchange.
B. The reduction in the number of foreign exchange transactions and the associated cost of making fewer
but larger transactions.
C. The reduction in intra-company float, which is frequently as high as five days even for wire transfers.
DThe benefits that accrue from the establishment of a formal information system, which serves as the
. foundation for centrally managing transaction exposure and the investment of excess funds.
E. All of the above
123.With a CENTRALIZED CASH DEPOSITORY
A. there is less chance for an MNC's funds to be denominated in the wrong currency.
B. the central cash manager has a global view of the MNC's overall cash position.
C. there is less chance of mislocated funds.
D. All of the above
124.With a CENTRALIZED CASH DEPOSITORY
A. a MNC can facilitate fund mobilization.
B. system-wide excess cash are invested at the most advantageous rates.
C. system-wide cash shortages are borrowed at the most advantageous rates.
D. all of the above

125.Not all countries allow MNCs the freedom to net payments,

A. by limiting netting, more needless foreign exchange transactions flow through the local banking
system.
B. MNCs can avoid these restrictions by using a Centralized Cash Depository.
C. MNCs can avoid these restrictions by using wire transfers.
D. both b and c
126.With regard to cash management systems in practice, studies suggest that the benefits of a multilateral
netting system include
A the decrease in the expense associated with funds transfer, which in some cases can be over $1,000 for
. a large international transfer of foreign exchange.
B. the savings in administrative time.
C. the reduction in intra company float, which is frequently as high as five days, even for wire transfers.
D. all of the above
127.Several international banks offer multilateral netting software packages. These packages
A. calculate the net currency positions of each affiliate.
B. can integrate the netting function with foreign exchange exposure management.
C. only work on the Mac platform.
D. both a and b
128.MNCs can reduce their exchange rate expense
A. by using bilateral netting.
B. by using a centralized cash management system.
C. by using multilateral netting.
D. all of the above
129.Which of the following statements about multilateral netting system are correct?
(i) - Each affiliate nets all its interaffiliate receipts against all its disbursements
(ii) - Each affiliate transfers or receives a balance, depending on whether it is a net payer or receiver
(iii) - The net funds to be received by the affiliates will equal the net disbursements to be made by the
affiliates
(iv) - Only two foreign exchange transactions are necessary since the affiliates' net receipts will always be
equal to zero
(v) - Only two foreign exchange transactions are necessary since the affiliates' net disbursements will
always be equal to zero
A. (i) and (ii)
B. (i), (ii), and (iii)
C. (i), (ii), (iii), and (iv)
D. (i), (ii), (iii), and (v)
130.Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the standard
deviation of the portfolio of cash held by the centralized depository for the following affiliate members:

A.
B.
C.
D.

$34,960.33
$139,841.33
$104,880.88
None of the above

131.Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the minimum cash
balance to have if the firm follows a conservative policy of having three standard deviations of cash for
precautionary purposes

A.
B.
C.
D.

$34,960.33
$314,642.65
$104,880.88
None of the above

132.If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A 2,000
when the exchange rate is $1.10 = 1.00. The net payment between A and B should be
A. 1,091 from B to A.
B. 1,091 from A to B.
C. $1,200 from B to A.
D. None of the above
133.For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

Use multilateral netting to find the net payment from the British affiliate to the U.S. affiliate.
The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency.
A. $60
B. $20
C. $0
D. None of the above
134.The U.S. IRS allows transfer prices to be set using Comparable uncontrolled price method. This method
requires
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
135.The U.S. IRS allows transfer prices to be set using the resale price method
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.

136.The U.S. IRS allows transfer prices to be set using the cost plus approach
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient to
. cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
137.For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency. Use
multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

138.For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $2.00 = 1.00; affiliates get paid in home currency. Use
multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

139.Simplify the following set of intra company cash flows for this U.S. Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A. Zero.
B. One.
C. Two.
D. Three.
E. Four.
140.Simplify the following set of intra company cash flows for this Swiss Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A. Zero.
B. One.
C. Two.
D. Three.
E. Four.
141.Which will reduce the number of foreign exchange transaction the most for a MNC?
A. Multilateral netting
B. Bilateral netting
C. Fish netting
D. None of the above

142.Under multilateral netting

A each affiliate nets all its inter-affiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is the net payer or receiver.
B. each pair of affiliates determines the net amount due between them, and only the net amount is
transferred.
C. no inter-affiliate payments are made or even computed, since no real cash flows are involved.
D. all of the above
143.One benefit of a centralized cash depository is
A the MNC's investment in precautionary cash balances can be substantially reduced without a reduction
. in its ability to cover unforeseen expenses.
B. each affiliate will have greater autonomy in managing its own cash balances.
C. exchange rate restrictions can be easily circumvented.
D. none of the above
144.If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A 2,000
when the exchange rate is $1.50 = 1.00. The net payment between A and B should be closest to
A. $2,000 from B to A.
B. 2,000 from A to B.
C. $1,000 from B to A.
D. none of the above
145.For the U.S. affiliate shown below, net all its inter-affiliate receipts against all its disbursements.
Use the following exchange rates.

