Question 1

Factors affecting international equity returns are:

Accepted Answer

A) macroeconomic variables that influence the overall economy 
B) exchange rate changes 
C) the industrial structure of the country 
D) all of these 
A) macroeconomic variables that influence the overall economy 
B) exchange rate changes 
C) the industrial structure of the country 
D) all of these D

Question 2

Which of the following statements is true?

Accepted Answer

A) In the primary market, firms sell shares to investors and in the secondary market investors sell shares to investors. 
B) In the primary market, investors sell shares to investors and in the secondary market firms sell shares to investors. 
C) In the primary market, firms sell shares to investors for the first time and in the secondary market firms sell shares to investors in subsequent equity issues. 
D) In the primary market, investors sell shares to investors for the first time and in the secondary market investors sell shares to investors after the initial sale. 
A) In the primary market, firms sell shares to investors and in the secondary market investors sell shares to investors. 
B) In the primary market, investors sell shares to investors and in the secondary market firms sell shares to investors. 
C) In the primary market, firms sell shares to investors for the first time and in the secondary market firms sell shares to investors in subsequent equity issues. 
D) In the primary market, investors sell shares to investors for the first time and in the secondary market investors sell shares to investors after the initial sale. A

Question 3

Canadian stocks are cross-listed in the United States as:

Accepted Answer

A) American depository receipts 
B) Global depository receipts 
C) Ordinary shares 
D) Global registered shares 
A) American depository receipts 
B) Global depository receipts 
C) Ordinary shares 
D) Global registered shares C

Question 4

Assume that Nestle shares are trading at SF 300 in Zurich and $ 51 in New York.Each share equals 4 ADRs.The current exchange rate is SF1.5/$.If transaction costs are $1 per ADR,can you make an arbitrage profit?

Accepted Answer

No,transaction costs = potential profit

Question 5

Assume that Accor shares are trading at A$2.5 in Sydney and $28 in New York.Each ADR equals 20 shares.The current exchange rate is A$1.5/$.At what transaction cost per share would there be no profit opportunity?

Accepted Answer

A$8/20 = A$0.4
Buy one ADR in

Question 6

Assume that Accor shares are trading at A$2.5 in Sydney and $28 in New York.Each ADR equals 20 shares.The current exchange rate is A$1.5/$.In the absence of transaction costs,can you make an arbitrage profit?

Accepted Answer

Yes.Buy one ADR in New York fo

Question 7

The functions of the secondary market are all except:

Accepted Answer

A) Provide liquidity for investors 
B) Price determination for traded securities 
C) Provide price signals 
D) Provide sell signals 
A) Provide liquidity for investors 
B) Price determination for traded securities 
C) Provide price signals 
D) Provide sell signals

Question 8

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.The current exchange rate is SF1/$ and a trader has $10,000 or the equivalent in SF.How much arbitrage profit can the trader make?

Accepted Answer

A) $ 200 
B) $ 1250 
C) $ 2500 
D) No profit can be made 
A) $ 200 
B) $ 1250 
C) $ 2500 
D) No profit can be made

Question 9

Shares trade on foreign exchanges in all of the following forms except:

Accepted Answer

A) American depository receipts 
B) Global depository receipts 
C) American registered shares 
D) Global registered shares 
A) American depository receipts 
B) Global depository receipts 
C) American registered shares 
D) Global registered shares

Question 10

All of the following are required criteria for a listing of a non-US company on the NYSE EXCEPT:

Accepted Answer

A) The number of publicly traded shares should be at least 2.5mln 
B) Global Market Capitalization is at least $500mln 
C) Annual revenue is at least $100mln 
D) pre-tax income is at least $50mln 
A) The number of publicly traded shares should be at least 2.5mln 
B) Global Market Capitalization is at least $500mln 
C) Annual revenue is at least $100mln 
D) pre-tax income is at least $50mln

Question 11

What factors go into the decision to cross-list on a foreign exchange?

Accepted Answer

When deciding whether to cross-list shar

Question 12

A measure of "liquidity" for a stock market is

Accepted Answer

A) the turnover ratio 
B) the ratio of stock market transactions over a period of time divided by the size, or market capitalization, of the stock market 
C) the LIBOR rate 
D) a and b 
A) the turnover ratio 
B) the ratio of stock market transactions over a period of time divided by the size, or market capitalization, of the stock market 
C) the LIBOR rate 
D) a and b

Question 13

American Depository Receipts have all of the following characteristics except:

Accepted Answer

A) They are bearer shares. 
B) They are quoted in US dollars. 
C) Dividends on ADRs are paid in US dollars. 
D) ADR trades clear in three business days. 
A) They are bearer shares. 
B) They are quoted in US dollars. 
C) Dividends on ADRs are paid in US dollars. 
D) ADR trades clear in three business days.

