Question 1

In a plain vanilla swap the MNC:

Accepted Answer

A) swaps payments to be received in one currency for payments to be received in another currency. 
B) trades interest payments to be made at a specified point in time for interest payments to be made at another point in time. 
C) exchanges payments to be received from one entity for payments to be received by another entity. 
D) exchanges fixed interest payments for interest payments based on a floating rate,expecting that the interest rate will increase. 
A) swaps payments to be received in one currency for payments to be received in another currency. 
B) trades interest payments to be made at a specified point in time for interest payments to be made at another point in time. 
C) exchanges payments to be received from one entity for payments to be received by another entity. 
D) exchanges fixed interest payments for interest payments based on a floating rate,expecting that the interest rate will increase. D

Question 2

A syndicated loan that is denominated in JPY and which involves entities in more than one country is popularly called a:

Accepted Answer

A) yen loan. 
B) Yankee bond. 
C) ninja loan. 
D) foreign bond. 
A) yen loan. 
B) Yankee bond. 
C) ninja loan. 
D) foreign bond. C

Question 3

Some of the factors that may cause MNCs to approach financing differently than domestic firms approach financing are:

Accepted Answer

A) currency rates,interest rates,and inflation rates. 
B) their locations,number of employees,and credit rating. 
C) their size,knowledge,and diversity. 
D) exchange rates,political risk,and economic risk. 
A) currency rates,interest rates,and inflation rates. 
B) their locations,number of employees,and credit rating. 
C) their size,knowledge,and diversity. 
D) exchange rates,political risk,and economic risk. C

Question 4

MNCs can borrow money by issuing bonds.How are bonds generally structured,and what obligations do bonds impose on MNCs?

Accepted Answer

A bond is a debt instrument issued by an

Question 5

How does a line of credit differ from a term loan?

Accepted Answer

A term loan advances a specified amount

Question 6

The cost of debt to a firm is equivalent to:

Accepted Answer

A) the yield from the investors' perspective. 
B) the firm's cost of capital. 
C) the firm's tax rate. 
D) the yield of its long-term debt. 
A) the yield from the investors' perspective. 
B) the firm's cost of capital. 
C) the firm's tax rate. 
D) the yield of its long-term debt.

Question 7

A short-term loan to a firm that is to be repaid when the firm obtains long-term financing or raises funds through issuing equity is called a:

Accepted Answer

A) temporary loan. 
B) bridge loan. 
C) stop-gap loan. 
D) turn-around loan. 
A) temporary loan. 
B) bridge loan. 
C) stop-gap loan. 
D) turn-around loan.

Question 8

Debt is often considered to be generally less expensive than equity because:

Accepted Answer

A) debt costs less to acquire than equity. 
B) the transactions costs associated with debt are generally less than those associated with equity. 
C) dividends are tax-deductible. 
D) interest payments on debt are tax-deductible and reduce the payor's taxable income. 
A) debt costs less to acquire than equity. 
B) the transactions costs associated with debt are generally less than those associated with equity. 
C) dividends are tax-deductible. 
D) interest payments on debt are tax-deductible and reduce the payor's taxable income.

Question 9

A firm's financing activities have two primary objectives:

Accepted Answer

A) access to capital markets and low cost of capital. 
B) raising as much capital as possible at the lowest possible cost. 
C) funding all of its projects and being as profitable as possible. 
D) keeping borrowing to a minimum and keeping costs as low as possible. 
A) access to capital markets and low cost of capital. 
B) raising as much capital as possible at the lowest possible cost. 
C) funding all of its projects and being as profitable as possible. 
D) keeping borrowing to a minimum and keeping costs as low as possible.

Question 10

By considering the cost of debt and the cost of equity of a firm and weighing each cost according to the proportion that each occupies in the firm's capital structure,the _______________________ can be determined.