The net inter-affiliate cash flow for the U.S. affiliate is

A. $0.
B. -$135.
C. $135.
D. $405.
E. $90.

146.The U.S. IRS allows transfer prices to be set using comparable uncontrolled price method. This method is
difficult to apply in practice because many factors enter into the pricing of goods and services. Examples
include
A. differences in the terms of sale.
B. differences in quantity and or quality sold.
C. differences in location or date of sale.
D. all of the above
147.Ad valorem duties are best described as
A. an ad valorem duty is a percentage tax levied at customs on the assessed value of the imported good.
B. a value-added tax on domestic production.
C. a percentage tax levied at customs on the value added by shipping the good.
D. none of the above
148.According to a recent survey by Ernst and Young, the most important tax issue that multinational
enterprises now face is
A. transfer pricing.
B choice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of expense items.
Cchoice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of income recognition.
D. none of the above
149.Which of the following statements about transfer pricing is true?
A. The higher the transfer price, the larger the gross profits of the transferring division relative to the
receiving division.
B Very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value
. (APV) of that subsidiary's capital expenditure appear less attractive.
C Very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value
. (APV) of that subsidiary's capital expenditure appear less attractive.
D. Both a and b
150.The lower the transfer price
A. the higher the net profit reported by the MNC.
B. the lower the gross profit of the transferring division relative to the receiving division.
C. the higher the gross profit of the receiving division relative to the transferring division.
D. none of the above
151.Multinational cash management
A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
152.In reference to establishing "transfer prices" between the affiliates of an MNC, which of the following
relates to the "resale" price approach?
A. Comparable uncontrolled price between unrelated firms.
B The price at which the good is resold by the distribution affiliate is reduced by an amount to cover
. overhead costs and a reasonable profit.
C. Assumes that the manufacturing cost is readily available.
D. Is based on financial and economic models and econometric techniques.

153."Unbundling fund transfers" from an MNC and to its affiliates refers to the following activity:
Ainstead of lumping all costs into a single transfer price, for the MNC (parent firm) to recognize the cost
. of the physical good and each service separately that it provides to its affiliates.
Bin addition to charging for the cost of the physical good, for the parent firm to charge for technical
. training of the affiliates' staff, cost of worldwide advertising, royalty, licensing fee, and technology,
whenever applicable, to facilitate for the MNC to present and support to the taxing authority of a host
country that each charge is legitimate and can be well substantiated.
C. used for removing blocked funds from a host country that is enforcing foreign exchange restrictions.
D. all of the above
154.Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.
A. $250,000
B. $500,000
C. $1,000,000
D. $1,250,000
155.Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise. Calculate the increase
in annual after-tax profits if the higher transfer price of $1,250 per unit is used.
A. $50,000
B. $100,000
C. $125,000
D. $250,000
156.Which term correctly describes the following situation? When a country imposes exchange restrictions on
its own currency, limiting conversion to other currencies, a MNC's frustrated remittance of profits from a
subsidiary would be
A. blocked funds.
B. stopped funds.
C. constipated funds.
D. money down the toilet.
157.On blocked funds strategy is
A. transferring personnel from corporate headquarters to the subsidiary offices.
B. using the national airlines of the host country when possible for the international travel of all MNC
executives.
C. holding business conferences of the MNC in the host country, where all expenses are paid by the local
subsidiary.
D. all of the above
158.Reasons for a country to impose exchange restrictions on its own currency, limiting conversion to other
currencies include
A. enticing more foreign investment from MNCs.
B. for a variety of reasons, the country may find itself short of foreign currency reserves.
C. creating a home-grown business climate.
D. all of the above
159.Why can blocked funds can be detrimental to all concerned?
A Host countries want to attract foreign industries that benefit their economic development; blocked
. funds make MNCs less willing to invest.
B. MNCs should not be expected to make beneficial investment where they may not be able to receive an
appropriate return.
C. Local competitors may be able to reap monopoly profits.
D. Both a and b

160.When engaged in bilateral netting

A. total interaffiliate receipts will always equal total interaffiliate disbursements.
B. we can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. all of the above
161.Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B.
We can reduce the number of foreign exchange transactions among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. All of the above
162.Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net receiver or payer respectively.
D. All of the above
163.Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts need not always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
D. All of the above
164.Bilateral netting can reduce the number of foreign exchange transactions among a MNC with N affiliates
to
A.
.
B.
.
C.
.
D. None of the above.
165.Mislocated funds are defined as:
A. Funds being found in the wrong account.
B. Funds being denominated in the wrong currency.
C. Funds being invested with the wrong maturity.
D. None of the above

