Exam 14: Raising Equity and Debt Globally

In part because of access to global markets,MNEs are better able than their domestic counterparts to maintain their desired debt ratio even when raising new capital.

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.

A distinction about the publicly traded firm's shares is that they raise capital with the daily rise and fall of their share prices.

Strategic alliances are normally formed by firms that expect to gain synergies from which of the following?

In theory multinational firms are in a better position than domestic firms to support higher debt ratios.

List and discuss three public pathway strategies for a MNE for raising equity capital outside its home market.

According to the U.S.school of thought,the worldwide trend toward fuller and more standardized disclosure rules should ________ the cost of equity capital.

The ultimate step sourcing capital abroad would be to place a directed equity issue in a prestigious target market or a euroequity issue in global equity markets.

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

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

Not all firms have the same optimal capital structure.Factors that might influence a firm's capital structure include:

One of the benefits of investing in Global Registered Shares (GRS)is that GRS allow to invest in foreign companies without foreign exchange risk.

Your authors note several empirical studies that have found:

Financial practice suggests that there is a range for an optimal capital structure for a firm within an industry rather than a specific optimal ratio of debt to equity.

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

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

Eurobanks are:

Private equity funds are best known for buying control of private owned firms,taking them publicly,improving management,and then reselling them after one to three years.

The public pathway to raise equity capital outside of its home market includes the following EXCEPT:

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