Question 1

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.

Question 2

A significant advantage of borrowing foreign currency-denominated bonds is that the borrower need not worry about relative changes in the value of the home currency.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a characteristic of an euroequity issue?

Accepted Answer

A)  an initial public offering of euro denominated securities 
B)  the issuers are located in Europe 
C)  the investors are located in Europe 
D)  is an offering on multiple exchanges in multiple countries at the same time 
A)  an initial public offering of euro denominated securities 
B)  the issuers are located in Europe 
C)  the investors are located in Europe 
D)  is an offering on multiple exchanges in multiple countries at the same time

Question 4

Private equity funds appear to have a longer time horizon than traditional venture capital funds.

Accepted Answer

A) True 
 B)False

Question 5

TropiKana Inc., a U.S firm, has just borrowed $1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 6.00% per year, how much interest will they pay in the first year?

Accepted Answer

A)  $6,000 
B)  $60,000 
C)  $600,000 
D)  €60,000 
A)  $6,000 
B)  $60,000 
C)  $600,000 
D)  €60,000

Question 6

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 7

Private equity funds differ from traditional venture capital funds. List and discuss three differences between them.

Accepted Answer

Private equity funds differ from traditi

Question 8

The financial structure and financing of a foreign subsidiary change over time as it passes through the following stages of its business life cycle EXCEPT:

Accepted Answer

A)  maturing. 
B)  growth. 
C)  startup. 
D)  discovery. 
A)  maturing. 
B)  growth. 
C)  startup. 
D)  discovery.

Question 9

Private equity funds are best known for buying control of private owned firms, taking them publicly, improving management, and then reselling them after one to three years.

Accepted Answer

A) True 
 B)False

Question 10

Which financial economists are most closely associated with the financial theory of optimal capital structure?

Accepted Answer

A)  Modigliani and Miller 
B)  Fama, Fisher, Jensen, and Roll 
C)  Black and Scholes 
D)  Markowitz and Sharpe 
A)  Modigliani and Miller 
B)  Fama, Fisher, Jensen, and Roll 
C)  Black and Scholes 
D)  Markowitz and Sharpe

Question 11

TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro appreciates against the dollar from $1.40/€ at the time the loan was made to $1.45/€ at the end of the first year, how much interest will TropiKana pay at the end of the first year (rounded)?

Accepted Answer

A)  $55,000 
B)  $79,750 
C)  $77,000 
D)  $37,931 
A)  $55,000 
B)  $79,750 
C)  $77,000 
D)  $37,931

Question 12

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

Accepted Answer

A)  the tax deductibility of depreciation. 
B)  the tax deductibility of equity. 
C)  the tax deductibility of dividends. 
D)  the tax deductibility of interest. 
A)  the tax deductibility of depreciation. 
B)  the tax deductibility of equity. 
C)  the tax deductibility of dividends. 
D)  the tax deductibility of interest.

Question 13

Internal financing includes all potential sources of fund arising from the MNE itself.

Accepted Answer

A) True 
 B)False

Question 14

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 15

A distinction about the publicly traded firm's shares is that they raise capital with the daily rise and fall of their share prices.

Accepted Answer

A) True 
 B)False

Eurocredits are:

A significant advantage of borrowing foreign currency-denominated bonds is that the borrower need not worry about relative changes in the value of the home currency.

Which of the following is a characteristic of an euroequity issue?

Private equity funds appear to have a longer time horizon than traditional venture capital funds.

TropiKana Inc., a U.S firm, has just borrowed $1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 6.00% per year, how much interest will they pay in the first year?

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

Private equity funds differ from traditional venture capital funds. List and discuss three differences between them.

The financial structure and financing of a foreign subsidiary change over time as it passes through the following stages of its business life cycle EXCEPT:

Private equity funds are best known for buying control of private owned firms, taking them publicly, improving management, and then reselling them after one to three years.

Which financial economists are most closely associated with the financial theory of optimal capital structure?

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

Internal financing includes all potential sources of fund arising from the MNE itself.

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

A distinction about the publicly traded firm's shares is that they raise capital with the daily rise and fall of their share prices.

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

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Exam 14: Funding the Multinational Firm

Eurocredits are:

A significant advantage of borrowing foreign currency-denominated bonds is that the borrower need not worry about relative changes in the value of the home currency.

Which of the following is a characteristic of an euroequity issue?

Private equity funds appear to have a longer time horizon than traditional venture capital funds.

TropiKana Inc., a U.S firm, has just borrowed $1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 6.00% per year, how much interest will they pay in the first year?

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

Private equity funds differ from traditional venture capital funds. List and discuss three differences between them.

The financial structure and financing of a foreign subsidiary change over time as it passes through the following stages of its business life cycle EXCEPT:

Private equity funds are best known for buying control of private owned firms, taking them publicly, improving management, and then reselling them after one to three years.

Which financial economists are most closely associated with the financial theory of optimal capital structure?

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

Internal financing includes all potential sources of fund arising from the MNE itself.

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

A distinction about the publicly traded firm's shares is that they raise capital with the daily rise and fall of their share prices.

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