Exam 10: Financial Management and Accounting in the Global Firm

The unbundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments is called ________.

Describe four factors responsible for the fast-paced growth of the global capital market.

Through ________, a subsidiary can defer payment for goods and services received from its parent firm.

Freedom Energy Group (Scenario) Freedom Energy Group (FEG) is a major American energy services group based in Oklahoma. FEG manufactures products to facilitate oil and gas exploration and is involved in the construction of oil refineries and gas pipelines around the world. FEG managers are considering the purchase of a Canadian energy firm, Maple Leaf Energy, which manufactures pipeline stabilization products. The financial management division of FEG is considering the risks and benefits of purchasing Maple Leaf. -Which of the following most likely supports the purchase of Maple Leaf by FEG?

Explain the differences between equity financing and debt financing, and discuss the ways international firms obtain equity financing or debt financing.

Major supply shocks affect exchange rates when oil-exporting countries suddenly announce a decrease in the supply of oil. In addition to forecasting such events, managers must assess the likely actions of foreign-exchange traders.

Estimating project cash flows is complex and requires forecasting a range of variables that contribute to anticipated revenues and costs over several years.

The sale of corporate bonds to individuals or institutions to raise capital is called ________.

Describe the six major financial management tasks that are critical to firms active in international business transactions.

If one U.S. dollar equaled one euro last year, and then the exchange rate shifted so that today one dollar equals two euros, which of the following will most likely occur?

A firm in need of long-term financing will most likely turn to the global money market instead of the global capital market.

Gains and losses directly affect cash flows in the case of translation exposure, but cash flows can be significantly affected by transaction exposure.

Multilateral netting is the means by which subsidiaries and affiliates charge each other as they exchange goods and services.

Which of the following is characteristic of the parent's perspective in capital budgeting?

________ refers to shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows.

Debt financing can add value to a firm because ________.

Which of the following is a benefit for firms that participate in the global capital market?

When using equity financing, firms run the risk of ________.

________ is the currency risk that firms face when outstanding accounts receivable or payable are denominated in foreign currencies.

What goals does harmonization of world accounting practices aim to achieve?