166.A firm keeps a precautionary cash balance to cover unexpected transactions during the budget period.
The size of this balance depends on how safe the firm desires to be in its ability to meet unexpected
transactions.
A. The larger the precautionary cash balance, the greater is the firm's ability to meet unexpected
expenses.
B. The larger the precautionary cash balance, the less is the risk of financial embarrassment and loss of
credit standing.
C. The larger the precautionary cash balance, the greater the potential opportunity cost.
D. All of the above
167.The formula for the standard deviation of cash held by the centralized depository for N affiliates is
A.
B.
C.
D.

The formula assumes that interaffiliate cash flows have a correlation coefficient of -1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of +1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of 0.
None of the above

168.Some countries allow interaffiliate transactions to be settled only on a gross basis. That is,
A all receipts for a settlement period must be grouped into a single large receipt and all disbursements
. must be grouped into a single large payment.
B. all receipts and disbursements for a settlement period must be handled individually.
C.all receipts and disbursements for a settlement period must be netted against each other and then a
single large payment is made.
D each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives
. the balance, respectively, if it is a net payer or receiver.
169.Not all countries allow MNCs the freedom to net payments,
A. the U.S., Canada, and Great Britain allow only netting between each other.
B. some countries require the MNC to ask permission, and some countries limit netting.
C. but that is fine, since netting typically has costs that outweigh the benefits for a MNC.
D. all of the above may be correct
170.Find the net cash flow in (out of) the U.S. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
171.Find the net cash flow in (out of) the Canadian affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
172.Find the net cash flow in (out of) the German affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above

173.Find the net cash flow in (out of) the U.K. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
174.Find the net cash flow in (out of) the U.S. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
175.Find the net cash flow in (out of) the Canadian affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
176.Find the net cash flow in (out of) the German affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above
177.Find the net cash flow in (out of) the U.K. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above
178.Find the net cash flow in (out of) the U.S. affiliate.
A. $0 in or out
B. $5,000 out
C. $10,000 in
D. $15,000 out
E. None of the above
179.Find the net cash flow in (out of) the Canadian affiliate.
A. $0 in or out
B. $20,000 out
C. $15,000 in
D. $30,000 out
E. None of the above
180.Find the net cash flow in (out of) the German affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above

181.Find the net cash flow in (out of) the U.K. affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
182.Find the net cash flow for the entire firm
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
183.Simplify the following set of intra company cash flows for this Swiss Firm
Consider the following exchange rates.

184.Simplify the following set of intra company cash flows for this Swiss Firm
Consider the following exchange rates.

185.Fill out the following figure with the initial situation shown in the table.

186.Using your results to the last question, use bilateral netting.

187.Fill out the following figure with the initial situation shown in the table.

188.Using your results to the last question, use bilateral netting to simplify.

189.Fill out the following figure with the initial situation shown in the table.

190.Using your results to the last question, use bilateral netting to simplify.

191.Using your results to the last question, use multilateral netting to simplify.

192.Fill out the following figure with the initial situation shown in the table.

193.Using your results to the last question, use bilateral netting to simplify.

194.Using your results to the last question, use multilateral netting to simplify.

195.Fill out the following figure with the initial situation shown in the table.

196.Using your results to the last question, use bilateral netting to simplify.

197.Using your results to the last question, use multilateral netting to simplify.

198.Fill out the following figure with the initial situation shown in the table.

199.Using your results to the last question, use bilateral netting to simplify.

200.Using your results to the last question, use multilateral netting to simplify.

19 Key
1.

Many of the skills necessary for effective cash management are the same regardless of whether the
firm has only domestic operations or if it operates internationally.
FALSE
Eun - Chapter 19 #1
Topic: The Management of International Cash Balances

2.

The cash manager of a domestic firm should source funds internationally to obtain the lowest
borrowing cost and to place excess funds wherever the greatest return can be earned regardless of
currency.
TRUE
Given IRP and hedging opportunities this is true. See page 461. Likely a contentious question.
Eun - Chapter 19 #2
Topic: Blocked Funds

3.

A netting center necessarily implies that the MNC has a central cash manager.
FALSE
Eun - Chapter 19 #3
Topic: Blocked Funds

4.

A multilateral netting system is beneficial in reducing the number of and the expense associated with
interaffiliate foreign exchange transactions.
TRUE
Eun - Chapter 19 #4
Topic: Blocked Funds

5.

A central cash manager has a global view of the most favorable borrowing rates and most
advantageous investment rates.
TRUE
Eun - Chapter 19 #5
Topic: Blocked Funds

6.

