Question 1

Obtaining local currency debt obligations is particularly attractive to an MNE if the subsidiary has

Accepted Answer

A) substantial accounts payable in the local currency. 
B) substantial financial obligations in foreign currency units. 
C) substantial accounts receivable in the local currency. 
D) all of the above. 
A) substantial accounts payable in the local currency. 
B) substantial financial obligations in foreign currency units. 
C) substantial accounts receivable in the local currency. 
D) all of the above.

Question 2

Private equity funds (PEF)differ from traditional venture capital (VC)funds in that

Accepted Answer

A) VC operate mainly in lesser-developed countries while PEF do not. 
B) VC typically invest in family business whereas PEF do not. 
C) VC is almost unavailable to emerging markets while PEF capital is available. 
D) All of the above are true. 
A) VC operate mainly in lesser-developed countries while PEF do not. 
B) VC typically invest in family business whereas PEF do not. 
C) VC is almost unavailable to emerging markets while PEF capital is available. 
D) All of the above are true.

Question 3

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms,and are of little value to foreign firms.

Accepted Answer

A) True 
 B)False

Question 4

ADRs that are created at the request of a foreign firm wanting its shares traded in the United States are ________.

Accepted Answer

A) facilitated 
B) unfacilitated 
C) sponsored 
D) unsponsored 
A) facilitated 
B) unfacilitated 
C) sponsored 
D) unsponsored

Question 5

A ________ is defined as one that targets investors in a single country and underwritten in whole or part by investment institutions from that country.

Accepted Answer

A) SEC rule 144a placement 
B) directed public share issue 
C) Euroequity public issue 
D) strategic alliance 
A) SEC rule 144a placement 
B) directed public share issue 
C) Euroequity public issue 
D) strategic alliance

Question 6

Given the following information,what is the cost of equity for the Teevox Corporation? Expected return in the domestic market is 12%,the risk-free rate of return is 4%,the firm's beta is 1.1,and the required return on debt for the firm is 7%.

Accepted Answer

A) 12.00% 
B) 10.00% 
C) 12.80% 
D) 7.70% 
A) 12.00% 
B) 10.00% 
C) 12.80% 
D) 7.70%

Question 7

An MNE may cross list its shares on a foreign stock exchange so that it can

Accepted Answer

A) create a secondary market so that shares may be used to compensate top local managers. 
B) create a secondary market so that shares can be used to acquire local firms. 
C) increase the firm's visibility to its customers and employees. 
D) accomplish all of the above. 
A) create a secondary market so that shares may be used to compensate top local managers. 
B) create a secondary market so that shares can be used to acquire local firms. 
C) increase the firm's visibility to its customers and employees. 
D) accomplish all of the above.

Question 8

Eurocurrencies are NOT the same as the euro developed for the common European currency.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is NOT an advantage of ADRs to U.S.shareholders?

Accepted Answer

A) Transfer of ownership is done in the U.S. in accordance with U.S. laws. 
B) In the event of the death of the shareholder, the estate does not go through a foreign court. 
C) Settlement for trading is generally faster in the United States. 
D) All of the above are advantages of ADRs. 
A) Transfer of ownership is done in the U.S. in accordance with U.S. laws. 
B) In the event of the death of the shareholder, the estate does not go through a foreign court. 
C) Settlement for trading is generally faster in the United States. 
D) All of the above are advantages of ADRs.

Question 10

Optimal capital structure in a domestic market is determined by many factors.Is there a single best debt ratio for a firm.If so,what is it? Does there appear to be a range for optimal capital structure for U.S.firms? If so,what is it? What factors were identified by the authors as important for an individual firm's optimal capital structure?

Accepted Answer

Optimal capital structure among U.S.firm

Question 11

Not all firms have the same optimal capital structure.Factors that might influence a firm's capital structure include

Accepted Answer

A) the industry in which it operates. 
B) the volatility of its sales and operating income. 
C) the collateral value of its assets. 
D) all of the above. 
A) the industry in which it operates. 
B) the volatility of its sales and operating income. 
C) the collateral value of its assets. 
D) all of the above.

Question 12

By cross-listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish one or more objectives.List and briefly explain each of the five objectives identified by your authors.

Accepted Answer

.Improve the liquidity of its existing s

Question 13

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

Accepted Answer

A) improved profitability. 
B) higher debt levels. 
C) lower real sales. 
D) all of the above. 
A) improved profitability. 
B) higher debt levels. 
C) lower real sales. 
D) all of the above.

Question 14

General Motors has agreed to a syndicated eurocredit loan with the following terms: A revolving loan of $100,000,000 with an up-front fee of 2% of the principal and an interest rate of LIBOR plus 75 basis points.If the payments are made every six months and the current LIBOR rate is 4.00%,what is the effective annual cost of this loan?

Accepted Answer

A) 4.75% 
B) 4.85% 
C) 4.95% 
D) 4.00% 
A) 4.75% 
B) 4.85% 
C) 4.95% 
D) 4.00%

Question 15

The authors note empirical evidence that shows cross-listing foreign shares of stock on U.S.exchanges has a positive stock price effect.________ for the listing of ADRs.

