Exam 13: Sourcing Equity Capital Globally

Another school of thought about the worldwide trend toward fuller and more standardized disclosure rules is that the cost of U.S. level equity capital disclosure

Investment banking services include WHICH of the following?

Level II ADRs must meet

Wallet Drug Company has just recently raised money abroad for the first time in the history of the firm. Prior to the recent equity issue abroad, the firm had a D/V ratio of 40%, an effective tax rate of 30%, a before-tax cost of debt of 9%, and a domestic beta of 1.3. The expected return on the market portfolio was 13% and the risk-free rate was 5%. After the equity issue, Wallet Drug has a D/V ratio of 50%, their after-tax cost of debt has not changed, nor has the effective tax rate, the firm's international beta is 1.0, the expected return on the market portfolio is only 12%, and the risk-free rate is still 5%. What was the firm's WACC prior to the issue of new common stock abroad?

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

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

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

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

Level III ADR commitment applies to

The term "euro" as used in the euro equity market implies

Which of the following are not contributing factors to the dominance of the London and New York Stock exchanges?

On the global financial scene, the term ________ is used to signify the end of of market ownership by a small, privileged group of "seat owners."

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

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%.

Which of the following is NOT a motivation for the use of ADRs?

ADRs are considered an effective way for firms to improve the liquidity of their stock, especially if the home market is small and illiquid.

Your authors note several empirical studies that have found

Contrary to many of the firms that trade financial securities and derivatives in their markets, the world's financial exchanges are splitting into smaller more specialized units rather than merging into larger exchanges.

Which of the following is the typical order of sourcing capital abroad?

Level I ADRs trade primarily