Question 1

Most firms raise their initial capital in foreign markets.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Your authors note several empirical studies that have found:

Accepted Answer

A) no share price effect for foreign firms that cross-list on major U.S. exchanges. 
B) a positive share price effect for foreign firms that cross-list on major U.S. exchanges. 
C) a negative share price effect for foreign firms that cross-list on major U.S. exchanges. 
D) none of the above 
A) no share price effect for foreign firms that cross-list on major U.S. exchanges. 
B) a positive share price effect for foreign firms that cross-list on major U.S. exchanges. 
C) a negative share price effect for foreign firms that cross-list on major U.S. exchanges. 
D) none of the above

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Eurocredits are:

Accepted Answer

A) bank loans to MNEs and others denominated in a currency other than that of the country where the bank is located. 
B) typically variable rate and tied to the LIBOR. 
C) usually for maturities of six months or less. 
D) All of the above are true. 
A) bank loans to MNEs and others denominated in a currency other than that of the country where the bank is located. 
B) typically variable rate and tied to the LIBOR. 
C) usually for maturities of six months or less. 
D) All of the above are true.

Question 6

A ________ is a bond underwritten by a syndicate from a single country, sold within in that country, denominated in that country's currency, but the issuer is from outside that country.

Accepted Answer

A) foreign bond 
B) Eurobond 
C) domestic bond 
D) none of the above 
A) foreign bond 
B) Eurobond 
C) domestic bond 
D) none of the above

Question 7

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

Accepted Answer

A) True 
 B)False

Question 8

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 9

TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro appreciates against the dollar from $1.40/€ at the time the loan was made to $1.45/€ at the end of the first year, how much interest will TropiKana pay at the end of the first year (rounded)?

Accepted Answer

A) $55,000 
B) $79,750 
C) $77,000 
D) $37,931 
A) $55,000 
B) $79,750 
C) $77,000 
D) $37,931

Question 10

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 11

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 12

Eurocurrencies are NOT the same as the euro developed for the common European currency.

Accepted Answer

A) True 
 B)False

Question 13

MNEs situated in countries with small illiquid and segmented markets are most like:

Accepted Answer

A) small domestic U.S. firms in that they must rely on internally generated funds and bank borrowing. 
B) large U.S. MNEs in that they are all MNEs and have worldwide markets and sources of financing. 
C) small domestic U.S. firms in that they have a strong niche market in the U.S. 
D) None of the above is true. 
A) small domestic U.S. firms in that they must rely on internally generated funds and bank borrowing. 
B) large U.S. MNEs in that they are all MNEs and have worldwide markets and sources of financing. 
C) small domestic U.S. firms in that they have a strong niche market in the U.S. 
D) None of the above is true.

Question 14

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 15

Which financial economists are most closely associated with the financial theory of optimal capital structure?

Accepted Answer

A) Modigliani and Miller 
B) Fama, Fisher, Jensen, and Roll 
C) Black and Scholes 
D) Markowitz and Sharpe 
A) Modigliani and Miller 
B) Fama, Fisher, Jensen, and Roll 
C) Black and Scholes 
D) Markowitz and Sharpe

Question 16

A/An ________ is defined as one that is targeted at investors in a single country and underwritten in whole or part by investment institutions from that country.

Accepted Answer

A) SEC rule 144a placement 
B) directed public share issue 
C) Euroequity public issue 
D) strategic alliance 
A) SEC rule 144a placement 
B) directed public share issue 
C) Euroequity public issue 
D) strategic alliance

Question 17

TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro appreciates against the dollar from $1.40/€ at the time the loan was made to $1.45/€ at the end of the first year, how much interest and principle will TropiKana pay at the end of the first year if they repay the entire loan plus interest (rounded)?

Accepted Answer

A) $1,529,750 
B) €1,529,750 
C) $1,055,000 
D) $1,477,000 
A) $1,529,750 
B) €1,529,750 
C) $1,055,000 
D) $1,477,000

Question 18

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

Accepted Answer

A) VC operates mainly in lesser-developed countries while PEF do not. 
B) VC typically invests in family business whereas PEF do not. 
C) VC is almost unavailable to emerging markets while PEF capital is available. 
D) All of the above are true. 
A) VC operates mainly in lesser-developed countries while PEF do not. 
B) VC typically invests in family business whereas PEF do not. 
C) VC is almost unavailable to emerging markets while PEF capital is available. 
D) All of the above are true.

Question 19

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 20

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.

Most firms raise their initial capital in foreign markets.

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

Your authors note several empirical studies that have found:

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

Eurocredits are:

A ________ is a bond underwritten by a syndicate from a single country, sold within in that country, denominated in that country's currency, but the issuer is from outside that country.

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

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.

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

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

Eurocurrencies are NOT the same as the euro developed for the common European currency.

MNEs situated in countries with small illiquid and segmented markets are most like:

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

Which financial economists are most closely associated with the financial theory of optimal capital structure?

A/An ________ is defined as one that is targeted at investors in a single country and underwritten in whole or part by investment institutions from that country.

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

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

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

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters

Exam 14: Raising Equity and Debt Globally

Most firms raise their initial capital in foreign markets.

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

Your authors note several empirical studies that have found:

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

Eurocredits are:

A ________ is a bond underwritten by a syndicate from a single country, sold within in that country, denominated in that country's currency, but the issuer is from outside that country.

Moody's rates international bonds at the request of the issuer with the stipulation that Moody's will publish the ratings even if the ratings are unfavorable.

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.

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

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

Eurocurrencies are NOT the same as the euro developed for the common European currency.

MNEs situated in countries with small illiquid and segmented markets are most like:

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

Which financial economists are most closely associated with the financial theory of optimal capital structure?

A/An ________ is defined as one that is targeted at investors in a single country and underwritten in whole or part by investment institutions from that country.

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

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

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

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Balance of Payments

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters