The Foreign Corrupt Practices Act of 1977 Makes It Illegal

question 67

Multiple Choice

The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to

• A) attempt to make large payments or bribes to influence policy decisions of foreign governments.
• B) offer foreign businesses any type of incentive for purchasing their company's products and services.
• C) change their ethical standards when dealing with foreign firms.
• D) give even small tips or gifts in countries where such gifts are customary business practices.
• E) introduce any type of corruption into foreign businesses that have higher ethical standards than those of the U.S. firm.

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Definitions:

Undervalued

A term used to describe an asset or security whose price is considered to be lower than its intrinsic or true value.

Security Market Line

A graphical representation of the expected return of investments at different levels of risk, based on the Capital Asset Pricing Model (CAPM).

Market Risk Premium

The excess return that investors require for choosing a risky investment over a risk-free one.

Excess Return

The return on an investment that exceeds the return on a risk-free asset such as a Treasury bond.