A centralized cash pool assists in reducing the problem of mislocated funds and in funds
mobilization.
TRUE
Eun - Chapter 19 #6
Topic: Blocked Funds

7.

A centralized cash management system with a cash pool can reduce the investment the MNC has in
precautionary cash balances, saving the firm money.
TRUE
Eun - Chapter 19 #7
Topic: Blocked Funds

8.

Efficient cash management techniques can

A. reduce the investment in cash balances and foreign exchange transaction expenses.
B. provide for maximum return from the investment of excess cash.
C. result in borrowing at lowest rate when a temporary cash shortage exists.
D. all of the above
Eun - Chapter 19 #8
Topic: The Management of International Cash Balances

9.

Cash management refers to

A. the decision to grant credit to customers or to remain "cash and carry".
B. the investment the firm has in transaction balances and precautionary balances.
C. a domestic firm's investment in foreign currency.
D. none of the above
Eun - Chapter 19 #9
Topic: The Management of International Cash Balances

10.

Precautionary cash balances

A. are necessary in case the firm has underestimated the amount of cash need to cover transactions.
B. are necessary to cover scheduled outflows of funds during a cash budgeting period.
C. both a and b
D. none of the above
Eun - Chapter 19 #10
Topic: The Management of International Cash Balances

11.

Precautionary cash balances

A. represent an increasingly-important source of interest income for many MNCs.
B. are necessary in case the firm has underestimated the amount needed to cover transactions.
C. are synonymous with speculative cash balances.
D. none of the above
Eun - Chapter 19 #11
Topic: The Management of International Cash Balances

12.

Multinational cash management

A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
Eun - Chapter 19 #12
Topic: The Management of International Cash Balances

13.

Good cash management boils down to

A.investing excess funds at the most favorable interest rate and borrowing at the lowest rate when
there is a temporary cash shortage.
B. investing excess funds at the lowest rate and borrowing at the highest rate when there is a
temporary cash shortage.
C. hedging currency exposure with judicious use of futures, forwards, and currency option contracts.
D. none of the above
Eun - Chapter 19 #13
Topic: The Management of International Cash Balances

ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them
into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites
States. For a recent month, the following payments matrix of interaffiliate cash flows, stated in
Singapore dollars, was forecasted.

Eun - Chapter 19

14.

Calculate, in Singapore dollars, the amount that the interaffiliate foreign exchange transaction will be
reduced by with multilateral netting.
A. S$152,000
B. S$170,000
C. S$322,000
D. S$405,000
Eun - Chapter 19 #14
Topic: CASE APPLICATION: Teltrexs Cash Management System

15.

If foreign exchange transactions cost ABC 0.45 percent, what savings results from netting?
A. S$684
B. S$765
C. S$1,449
D. S$1,823
Eun - Chapter 19 #15
Topic: CASE APPLICATION: Teltrexs Cash Management System

16.

Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown
at left. Use BILATERAL netting to reduce the number of foreign exchange transactions by half.

A.

B.

C.

D. None of the above

Eun - Chapter 19 #16
Topic: Bilateral Netting of Internal and External Net Cash Flows

17.

Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown
at left. Use MULTILATERAL netting to reduce the number of foreign exchange transactions.

A.

B.

C.

D. None of the above

Eun - Chapter 19 #17
Topic: Bilateral Netting of Internal and External Net Cash Flows

18.

Consider a U.S. MNC with three subsidiaries and the following foreign exchange transactions shown
at left. Use MULTILATERAL netting WITH A CENTRAL DEPOSITORY to reduce the number of
foreign exchange transactions.

A.

B.

C.

D. None of the above

Eun - Chapter 19 #18
Topic: Bilateral Netting of Internal and External Net Cash Flows

19.

ABC Trading Company of Singapore purchases spices in bulk from around the world, packages them
into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites
States. For a recent month, the following payments matrix of interaffiliate cash flows, stated in
Singapore dollars, was forecasted.

Which of the following is an accurate chart of their current situation?

A.

B.

C.

D.

Eun - Chapter 19 #19

Topic: Bilateral Netting of Internal and External Net Cash Flows

20.

Find the net exposure of the U.S. MNC with the following intra affiliate transactions shown:

A.
B.
C.
D.

$55
$65
$800
None of the above
Eun - Chapter 19 #20
Topic: Bilateral Netting of Internal and External Net Cash Flows

21.

Find the net exposure of the British subsidiary of the U.S. MNC with the following intra affiliate
transactions shown:

A. $40 out
B. $65 in
C. 20 out
D. None of the above
Eun - Chapter 19 #21
Topic: Bilateral Netting of Internal and External Net Cash Flows

22.

