Question 1

________ are domestic currencies of one country on deposit in a second country.

Accepted Answer

A) LIBORs 
B) Eurocurrencies 
C) Federal funds 
D) Discount window deposits 
A) LIBORs 
B) Eurocurrencies 
C) Federal funds 
D) Discount window deposits B

Question 2

What are the two schools of thought regarding the worldwide trend toward increased financial disclosure by publicly traded firms.Explain which school of thought you hold to and why.

Accepted Answer

The student must give his/her own opinion and supporting background.In either case the following should be noted: Increased disclosure should decrease uncertainty thus increasing stock price.However,increased disclosure requirements result in increased costs in the form of initial preparation of financial statements,on-going costs associated with regular development of financial statements,and the costs of gathering and distributing information about the form on an on-going basis.As the authors state,disclosure is a two-edged sword.

Question 3

The MNE in an effort to minimize the cost of external funds should choose ________ funds to minimize ________.

Accepted Answer

A) internal; debt financing 
B) internal; taxes and political risk 
C) external; debt financing 
D) external; taxes and political risk 
A) internal; debt financing 
B) internal; taxes and political risk 
C) external; debt financing 
D) external; taxes and political risk B

Question 4

Empirical evidence shows that new issues of equity by domestic firms in the U.S.market typically has a ________ stock price reaction and new equity issues in the U.S.markets by foreign firms with segmented domestic markets have a ________ stock price reaction.

Accepted Answer

A) negative; negative 
B) positive; negative 
C) negative; positive 
D) positive; positive 
A) negative; negative 
B) positive; negative 
C) negative; positive 
D) positive; positive

Question 5

The domestic theory of optimal capital structure does not need to be modified for MNEs.

Accepted Answer

A) True 
 B)False

Question 6

The choice of when and how to source equity globally is usually aided early on by the advice of

Accepted Answer

A) an investment banker. 
B) your stock broker. 
C) a commercial banker. 
D) the internal revenue service. 
A) an investment banker. 
B) your stock broker. 
C) a commercial banker. 
D) the internal revenue service.

Question 7

Of the following,which is NOT considered to be a disadvantage to MNEs of having a financial structure adhere to local debt norms?

Accepted Answer

A) Why adhere to local standards if, as an MNE, the firm has important competitive advantages relating to capital structure? 
B) Adhering to local standards may push the MNE consolidated financial ratios out of the optimal range. 
C) A localized financial structure makes it difficult for management to compare operating results with those of local competitors. 
D) All of the above are noted as disadvantages to having a localized capital structure. 
A) Why adhere to local standards if, as an MNE, the firm has important competitive advantages relating to capital structure? 
B) Adhering to local standards may push the MNE consolidated financial ratios out of the optimal range. 
C) A localized financial structure makes it difficult for management to compare operating results with those of local competitors. 
D) All of the above are noted as disadvantages to having a localized capital structure.

Question 8

By cross listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish which of the following?

Accepted Answer

A) improve the liquidity of its existing shares 
B) increase its share price 
C) increase the firm's visibility 
D) all of the above 
A) improve the liquidity of its existing shares 
B) increase its share price 
C) increase the firm's visibility 
D) all of the above

Question 9

Empirical evidence has found that on average public firms that have been privatized by issuing public equity have

Accepted Answer

A) lowered capital investment levels. 
B) decreased efficiency. 
C) expanded their employment. 
D) all of the above. 
A) lowered capital investment levels. 
B) decreased efficiency. 
C) expanded their employment. 
D) all of the above.

Question 10

Depositary receipts traded outside the United States are called ________ depositary receipts.

Accepted Answer

A) Euro 
B) Global 
C) American 
D) None of the above 
A) Euro 
B) Global 
C) American 
D) None of the above

Question 11

How does market segmentation impact the effect on share prices from cross-listing on foreign stock exchanges?

Accepted Answer

If a firm's home capital market is segme

Question 12

The number of foreign firms traded on the London exchange is ________ than the number traded on the NYSE,and the costs of listing and disclosure in London are ________ those for the NYSE.

Accepted Answer

A) less than; less than 
B) less than; greater than 
C) greater than; less than 
D) greater than; greater than 
A) less than; less than 
B) less than; greater than 
C) greater than; less than 
D) greater than; greater than

Question 13

Who pays the costs of creating a sponsored ADR?

Accepted Answer

A) the foreign firm whose stocks underlie the ADR 
B) the U.S. bank creating the ADR 
C) both the U.S. bank and the foreign firm 
D) the SEC since they require the regulation 
A) the foreign firm whose stocks underlie the ADR 
B) the U.S. bank creating the ADR 
C) both the U.S. bank and the foreign firm 
D) the SEC since they require the regulation

Question 14

Of the following,which is NOT an external source of financing for the foreign subsidiary?

Accepted Answer

A) borrowing from sister subsidiaries 
B) borrowing from commercial banks in the parent country 
C) selling new stock to local shareholders 
D) All of the above are external sources of financing for the foreign subsidiary. 
A) borrowing from sister subsidiaries 
B) borrowing from commercial banks in the parent country 
C) selling new stock to local shareholders 
D) All of the above are external sources of financing for the foreign subsidiary.

Question 15

An unsponsored ADR may be initiated without the approval of the foreign firm with the underlying stock.

Accepted Answer

A) True 
 B)False

Question 16

One of the most important factors in making debt less expensive than equity is

Accepted Answer

A) the seniority of equity obligations to debt claims. 
B) the tax deductibility of dividends. 
C) the tax deductibility of equity. 
D) the seniority of debt obligations to equity claims. 
A) the seniority of equity obligations to debt claims. 
B) the tax deductibility of dividends. 
C) the tax deductibility of equity. 
D) the seniority of debt obligations to equity claims.