Question 14

The major national stock market index for the Tokyo stock exchange is the

Accepted Answer

A) FTSE 100 
B) DAX 
C) Hang Seng 
D) Nikkei 300 
A) FTSE 100 
B) DAX 
C) Hang Seng 
D) Nikkei 300

Question 15

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.There is no arbitrage possible.What is the current SF/US$ exchange rate?

Accepted Answer

A) SF 0.8/$ 
B) SF 1/$ 
C) SF 1.25/$ 
D) SF 4/$ 
A) SF 0.8/$ 
B) SF 1/$ 
C) SF 1.25/$ 
D) SF 4/$

Question 16

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.The current exchange rate is SF1/$ and a trader has $10,000 or the equivalent in SF.How can the trader make an arbitrage profit?

Accepted Answer

A) Buy ADRs in Zurich and sell shares in New York 
B) Buy ADRs in New York and sell shares in Zurich 
C) Buy shares in Zurich and sell ADRs in New York 
D) Buy shares in New York and sell ADRs in Zurich 
A) Buy ADRs in Zurich and sell shares in New York 
B) Buy ADRs in New York and sell shares in Zurich 
C) Buy shares in Zurich and sell ADRs in New York 
D) Buy shares in New York and sell ADRs in Zurich

Question 17

American Depository Receipt (ADRs)represent foreign stocks

Accepted Answer

A) denominated in U.S.dollars that trade on European stock exchanges 
B) denominated in U.S.dollars that trade on a U.S.stock exchange 
C) denominated in a foreign currency that trade on a U.S.stock exchange 
D) non-registered (bearer) securities 
A) denominated in U.S.dollars that trade on European stock exchanges 
B) denominated in U.S.dollars that trade on a U.S.stock exchange 
C) denominated in a foreign currency that trade on a U.S.stock exchange 
D) non-registered (bearer) securities

Question 18

Assume that Nestle shares are trading at SF 300 in Zurich and $ 51 in New York.Each share equals 4 ADRs.The current exchange rate is SF1.5/$.In the absence of transaction costs,can you make an arbitrage profit?

Accepted Answer

Yes.Buy one share in Zurich fo

Question 19

A liquid stock market is one in which

Accepted Answer

A) investors can buy and sell shares quickly at close to the current quoted prices 
B) investors can buy shares quickly at close to the current quoted prices 
C) investors can sell shares quickly at close to the current quoted prices 
D) investors can buy and sell shares quickly above the current quoted prices 
A) investors can buy and sell shares quickly at close to the current quoted prices 
B) investors can buy shares quickly at close to the current quoted prices 
C) investors can sell shares quickly at close to the current quoted prices 
D) investors can buy and sell shares quickly above the current quoted prices

Question 20

Which ADRs are listed on a US exchange:

Accepted Answer

A) Level I only 
B) Level I and II only 
C) Level II and III only 
D) Level III only 
A) Level I only 
B) Level I and II only 
C) Level II and III only 
D) Level III only

Exam 8: Management of Transaction Exposure

Factors affecting international equity returns are:

Which of the following statements is true?

Canadian stocks are cross-listed in the United States as:

Assume that Nestle shares are trading at SF 300 in Zurich and $ 51 in New York.Each share equals 4 ADRs.The current exchange rate is SF1.5/$.If transaction costs are $1 per ADR,can you make an arbitrage profit?

Assume that Accor shares are trading at A$2.5 in Sydney and $28 in New York.Each ADR equals 20 shares.The current exchange rate is A$1.5/$.At what transaction cost per share would there be no profit opportunity?

Assume that Accor shares are trading at A$2.5 in Sydney and $28 in New York.Each ADR equals 20 shares.The current exchange rate is A$1.5/$.In the absence of transaction costs,can you make an arbitrage profit?

The functions of the secondary market are all except:

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.The current exchange rate is SF1/$ and a trader has $10,000 or the equivalent in SF.How much arbitrage profit can the trader make?

Shares trade on foreign exchanges in all of the following forms except:

All of the following are required criteria for a listing of a non-US company on the NYSE EXCEPT:

What factors go into the decision to cross-list on a foreign exchange?

A measure of "liquidity" for a stock market is

American Depository Receipts have all of the following characteristics except:

The major national stock market index for the Tokyo stock exchange is the

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.There is no arbitrage possible.What is the current SF/US$ exchange rate?

Assume Nestle is trading for SF200 in Zurich and Nestle ADRs (4 ADRs per share)are trading for $40 on the New York Stock exchange.The current exchange rate is SF1/$ and a trader has $10,000 or the equivalent in SF.How can the trader make an arbitrage profit?

American Depository Receipt (ADRs)represent foreign stocks

Assume that Nestle shares are trading at SF 300 in Zurich and $ 51 in New York.Each share equals 4 ADRs.The current exchange rate is SF1.5/$.In the absence of transaction costs,can you make an arbitrage profit?

A liquid stock market is one in which

Which ADRs are listed on a US exchange:

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

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