Question 1

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

Accepted Answer

A)  Negotiable CDs 
B)  International mutual funds 
C)  Depositary receipts 
D)  Eurodeposits 
A)  Negotiable CDs 
B)  International mutual funds 
C)  Depositary receipts 
D)  Eurodeposits

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

In addition to gaining liquidity, which of the following could also be considered a legitimate reason for cross-listing equity?

Accepted Answer

A)  enhance a firm's local image 
B)  become more familiar with the local financial community 
C)  get better local press coverage 
D)  all of the above 
A)  enhance a firm's local image 
B)  become more familiar with the local financial community 
C)  get better local press coverage 
D)  all of the above

Question 6

SEC rule 144A permits institutional buyers to trade privately placed securities without the previous holding periods restrictions and without requiring SEC registration.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

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 9

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 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. fir

Question 11

ADRs are a popular investment tool for many U.S. investors. In recent years several alternatives for investing in foreign equity securities have become available for U.S. investors, yet ADRs remain popular. Define what an ADR is and provide at least three examples of the advantages they may hold over alternative foreign investment vehicles for U.S. investors.

Accepted Answer

Depositary receipts are negotiable certi

Question 12

Level ________ is the easiest standard to satisfy for issuing ADRs.

Accepted Answer

A)  144a 
B)  III 
C)  II 
D)  I 
A)  144a 
B)  III 
C)  II 
D)  I

Question 13

Eurobanks are

Accepted Answer

A)  banks where Eurocurrencies are deposited. 
B)  major world banks that conduct a Eurocurrency business in addition to normal banking activities. 
C)  financial intermediaries that simultaneously bid for time deposits in and make loans in a currency other than that of the currency of where it is located. 
D)  All of the above are descriptions of a Eurobank. 
A)  banks where Eurocurrencies are deposited. 
B)  major world banks that conduct a Eurocurrency business in addition to normal banking activities. 
C)  financial intermediaries that simultaneously bid for time deposits in and make loans in a currency other than that of the currency of where it is located. 
D)  All of the above are descriptions of a Eurobank.

Question 14

Level I ADRs trade primarily

Accepted Answer

A)  on the New York Stock Exchange. 
B)  on the American Stock Exchange. 
C)  over the counter or pink sheets. 
D)  Level I ADRs typically do not trade at all, but instead are privately issued and held until maturity. 
A)  on the New York Stock Exchange. 
B)  on the American Stock Exchange. 
C)  over the counter or pink sheets. 
D)  Level I ADRs typically do not trade at all, but instead are privately issued and held until maturity.

Question 15

For the most part, U.S. SEC disclosure requirements are ________ stringent than other, non-U.S. equity market rules.

Accepted Answer

A)  more 
B)  less 
C)  as equally 
D)  none of the above 
A)  more 
B)  less 
C)  as equally 
D)  none of the above

Question 16

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 17

Economic studies have found that international cross-listing of securities across financial markets resulted in ________ abnormal returns that were ________ for firms resident in emerging markets with a low level of legal barriers to capital flows than for firms resident in developed countries.

Accepted Answer

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

Question 18

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

Accepted Answer

A)  Negotiable CDs 
B)  International mutual funds 
C)  Depositary receipts 
D)  Eurodeposits 
A)  Negotiable CDs 
B)  International mutual funds 
C)  Depositary receipts 
D)  Eurodeposits

Question 19

In general, which has the shorter maturity and is more appropriate for funding short-term inventory needs?

Accepted Answer

A)  commercial paper 
B)  Euro-Medium-Term notes (EMTNs) 
C)  the international bond market 
D)  all of the above 
A)  commercial paper 
B)  Euro-Medium-Term notes (EMTNs) 
C)  the international bond market 
D)  all of the above

Question 20

An Irish company strategy to diversify its capital structure can be

Accepted Answer

A)  issuing Eurobond denominated in US dollars. 
B)  issuing a Yankee Bond. 
C)  private placement in USA. 
D)  all of the above 
A)  issuing Eurobond denominated in US dollars. 
B)  issuing a Yankee Bond. 
C)  private placement in USA. 
D)  all of the above

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

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

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

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

In addition to gaining liquidity, which of the following could also be considered a legitimate reason for cross-listing equity?

SEC rule 144A permits institutional buyers to trade privately placed securities without the previous holding periods restrictions and without requiring SEC registration.

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.

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

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

Level ________ is the easiest standard to satisfy for issuing ADRs.

Eurobanks are

Level I ADRs trade primarily

For the most part, U.S. SEC disclosure requirements are ________ stringent than other, non-U.S. equity market rules.

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

Economic studies have found that international cross-listing of securities across financial markets resulted in abnormal returns that were for firms resident in emerging markets with a low level of legal barriers to capital flows than for firms resident in developed countries.

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

In general, which has the shorter maturity and is more appropriate for funding short-term inventory needs?

An Irish company strategy to diversify its capital structure can be

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 and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The 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 13: Raising Equity and Debt Globally

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

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

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

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

In addition to gaining liquidity, which of the following could also be considered a legitimate reason for cross-listing equity?

SEC rule 144A permits institutional buyers to trade privately placed securities without the previous holding periods restrictions and without requiring SEC registration.

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.

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

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

Level ________ is the easiest standard to satisfy for issuing ADRs.

Eurobanks are

Level I ADRs trade primarily

For the most part, U.S. SEC disclosure requirements are ________ stringent than other, non-U.S. equity market rules.

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

Economic studies have found that international cross-listing of securities across financial markets resulted in ________ abnormal returns that were ________ for firms resident in emerging markets with a low level of legal barriers to capital flows than for firms resident in developed countries.

________ are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust at a foreign custodian bank.

In general, which has the shorter maturity and is more appropriate for funding short-term inventory needs?

An Irish company strategy to diversify its capital structure can be

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 and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The 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

Economic studies have found that international cross-listing of securities across financial markets resulted in abnormal returns that were for firms resident in emerging markets with a low level of legal barriers to capital flows than for firms resident in developed countries.