Question 1

External financing includes debt from any source that is not the MNE itself and equity from any potential partner.

Accepted Answer

A) True 
 B)False

Question 2

Each ADR represents ________ of the shares of the underlying foreign stock.

Accepted Answer

A)  a multiple 
B)  100 
C)  1 
D)  ADRs have nothing to do with foreign stocks. 
A)  a multiple 
B)  100 
C)  1 
D)  ADRs have nothing to do with foreign stocks.

Question 3

Most financial theorists believe that the optimal capital structure is a ________ with a debt to total value ratio somewhere around ________.

Accepted Answer

A)  point; 50% 
B)  point; 25% 
C)  range; 30%-60% 
D)  range; 10%-40% 
A)  point; 50% 
B)  point; 25% 
C)  range; 30%-60% 
D)  range; 10%-40%

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

Host country government would, in the extreme, prefer all inward investment be financed with local debt.

Accepted Answer

A) True 
 B)False

Question 6

External sources of financing available for foreign subsidiaries include all of the following EXCEPT:

Accepted Answer

A)  debt from the parent's country. 
B)  debt from countries outside the parent's country. 
C)  local or global equity. 
D)  intercompany and intracompany loans. 
A)  debt from the parent's country. 
B)  debt from countries outside the parent's country. 
C)  local or global equity. 
D)  intercompany and intracompany loans.

Question 7

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

Accepted Answer

A)  VC operates mainly in lesser-developed countries while PEF do not. 
B)  VC typically invests 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 operates mainly in lesser-developed countries while PEF do not. 
B)  VC typically invests 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 8

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 9

By cross-listing shares on a foreign exchange, you can expect:

Accepted Answer

A)  no share price effect for foreign firms that cross-list on major U.S. exchanges. 
B)  a positive share price effect for foreign firms that cross-list on major U.S. exchanges. 
C)  a negative share price effect for foreign firms that cross-list on major U.S. exchanges. 
D)  none of the above 
A)  no share price effect for foreign firms that cross-list on major U.S. exchanges. 
B)  a positive share price effect for foreign firms that cross-list on major U.S. exchanges. 
C)  a negative share price effect for foreign firms that cross-list on major U.S. exchanges. 
D)  none of the above

Question 10

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

Accepted Answer

A) True 
 B)False

Question 11

The initial issuance of shares by a company in an IPO typically represents no more than:

Accepted Answer

A)  25%. 
B)  35%. 
C)  45%. 
D)  55%. 
A)  25%. 
B)  35%. 
C)  45%. 
D)  55%.

Question 12

The Eurocurrency market continues to thrive because it is a large international money market relatively free of governmental regulation and interference.

Accepted Answer

A) True 
 B)False

Question 13

A euroequity issue is an initial public offering of euro denominated securities.

Accepted Answer

A) True 
 B)False

Question 14

The choice of when and how to source capital 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)  an underwriter. 
A)  an investment banker. 
B)  your stock broker. 
C)  a commercial banker. 
D)  an underwriter.

Question 15

Most firms raise their initial capital in foreign markets.

Accepted Answer

A) True 
 B)False

Question 16

The eurobond market owes its existence to all of the following reasons unique factors EXCEPT:

Accepted Answer

A)  free bond ratings. 
B)  the absence of regulatory interference. 
C)  less stringent disclosure practices. 
D)  favorable tax treatment. 
A)  free bond ratings. 
B)  the absence of regulatory interference. 
C)  less stringent disclosure practices. 
D)  favorable tax treatment.

Question 17

Of the following, which was NOT cited by the authors as a valuable function provided by the Eurocurrency market?

Accepted Answer

A)  Eurocurrency deposits are an efficient and convenient money market device for holding excess corporate liquidity. 
B)  Eurocurrency deposits are a tool used by the Federal Reserve to regulate the money supply of countries that peg their currency against the U.S. dollar. 
C)  The Eurocurrency market is a major source of short-term bank loans to finance corporate working capital needs. 
D)  All of the above were cited by the authors. 
A)  Eurocurrency deposits are an efficient and convenient money market device for holding excess corporate liquidity. 
B)  Eurocurrency deposits are a tool used by the Federal Reserve to regulate the money supply of countries that peg their currency against the U.S. dollar. 
C)  The Eurocurrency market is a major source of short-term bank loans to finance corporate working capital needs. 
D)  All of the above were cited by the authors.

Question 18

Moody's assesses the investor's risk caused by changing exchange rates in the investment.

Accepted Answer

A) True 
 B)False

Question 19

Strategic alliances are normally formed by firms that expect to gain synergies from which of the following?

Accepted Answer

A)  economies of scale 
B)  economies of scope 
C)  complementary marketing 
D)  all of the above 
A)  economies of scale 
B)  economies of scope 
C)  complementary marketing 
D)  all of the above

Question 20

List and discuss three public pathway strategies for a MNE for raising equity capital outside its home market.

Accepted Answer

A euroequity or euroequity issue is an i

External financing includes debt from any source that is not the MNE itself and equity from any potential partner.

Each ADR represents ________ of the shares of the underlying foreign stock.

Most financial theorists believe that the optimal capital structure is a with a debt to total value ratio somewhere around .

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

Host country government would, in the extreme, prefer all inward investment be financed with local debt.

External sources of financing available for foreign subsidiaries include all of the following EXCEPT:

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

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

By cross-listing shares on a foreign exchange, you can expect:

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

The initial issuance of shares by a company in an IPO typically represents no more than:

The Eurocurrency market continues to thrive because it is a large international money market relatively free of governmental regulation and interference.

A euroequity issue is an initial public offering of euro denominated securities.

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

Most firms raise their initial capital in foreign markets.

The eurobond market owes its existence to all of the following reasons unique factors EXCEPT:

Of the following, which was NOT cited by the authors as a valuable function provided by the Eurocurrency market?

Moody's assesses the investor's risk caused by changing exchange rates in the investment.

Strategic alliances are normally formed by firms that expect to gain synergies from which of the following?

List and discuss three public pathway strategies for a MNE for raising equity capital outside its home market.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 14: Funding the Multinational Firm

External financing includes debt from any source that is not the MNE itself and equity from any potential partner.

Each ADR represents ________ of the shares of the underlying foreign stock.

Most financial theorists believe that the optimal capital structure is a ________ with a debt to total value ratio somewhere around ________.

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

Host country government would, in the extreme, prefer all inward investment be financed with local debt.

External sources of financing available for foreign subsidiaries include all of the following EXCEPT:

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

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

By cross-listing shares on a foreign exchange, you can expect:

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

The initial issuance of shares by a company in an IPO typically represents no more than:

The Eurocurrency market continues to thrive because it is a large international money market relatively free of governmental regulation and interference.

A euroequity issue is an initial public offering of euro denominated securities.

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

Most firms raise their initial capital in foreign markets.

The eurobond market owes its existence to all of the following reasons unique factors EXCEPT:

Of the following, which was NOT cited by the authors as a valuable function provided by the Eurocurrency market?

Moody's assesses the investor's risk caused by changing exchange rates in the investment.

Strategic alliances are normally formed by firms that expect to gain synergies from which of the following?

List and discuss three public pathway strategies for a MNE for raising equity capital outside its home market.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Most financial theorists believe that the optimal capital structure is a with a debt to total value ratio somewhere around .