Benefits of a multilateral netting system include:

A The decrease in the expense associated with funds transfer, which in some cases can be over $1,000
. for a large international transfer of foreign exchange.
B. The reduction in the number of foreign exchange transactions and the associated cost of making
fewer but larger transactions.
C. The reduction in intra-company float, which is frequently as high as five days even for wire
transfers.
DThe benefits that accrue from the establishment of a formal information system, which serves as the
. foundation for centrally managing transaction exposure and the investment of excess funds.
E. All of the above
Eun - Chapter 19 #22
Topic: Bilateral Netting of Internal and External Net Cash Flows

23.

With a CENTRALIZED CASH DEPOSITORY

A. there is less chance for an MNC's funds to be denominated in the wrong currency.
B. the central cash manager has a global view of the MNC's overall cash position.
C. there is less chance of mislocated funds.
D. All of the above
Eun - Chapter 19 #23
Topic: Bilateral Netting of Internal and External Net Cash Flows

24.

With a CENTRALIZED CASH DEPOSITORY

A. a MNC can facilitate fund mobilization.
B. system-wide excess cash are invested at the most advantageous rates.
C. system-wide cash shortages are borrowed at the most advantageous rates.
D. all of the above
Eun - Chapter 19 #24
Topic: Bilateral Netting of Internal and External Net Cash Flows

25.

Not all countries allow MNCs the freedom to net payments,

A. by limiting netting, more needless foreign exchange transactions flow through the local banking
system.
B. MNCs can avoid these restrictions by using a Centralized Cash Depository.
C. MNCs can avoid these restrictions by using wire transfers.
D. both b and c
Eun - Chapter 19 #25
Topic: Cash Management Systems in Practice

26.

With regard to cash management systems in practice, studies suggest that the benefits of a multilateral
netting system include
A the decrease in the expense associated with funds transfer, which in some cases can be over $1,000
. for a large international transfer of foreign exchange.
B. the savings in administrative time.
C. the reduction in intra company float, which is frequently as high as five days, even for wire
transfers.
D. all of the above
Eun - Chapter 19 #26
Topic: Cash Management Systems in Practice

27.

Several international banks offer multilateral netting software packages. These packages
A. calculate the net currency positions of each affiliate.
B. can integrate the netting function with foreign exchange exposure management.
C. only work on the Mac platform.
D. both a and b
Eun - Chapter 19 #27
Topic: Cash Management Systems in Practice

28.

MNCs can reduce their exchange rate expense

A. by using bilateral netting.
B. by using a centralized cash management system.
C. by using multilateral netting.
D. all of the above
Eun - Chapter 19 #28
Topic: Cash Management Systems in Practice

29.

Which of the following statements about multilateral netting system are correct?
(i) - Each affiliate nets all its interaffiliate receipts against all its disbursements
(ii) - Each affiliate transfers or receives a balance, depending on whether it is a net payer or receiver
(iii) - The net funds to be received by the affiliates will equal the net disbursements to be made by the
affiliates
(iv) - Only two foreign exchange transactions are necessary since the affiliates' net receipts will
always be equal to zero
(v) - Only two foreign exchange transactions are necessary since the affiliates' net disbursements will
always be equal to zero
A. (i) and (ii)
B. (i), (ii), and (iii)
C. (i), (ii), (iii), and (iv)
D. (i), (ii), (iii), and (v)
Eun - Chapter 19 #29
Topic: Cash Management Systems in Practice

30.

Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the standard
deviation of the portfolio of cash held by the centralized depository for the following affiliate
members:

A.
B.
C.
D.

$34,960.33
$139,841.33
$104,880.88
None of the above
Eun - Chapter 19 #30
Topic: Cash Management Systems in Practice

31.

Assuming that the interaffiliate cash flows are uncorrelated with one another, calculate the minimum
cash balance to have if the firm follows a conservative policy of having three standard deviations of
cash for precautionary purposes

A.
B.
C.
D.

$34,960.33
$314,642.65
$104,880.88
None of the above
Eun - Chapter 19 #31
Topic: Cash Management Systems in Practice

32.

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A
2,000 when the exchange rate is $1.10 = 1.00. The net payment between A and B should be
A. 1,091 from B to A.
B. 1,091 from A to B.
C. $1,200 from B to A.
D. None of the above
Eun - Chapter 19 #32
Topic: Cash Management Systems in Practice

33.

For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

Use multilateral netting to find the net payment from the British affiliate to the U.S. affiliate.
The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency.
A. $60
B. $20
C. $0
D. None of the above
Eun - Chapter 19 #33
Topic: Cash Management Systems in Practice

34.

The U.S. IRS allows transfer prices to be set using Comparable uncontrolled price method. This
method requires
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient
. to cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
Eun - Chapter 19 #34
Topic: Cash Management Systems in Practice

35.