Accepted Answer

A) weighted discount rate 
B) average cost of debt and equity 
C) weighted average cost of capital 
D) cost of capital 
A) weighted discount rate 
B) average cost of debt and equity 
C) weighted average cost of capital 
D) cost of capital

Question 11

MNCs can acquire financing for projects through either debt or equity.What is the difference between debt and equity?

Accepted Answer

While both debt and equity can provide f

Question 12

The all-in cost of debt differs from the cost of debt in that:

Accepted Answer

A) the all-in cost of debt includes the cost of all of the firm's debt rather than the cost of any single debt. 
B) the all-in cost of debt is the cost of debt plus debt issuance costs. 
C) the cost of debt and the all-in cost of debt are equal. 
D) the all-in cost of debt includes the cost of debt that the firm has already repaid. 
A) the all-in cost of debt includes the cost of all of the firm's debt rather than the cost of any single debt. 
B) the all-in cost of debt is the cost of debt plus debt issuance costs. 
C) the cost of debt and the all-in cost of debt are equal. 
D) the all-in cost of debt includes the cost of debt that the firm has already repaid.

Question 13

Eurobonds have coupons that pay __________________,while U.S.domestic bonds have coupons that pay _____________________________.

Accepted Answer

A) twice each year;once each year 
B) at different times each year;at the same time every year 
C) once each year;twice each year 
D) at the same time every year;at different times each year 
A) twice each year;once each year 
B) at different times each year;at the same time every year 
C) once each year;twice each year 
D) at the same time every year;at different times each year

Question 14

One of the first decisions that an MNC has to make when considering financing is whether to pursue:

Accepted Answer

A) internal financing or external financing. 
B) debt financing or internal financing. 
C) public financing or private financing. 
D) equity financing or internal financing. 
A) internal financing or external financing. 
B) debt financing or internal financing. 
C) public financing or private financing. 
D) equity financing or internal financing.

Question 15

Bank loans typically take the form of either:

Accepted Answer

A) debt or equity. 
B) unsecured or secured loans. 
C) installment or balloon loans. 
D) term loans or lines-of-credit. 
A) debt or equity. 
B) unsecured or secured loans. 
C) installment or balloon loans. 
D) term loans or lines-of-credit.

Question 16

A __________________ is a bond that stipulates that coupon payments will be made in one specified currency and that the principal repayment will be made in another specified currency.

Accepted Answer

A) split-payment bond 
B) multiple-currency bond 
C) flexible-payment bond 
D) dual-currency bond 
A) split-payment bond 
B) multiple-currency bond 
C) flexible-payment bond 
D) dual-currency bond

Question 17

What is a seasoned offer?

Accepted Answer

A) A seasoned offer is an offer of a new issue of securities in an established firm. 
B) A seasoned offer is an offer of a new issue of securities that has features and rights that are superior to existing stock in a firm. 
C) A seasoned offer is the first offer of securities that is made to the public. 
D) A seasoned offer is the offer of securities by a firm that have previously been offered by the firm and then repurchased by the firm. 
A) A seasoned offer is an offer of a new issue of securities in an established firm. 
B) A seasoned offer is an offer of a new issue of securities that has features and rights that are superior to existing stock in a firm. 
C) A seasoned offer is the first offer of securities that is made to the public. 
D) A seasoned offer is the offer of securities by a firm that have previously been offered by the firm and then repurchased by the firm.

Question 18

Why are Eurobonds rarely rated by well-known security rating firms?

Accepted Answer

A) Firms issuing Eurobonds typically have very high credit ratings which suggest that their bonds carry very low credit risks. 
B) Eurobonds can be issued by any entity anywhere,so rating the credit risk of Eurobonds cannot be done reliably. 
C) Securities rating firms generally do not operate in Europe. 
D) Eurobonds are rated by the European financial markets and,therefore,rating by security rating firms is not necessary. 
A) Firms issuing Eurobonds typically have very high credit ratings which suggest that their bonds carry very low credit risks. 
B) Eurobonds can be issued by any entity anywhere,so rating the credit risk of Eurobonds cannot be done reliably. 
C) Securities rating firms generally do not operate in Europe. 
D) Eurobonds are rated by the European financial markets and,therefore,rating by security rating firms is not necessary.