Question 17

Which one of the following characteristics does NOT contribute to overall market liquidity?

Accepted Answer

A) Significant market making activities. 
B) Reduced transaction costs. 
C) Effective crisis management. 
D) All of the above contribute to efficient markets. 
A) Significant market making activities. 
B) Reduced transaction costs. 
C) Effective crisis management. 
D) All of the above contribute to efficient markets.

Question 18

There is much debate about whether an MNE should consider individual country norms,known as localization,when attempting to optimize the consolidated capital structure and minimize the firm's cost of capital.Provide arguments for the advantages and disadvantages of localization of capital structure for subsidiaries.Do you think MNEs should localize the capital structure of their subsidiaries? Why/why not?

Accepted Answer

The authors lay out several advantages a

Question 19

Which of the following is NOT true regarding Euro-Medium-Term notes (EMTNs)when compared to typical long-term bonds?

Accepted Answer

A) The EMTN is a facility allowing continuous issuance over a short period of time. 
B) EMTN coupon payments are on set calendar dates regardless of the date of issue. 
C) EMTNs are relatively small, often with totals of $5 million or less. 
D) All of the above are true. 
A) The EMTN is a facility allowing continuous issuance over a short period of time. 
B) EMTN coupon payments are on set calendar dates regardless of the date of issue. 
C) EMTNs are relatively small, often with totals of $5 million or less. 
D) All of the above are true.

Question 20

Eurocredits are

Accepted Answer

A) bank loans to MNEs and others denominated in a currency other than that of the country where the bank is located. 
B) typically variable rate and tied to the LIBOR. 
C) usually for maturities of six months or less. 
D) All of the above are true. 
A) bank loans to MNEs and others denominated in a currency other than that of the country where the bank is located. 
B) typically variable rate and tied to the LIBOR. 
C) usually for maturities of six months or less. 
D) All of the above are true.

________ are domestic currencies of one country on deposit in a second country.

What are the two schools of thought regarding the worldwide trend toward increased financial disclosure by publicly traded firms.Explain which school of thought you hold to and why.

The MNE in an effort to minimize the cost of external funds should choose funds to minimize .

Empirical evidence shows that new issues of equity by domestic firms in the U.S.market typically has a stock price reaction and new equity issues in the U.S.markets by foreign firms with segmented domestic markets have a stock price reaction.

The domestic theory of optimal capital structure does not need to be modified for MNEs.

The choice of when and how to source equity globally is usually aided early on by the advice of

Of the following,which is NOT considered to be a disadvantage to MNEs of having a financial structure adhere to local debt norms?

By cross listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish which of the following?

Empirical evidence has found that on average public firms that have been privatized by issuing public equity have

Depositary receipts traded outside the United States are called ________ depositary receipts.

How does market segmentation impact the effect on share prices from cross-listing on foreign stock exchanges?

The number of foreign firms traded on the London exchange is than the number traded on the NYSE,and the costs of listing and disclosure in London are those for the NYSE.

Who pays the costs of creating a sponsored ADR?

Of the following,which is NOT an external source of financing for the foreign subsidiary?

An unsponsored ADR may be initiated without the approval of the foreign firm with the underlying stock.

One of the most important factors in making debt less expensive than equity is

Which one of the following characteristics does NOT contribute to overall market liquidity?

Which of the following is NOT true regarding Euro-Medium-Term notes (EMTNs)when compared to typical long-term bonds?

Eurocredits are

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

Exam 13: Sourcing Equity and Debt Globally

________ are domestic currencies of one country on deposit in a second country.

What are the two schools of thought regarding the worldwide trend toward increased financial disclosure by publicly traded firms.Explain which school of thought you hold to and why.

The MNE in an effort to minimize the cost of external funds should choose ________ funds to minimize ________.

Empirical evidence shows that new issues of equity by domestic firms in the U.S.market typically has a ________ stock price reaction and new equity issues in the U.S.markets by foreign firms with segmented domestic markets have a ________ stock price reaction.

The domestic theory of optimal capital structure does not need to be modified for MNEs.

The choice of when and how to source equity globally is usually aided early on by the advice of

Of the following,which is NOT considered to be a disadvantage to MNEs of having a financial structure adhere to local debt norms?

By cross listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish which of the following?

Empirical evidence has found that on average public firms that have been privatized by issuing public equity have

Depositary receipts traded outside the United States are called ________ depositary receipts.

How does market segmentation impact the effect on share prices from cross-listing on foreign stock exchanges?

The number of foreign firms traded on the London exchange is ________ than the number traded on the NYSE,and the costs of listing and disclosure in London are ________ those for the NYSE.

Who pays the costs of creating a sponsored ADR?

Of the following,which is NOT an external source of financing for the foreign subsidiary?

An unsponsored ADR may be initiated without the approval of the foreign firm with the underlying stock.

One of the most important factors in making debt less expensive than equity is

Which one of the following characteristics does NOT contribute to overall market liquidity?

Which of the following is NOT true regarding Euro-Medium-Term notes (EMTNs)when compared to typical long-term bonds?

Eurocredits are

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

The MNE in an effort to minimize the cost of external funds should choose funds to minimize .

Empirical evidence shows that new issues of equity by domestic firms in the U.S.market typically has a stock price reaction and new equity issues in the U.S.markets by foreign firms with segmented domestic markets have a stock price reaction.

The number of foreign firms traded on the London exchange is than the number traded on the NYSE,and the costs of listing and disclosure in London are those for the NYSE.