The U.S. IRS allows transfer prices to be set using the resale price method
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient
. to cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
Eun - Chapter 19 #35
Topic: Cash Management Systems in Practice

36.

The U.S. IRS allows transfer prices to be set using the cost plus approach
A. finding the price that an unrelated willing seller would accept from an unrelated willing buyer.
B the price at which the good is resold by the distribution affiliate is reduced by an amount sufficient
. to cover overhead costs and a reasonable profit.
C. an appropriate profit is added to the cost of the manufacturing affiliate.
D. financial models and econometric techniques.
Eun - Chapter 19 #36
Topic: Cash Management Systems in Practice

37.

For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $1.80 = 1.00; affiliates get paid in home currency.
Use multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

Eun - Chapter 19 #37
Topic: Cash Management Systems in Practice

38.

For a recent month, the following payments matrix of interaffiliate cash flows was forecasted:

The spot exchange rates are $1.20 = 1.00 and $2.00 = 1.00; affiliates get paid in home currency.
Use multilateral netting to find the net payments to and from all parties.
Which of the following is an accurate chart of their current situation?
A.

B.

C.

D. None of the others.

Eun - Chapter 19 #38
Topic: Cash Management Systems in Practice

39.

Simplify the following set of intra company cash flows for this U.S. Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A.
B.
C.
D.
E.

Zero.
One.
Two.
Three.
Four.
Eun - Chapter 19 #39
Topic: Cash Management Systems in Practice

40.

Simplify the following set of intra company cash flows for this Swiss Firm.
Use the following exchange rates.

The fewest number of intra-affiliate cash flows is

A.
B.
C.
D.
E.

Zero.
One.
Two.
Three.
Four.
Eun - Chapter 19 #40
Topic: Cash Management Systems in Practice

41.

Which will reduce the number of foreign exchange transaction the most for a MNC?
A. Multilateral netting
B. Bilateral netting
C. Fish netting
D. None of the above
Eun - Chapter 19 #41
Topic: Cash Management Systems in Practice

42.

Under multilateral netting

A each affiliate nets all its inter-affiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is the net payer or receiver.
B. each pair of affiliates determines the net amount due between them, and only the net amount is
transferred.
C. no inter-affiliate payments are made or even computed, since no real cash flows are involved.
D. all of the above
Eun - Chapter 19 #42
Topic: Cash Management Systems in Practice

43.

One benefit of a centralized cash depository is

A the MNC's investment in precautionary cash balances can be substantially reduced without a
. reduction in its ability to cover unforeseen expenses.
B. each affiliate will have greater autonomy in managing its own cash balances.
C. exchange rate restrictions can be easily circumvented.
D. none of the above
Eun - Chapter 19 #43
Topic: Cash Management Systems in Practice

44.

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A
2,000 when the exchange rate is $1.50 = 1.00. The net payment between A and B should be closest
to
A. $2,000 from B to A.
B. 2,000 from A to B.
C. $1,000 from B to A.
D. none of the above
Eun - Chapter 19 #44
Topic: Cash Management Systems in Practice

45.

For the U.S. affiliate shown below, net all its inter-affiliate receipts against all its disbursements.
Use the following exchange rates.

The net inter-affiliate cash flow for the U.S. affiliate is

A.
B.
C.
D.
E.

$0.
-$135.
$135.
$405.
$90.
Eun - Chapter 19 #45
Topic: Cash Management Systems in Practice

46.

The U.S. IRS allows transfer prices to be set using comparable uncontrolled price method. This
method is difficult to apply in practice because many factors enter into the pricing of goods and
services. Examples include
A. differences in the terms of sale.
B. differences in quantity and or quality sold.
C. differences in location or date of sale.
D. all of the above
Eun - Chapter 19 #46
Topic: Cash Management Systems in Practice

47.

Ad valorem duties are best described as

A. an ad valorem duty is a percentage tax levied at customs on the assessed value of the imported
good.
B. a value-added tax on domestic production.
C. a percentage tax levied at customs on the value added by shipping the good.
D. none of the above
Eun - Chapter 19 #47
Topic: Cash Management Systems in Practice

48.

According to a recent survey by Ernst and Young, the most important tax issue that multinational
enterprises now face is
A. transfer pricing.
B choice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of expense items.
C choice of accounting method to use in preparing consolidated income statements when firms have
. subsidiaries in countries with different tax treatments of income recognition.
D. none of the above
Eun - Chapter 19 #48
Topic: Cash Management Systems in Practice

49.

Which of the following statements about transfer pricing is true?

