Question 1

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

Accepted Answer

A) An international bond issue, then cross listing the outstanding issues on other exchanges, then an international bond issue in the target market. 
B) An international bond issue in the target market then cross listing the outstanding issues on other exchanges, then an international bond issue. 
C) An international bond issue, then an international bond issue in the target market, then cross listing the outstanding issues on other exchanges. 
D) Cross listing the outstanding issues on other exchanges, then an international bond issue, then an international bond issue in the target market. 
A) An international bond issue, then cross listing the outstanding issues on other exchanges, then an international bond issue in the target market. 
B) An international bond issue in the target market then cross listing the outstanding issues on other exchanges, then an international bond issue. 
C) An international bond issue, then an international bond issue in the target market, then cross listing the outstanding issues on other exchanges. 
D) Cross listing the outstanding issues on other exchanges, then an international bond issue, then an international bond issue in the target market.

Question 2

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

Accepted Answer

A) a multiple 
B) 100 
C) 1 
D) ADRs have nothing to do with foreign stocks. 
A) a multiple 
B) 100 
C) 1 
D) ADRs have nothing to do with foreign stocks.

Question 3

________ 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 4

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms, and are of little value to foreign firms.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is NOT an advantage of ADRs to U.S. shareholders?

Accepted Answer

A) Transfer of ownership is done in the U.S. in accordance with U.S. laws. 
B) In the event of the death of the shareholder, the estate does not go through a foreign court. 
C) Settlement for trading is generally faster in the United States. 
D) All of the above are advantages of ADRs. 
A) Transfer of ownership is done in the U.S. in accordance with U.S. laws. 
B) In the event of the death of the shareholder, the estate does not go through a foreign court. 
C) Settlement for trading is generally faster in the United States. 
D) All of the above are advantages of ADRs.

Question 6

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

Accepted Answer

A) chases away potential listers of equity. 
B) is an onerous costly burden. 
C) leads to fewer foreign firms cross listing in U.S. equity markets. 
D) all of the above 
A) chases away potential listers of equity. 
B) is an onerous costly burden. 
C) leads to fewer foreign firms cross listing in U.S. equity markets. 
D) all of the above

Question 7

Most firms raise their initial capital in foreign markets.

Accepted Answer

A) True 
 B)False

Question 8

The choice of when and how to source equity globally is usually aided early on by the advice of

Accepted Answer

A) an investment banker. 
B) your stock broker. 
C) a commercial banker. 
D) an underwriter. 
A) an investment banker. 
B) your stock broker. 
C) a commercial banker. 
D) an underwriter.

Question 9

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 10

The Tokyo exchange is the number one choice of firms looking to gain liquidity by cross-listing their equity securities.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) the issuers are located in Europe. 
B) the investors are located in Europe. 
C) both A and B 
D) none of the above 
A) the issuers are located in Europe. 
B) the investors are located in Europe. 
C) both A and B 
D) none of the above

Question 12

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 13

Because of stringent SEC rules, American companies typically do not find foreign disclosure rules to be overly onerous..

Accepted Answer

A) True 
 B)False

Question 14

ADRs cannot be exchanged for the underlying shares of the foreign stock, therefore, arbitrage cannot keep the prices in line with the foreign price of the stock.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Level III ADR commitment applies to

Accepted Answer

A) firms that want to list existing shares on the NYSE. 
B) banks issuing foreign mutual funds. 
C) ADR issues of under $25,000. 
D) the sale of a new equity issued in the United States. 
A) firms that want to list existing shares on the NYSE. 
B) banks issuing foreign mutual funds. 
C) ADR issues of under $25,000. 
D) the sale of a new equity issued in the United States.

Question 18

The combined impact of a new equity issue undertaken simultaneously with a cross-listing has a more favorable impact on stock price than cross-listing alone.

Accepted Answer

A) True 
 B)False

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

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

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

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms, and are of little value to foreign firms.

Which of the following is NOT an advantage of ADRs to U.S. shareholders?

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

Most firms raise their initial capital in foreign markets.

The choice of when and how to source equity globally is usually aided early on by the advice of

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

The Tokyo exchange is the number one choice of firms looking to gain liquidity by cross-listing their equity securities.

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

Because of stringent SEC rules, American companies typically do not find foreign disclosure rules to be overly onerous..

ADRs cannot be exchanged for the underlying shares of the foreign stock, therefore, arbitrage cannot keep the prices in line with the foreign price of the stock.

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

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

Level III ADR commitment applies to

The combined impact of a new equity issue undertaken simultaneously with a cross-listing has a more favorable impact on stock price than cross-listing alone.

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007-2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives

Interest Rate and Currency Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Operating Exposure

Translation Exposure

The Global Cost and Availability of Capital

Sourcing Debt Globally

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Political Risk

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

International Trade Finance

Filters

Exam 15: Sourcing Equity Globally

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

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

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

The least liquid stock markets as identified by the authors offer little liquidity for their own domestic firms, and are of little value to foreign firms.

Which of the following is NOT an advantage of ADRs to U.S. shareholders?

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

Most firms raise their initial capital in foreign markets.

The choice of when and how to source equity globally is usually aided early on by the advice of

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

The Tokyo exchange is the number one choice of firms looking to gain liquidity by cross-listing their equity securities.

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

Because of stringent SEC rules, American companies typically do not find foreign disclosure rules to be overly onerous..

ADRs cannot be exchanged for the underlying shares of the foreign stock, therefore, arbitrage cannot keep the prices in line with the foreign price of the stock.

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

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

Level III ADR commitment applies to

The combined impact of a new equity issue undertaken simultaneously with a cross-listing has a more favorable impact on stock price than cross-listing alone.

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

Current Multinational Financial Challenges: the Credit Crisis of 2007-2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives

Interest Rate and Currency Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Operating Exposure

Translation Exposure

The Global Cost and Availability of Capital

Sourcing Debt Globally

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Political Risk

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

International Trade Finance

Filters