Question 19

What is cost of capital?

Accepted Answer

Cost of capital is the cost to a firm of

Question 20

The difference between the amount of money that a firm has borrowed and the amount of money,in principle and interest payments,the firm has promised to pay to its lenders is:

Accepted Answer

A) equal to the firm's total cost of capital. 
B) the firm's cost of debt. 
C) always less than the firm's cost of capital. 
D) always more than the firm's cost of capital. 
A) equal to the firm's total cost of capital. 
B) the firm's cost of debt. 
C) always less than the firm's cost of capital. 
D) always more than the firm's cost of capital.

In a plain vanilla swap the MNC:

A syndicated loan that is denominated in JPY and which involves entities in more than one country is popularly called a:

Some of the factors that may cause MNCs to approach financing differently than domestic firms approach financing are:

MNCs can borrow money by issuing bonds.How are bonds generally structured,and what obligations do bonds impose on MNCs?

How does a line of credit differ from a term loan?

The cost of debt to a firm is equivalent to:

A short-term loan to a firm that is to be repaid when the firm obtains long-term financing or raises funds through issuing equity is called a:

Debt is often considered to be generally less expensive than equity because:

A firm's financing activities have two primary objectives:

By considering the cost of debt and the cost of equity of a firm and weighing each cost according to the proportion that each occupies in the firm's capital structure,the _______________________ can be determined.

MNCs can acquire financing for projects through either debt or equity.What is the difference between debt and equity?

The all-in cost of debt differs from the cost of debt in that:

Eurobonds have coupons that pay ,while U.S.domestic bonds have coupons that pay ___________.

One of the first decisions that an MNC has to make when considering financing is whether to pursue:

Bank loans typically take the form of either:

A __________________ is a bond that stipulates that coupon payments will be made in one specified currency and that the principal repayment will be made in another specified currency.

What is a seasoned offer?

Why are Eurobonds rarely rated by well-known security rating firms?

What is cost of capital?

The difference between the amount of money that a firm has borrowed and the amount of money,in principle and interest payments,the firm has promised to pay to its lenders is:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters

Exam 10: Long-Term Financing

In a plain vanilla swap the MNC:

A syndicated loan that is denominated in JPY and which involves entities in more than one country is popularly called a:

Some of the factors that may cause MNCs to approach financing differently than domestic firms approach financing are:

MNCs can borrow money by issuing bonds.How are bonds generally structured,and what obligations do bonds impose on MNCs?

How does a line of credit differ from a term loan?

The cost of debt to a firm is equivalent to:

A short-term loan to a firm that is to be repaid when the firm obtains long-term financing or raises funds through issuing equity is called a:

Debt is often considered to be generally less expensive than equity because:

A firm's financing activities have two primary objectives:

By considering the cost of debt and the cost of equity of a firm and weighing each cost according to the proportion that each occupies in the firm's capital structure,the _______________________ can be determined.

MNCs can acquire financing for projects through either debt or equity.What is the difference between debt and equity?

The all-in cost of debt differs from the cost of debt in that:

Eurobonds have coupons that pay __________________,while U.S.domestic bonds have coupons that pay _____________________________.

One of the first decisions that an MNC has to make when considering financing is whether to pursue:

Bank loans typically take the form of either:

A __________________ is a bond that stipulates that coupon payments will be made in one specified currency and that the principal repayment will be made in another specified currency.

What is a seasoned offer?

Why are Eurobonds rarely rated by well-known security rating firms?

What is cost of capital?

The difference between the amount of money that a firm has borrowed and the amount of money,in principle and interest payments,the firm has promised to pay to its lenders is:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Taxation and Accounting

International Portfolio Investments

Filters

Eurobonds have coupons that pay ,while U.S.domestic bonds have coupons that pay ___________.