A. The higher the transfer price, the larger the gross profits of the transferring division relative to the
receiving division.
B Very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present
. value (APV) of that subsidiary's capital expenditure appear less attractive.
C Very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value
. (APV) of that subsidiary's capital expenditure appear less attractive.
D. Both a and b
Eun - Chapter 19 #49
Topic: Cash Management Systems in Practice

50.

The lower the transfer price

A. the higher the net profit reported by the MNC.
B. the lower the gross profit of the transferring division relative to the receiving division.
C. the higher the gross profit of the receiving division relative to the transferring division.
D. none of the above
Eun - Chapter 19 #50
Topic: Cash Management Systems in Practice

51.

Multinational cash management

A. is really no different for a MNC than for a purely domestic firm in a closed economy.
B concerns itself with the size of cash balances, their currency denominations, and where these cash
. balances are located among the MNC's affiliates.
Cconcerns itself with the size of cash balances and their currency denominations, but not where these
. cash balances are located among the MNC's affiliates, since intra-affiliate default risk is not an issue.
D. none of the above
Eun - Chapter 19 #51
Topic: Cash Management Systems in Practice

52.

In reference to establishing "transfer prices" between the affiliates of an MNC, which of the following
relates to the "resale" price approach?
A. Comparable uncontrolled price between unrelated firms.
B.The price at which the good is resold by the distribution affiliate is reduced by an amount to cover
overhead costs and a reasonable profit.
C. Assumes that the manufacturing cost is readily available.
D. Is based on financial and economic models and econometric techniques.
Eun - Chapter 19 #52
Topic: Cash Management Systems in Practice

53.

"Unbundling fund transfers" from an MNC and to its affiliates refers to the following activity:
Ainstead of lumping all costs into a single transfer price, for the MNC (parent firm) to recognize the
. cost of the physical good and each service separately that it provides to its affiliates.
Bin addition to charging for the cost of the physical good, for the parent firm to charge for technical
. training of the affiliates' staff, cost of worldwide advertising, royalty, licensing fee, and technology,
whenever applicable, to facilitate for the MNC to present and support to the taxing authority of a host
country that each charge is legitimate and can be well substantiated.
C. used for removing blocked funds from a host country that is enforcing foreign exchange
restrictions.
D. all of the above
Eun - Chapter 19 #53
Topic: Cash Management Systems in Practice

Affiliate X sells 10,000 units to Affiliate Y per year. The marginal tax rates for X and Y, respectively,
are 20 percent and 30 percent. The transfer price per unit is currently set at $1,000, but it can go as
high as $1,250.
Eun - Chapter 19

54.

Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is
used.
A. $250,000
B. $500,000
C. $1,000,000
D. $1,250,000
Eun - Chapter 19 #54
Topic: Cash Management Systems in Practice

55.

Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise. Calculate the
increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.
A. $50,000
B. $100,000
C. $125,000
D. $250,000
Eun - Chapter 19 #55
Topic: Cash Management Systems in Practice

56.

Which term correctly describes the following situation? When a country imposes exchange
restrictions on its own currency, limiting conversion to other currencies, a MNC's frustrated
remittance of profits from a subsidiary would be
A. blocked funds.
B. stopped funds.
C. constipated funds.
D. money down the toilet.
Eun - Chapter 19 #56
Topic: Blocked Funds

57.

On blocked funds strategy is

A. transferring personnel from corporate headquarters to the subsidiary offices.
B. using the national airlines of the host country when possible for the international travel of all MNC
executives.
C. holding business conferences of the MNC in the host country, where all expenses are paid by the
local subsidiary.
D. all of the above
Eun - Chapter 19 #57
Topic: Blocked Funds

58.

Reasons for a country to impose exchange restrictions on its own currency, limiting conversion to
other currencies include
A. enticing more foreign investment from MNCs.
B. for a variety of reasons, the country may find itself short of foreign currency reserves.
C. creating a home-grown business climate.
D. all of the above
Eun - Chapter 19 #58
Topic: Blocked Funds

59.

Why can blocked funds can be detrimental to all concerned?

A Host countries want to attract foreign industries that benefit their economic development; blocked
. funds make MNCs less willing to invest.
B. MNCs should not be expected to make beneficial investment where they may not be able to receive
an appropriate return.
C. Local competitors may be able to reap monopoly profits.
D. Both a and b
Eun - Chapter 19 #59
Topic: Blocked Funds

60.

When engaged in bilateral netting

A. total interaffiliate receipts will always equal total interaffiliate disbursements.
B. we can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is a net payer or receiver.
D. all of the above
Eun - Chapter 19 #60
Topic: Blocked Funds

61.

Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is a net payer or receiver.
D. All of the above
Eun - Chapter 19 #61
Topic: Blocked Funds

62.

Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts will always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is a net receiver or payer respectively.
D. All of the above
Eun - Chapter 19 #62
Topic: Blocked Funds

63.