Accepted Answer

A) There is no stock price reaction 
B) There is a negative stock price reaction 
C) There is a positive stock price reaction 
D) None of the above is true. 
A) There is no stock price reaction 
B) There is a negative stock price reaction 
C) There is a positive stock price reaction 
D) None of the above is true.

Question 16

ADRs cannot be exchanged for the underlying shares of the foreign stock,therefore,arbitrage cannot keep the prices in line with the foreign price of the stock.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would likely be the ultimate step in a firm's efforts to source equity globally?

Accepted Answer

A) an international bond issue 
B) an equity listing in less-prestigious markets 
C) an equity listing in a target market 
D) a Euroequity issue in global equity markets 
A) an international bond issue 
B) an equity listing in less-prestigious markets 
C) an equity listing in a target market 
D) a Euroequity issue in global equity markets

Question 18

The Euro-medium-term-note (EMTN)has filled a substantial niche market in global financing.What are the distinguishing characteristics of the EMTN and why is it such a popular form of financing for MNEs?

Accepted Answer

EMTNs have maturity between the long-liv

Question 19

Transaction costs for trading equity securities as measured by the bid-ask spreads are lowest on which exchange?

Accepted Answer

A) NYSE 
B) Nasdaq 
C) London 
D) Tokyo 
A) NYSE 
B) Nasdaq 
C) London 
D) Tokyo

Question 20

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

Accepted Answer

A) equity in the form of cash from the parent firm 
B) equity in the form of real goods from the parent 
C) debt in the form of loans from the same commercial bank used by the parent 
D) All of the above are internal sources of financing for the foreign subsidiary. 
A) equity in the form of cash from the parent firm 
B) equity in the form of real goods from the parent 
C) debt in the form of loans from the same commercial bank used by the parent 
D) All of the above are internal sources of financing for the foreign subsidiary.

Obtaining local currency debt obligations is particularly attractive to an MNE if the subsidiary has

Private equity funds (PEF)differ from traditional venture capital (VC)funds in that

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms,and are of little value to foreign firms.

ADRs that are created at the request of a foreign firm wanting its shares traded in the United States are ________.

A ________ is defined as one that targets investors in a single country and underwritten in whole or part by investment institutions from that country.

Given the following information,what is the cost of equity for the Teevox Corporation? Expected return in the domestic market is 12%,the risk-free rate of return is 4%,the firm's beta is 1.1,and the required return on debt for the firm is 7%.

An MNE may cross list its shares on a foreign stock exchange so that it can

Eurocurrencies are NOT the same as the euro developed for the common European currency.

Which of the following is NOT an advantage of ADRs to U.S.shareholders?

Not all firms have the same optimal capital structure.Factors that might influence a firm's capital structure include

By cross-listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish one or more objectives.List and briefly explain each of the five objectives identified by your authors.

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

The authors note empirical evidence that shows cross-listing foreign shares of stock on U.S.exchanges has a positive stock price effect.________ for the listing of ADRs.

ADRs cannot be exchanged for the underlying shares of the foreign stock,therefore,arbitrage cannot keep the prices in line with the foreign price of the stock.

Which of the following would likely be the ultimate step in a firm's efforts to source equity globally?

The Euro-medium-term-note (EMTN)has filled a substantial niche market in global financing.What are the distinguishing characteristics of the EMTN and why is it such a popular form of financing for MNEs?

Transaction costs for trading equity securities as measured by the bid-ask spreads are lowest on which exchange?

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

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

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Exam 13: Sourcing Equity and Debt Globally

Obtaining local currency debt obligations is particularly attractive to an MNE if the subsidiary has

Private equity funds (PEF)differ from traditional venture capital (VC)funds in that

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms,and are of little value to foreign firms.

ADRs that are created at the request of a foreign firm wanting its shares traded in the United States are ________.

A ________ is defined as one that targets investors in a single country and underwritten in whole or part by investment institutions from that country.

Given the following information,what is the cost of equity for the Teevox Corporation? Expected return in the domestic market is 12%,the risk-free rate of return is 4%,the firm's beta is 1.1,and the required return on debt for the firm is 7%.

An MNE may cross list its shares on a foreign stock exchange so that it can

Eurocurrencies are NOT the same as the euro developed for the common European currency.

Which of the following is NOT an advantage of ADRs to U.S.shareholders?

Not all firms have the same optimal capital structure.Factors that might influence a firm's capital structure include

By cross-listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish one or more objectives.List and briefly explain each of the five objectives identified by your authors.

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

The authors note empirical evidence that shows cross-listing foreign shares of stock on U.S.exchanges has a positive stock price effect.________ for the listing of ADRs.

ADRs cannot be exchanged for the underlying shares of the foreign stock,therefore,arbitrage cannot keep the prices in line with the foreign price of the stock.

Which of the following would likely be the ultimate step in a firm's efforts to source equity globally?

The Euro-medium-term-note (EMTN)has filled a substantial niche market in global financing.What are the distinguishing characteristics of the EMTN and why is it such a popular form of financing for MNEs?

Transaction costs for trading equity securities as measured by the bid-ask spreads are lowest on which exchange?

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

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