Which one of the following is a false statement when engaged in bilateral netting?
A. Total interaffiliate receipts need not always equal total interaffiliate disbursements.
B. We can reduce the number of foreign exchange transactions
among a MNC with N affiliates to
or less
C Each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is a net payer or receiver.
D. All of the above
Eun - Chapter 19 #63
Topic: Blocked Funds

64.

Bilateral netting can reduce the number of foreign exchange transactions among a MNC with N
affiliates to
A.
.
B.
.
C.
.
D. None of the above.
Eun - Chapter 19 #64
Topic: Blocked Funds

65.

Mislocated funds are defined as:

A. Funds being found in the wrong account.
B. Funds being denominated in the wrong currency.
C. Funds being invested with the wrong maturity.
D. None of the above
Eun - Chapter 19 #65
Topic: Blocked Funds

66.

A firm keeps a precautionary cash balance to cover unexpected transactions during the budget period.
The size of this balance depends on how safe the firm desires to be in its ability to meet unexpected
transactions.
A. The larger the precautionary cash balance, the greater is the firm's ability to meet unexpected
expenses.
B. The larger the precautionary cash balance, the less is the risk of financial embarrassment and loss of
credit standing.
C. The larger the precautionary cash balance, the greater the potential opportunity cost.
D. All of the above
Eun - Chapter 19 #66
Topic: Blocked Funds

67.

The formula for the standard deviation of cash held by the centralized depository for N affiliates is
A.
B.
C.
D.

The formula assumes that interaffiliate cash flows have a correlation coefficient of -1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of +1.
The formula assumes that interaffiliate cash flows have a correlation coefficient of 0.
None of the above
Eun - Chapter 19 #67
Topic: Blocked Funds

68.

Some countries allow interaffiliate transactions to be settled only on a gross basis. That is,
A all receipts for a settlement period must be grouped into a single large receipt and all disbursements
. must be grouped into a single large payment.
B. all receipts and disbursements for a settlement period must be handled individually.
C. all receipts and disbursements for a settlement period must be netted against each other and then a
single large payment is made.
D each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or
. receives the balance, respectively, if it is a net payer or receiver.
Eun - Chapter 19 #68
Topic: Blocked Funds

69.

Not all countries allow MNCs the freedom to net payments,

A. the U.S., Canada, and Great Britain allow only netting between each other.
B. some countries require the MNC to ask permission, and some countries limit netting.
C. but that is fine, since netting typically has costs that outweigh the benefits for a MNC.
D. all of the above may be correct
Eun - Chapter 19 #69
Topic: Blocked Funds

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

Eun - Chapter 19

70.

Find the net cash flow in (out of) the U.S. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
Eun - Chapter 19 #70
Topic: Blocked Funds

71.

Find the net cash flow in (out of) the Canadian affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
Eun - Chapter 19 #71
Topic: Blocked Funds

72.

Find the net cash flow in (out of) the German affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
Eun - Chapter 19 #72
Topic: Blocked Funds

73.

Find the net cash flow in (out of) the U.K. affiliate.
A. $55,000 in
B. $15,000 out
C. $0 in or out
D. $40,000 out
E. None of the above
Eun - Chapter 19 #73
Topic: Blocked Funds

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

Eun - Chapter 19

74.

Find the net cash flow in (out of) the U.S. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #74
Topic: Blocked Funds

75.

Find the net cash flow in (out of) the Canadian affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #75
Topic: Blocked Funds

76.

Find the net cash flow in (out of) the German affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above
Eun - Chapter 19 #76
Topic: Blocked Funds

77.

Find the net cash flow in (out of) the U.K. affiliate.
A. $5,000 in
B. $5,000 out
C. $30,000 out
D. $30,000 in
E. None of the above
Eun - Chapter 19 #77
Topic: Blocked Funds

Your firm's interaffiliate cash receipts and disbursements matrix is shown below ($000):

Eun - Chapter 19

78.

Find the net cash flow in (out of) the U.S. affiliate.
A. $0 in or out
B. $5,000 out
C. $10,000 in
D. $15,000 out
E. None of the above
Eun - Chapter 19 #78
Topic: Blocked Funds

79.

Find the net cash flow in (out of) the Canadian affiliate.
A. $0 in or out
B. $20,000 out
C. $15,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #79
Topic: Blocked Funds

80.

Find the net cash flow in (out of) the German affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #80
Topic: Blocked Funds

81.

Find the net cash flow in (out of) the U.K. affiliate.
A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #81
Topic: Blocked Funds

82.

Find the net cash flow for the entire firm

A. $0 in or out
B. $5,000 out
C. $30,000 in
D. $30,000 out
E. None of the above
Eun - Chapter 19 #82
Topic: Blocked Funds