MNC QUIZ

“DRs price are mainly affected by risk and market sentiment of the original country of which underlying stocks are in trading”. Which charateristic best described in the above statement? 

• Foreign exchange exposure

• Derived value

• Diversification

• Global accessibility 

TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to anItalian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro depreciates against the dollar from $1.40/€ at the time the loan was made to $1.35/€ at the end of the first year, how much interest will TropiKana pay at the end of the first year (rounded)?

• $55,000

• €74,250

• $74,250

•  $77,000

............... are domestic currencies of one country on deposit in a second country.

• LIBORs

•  Eurocurrencies

• Federal funds

• Discount window deposits

 Level II ADRs must meet:

• U.S. GAAP standards.

• home country accounting standards.

•  both U.S. GAAP and home country standards.

• none of the above

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

• TRUE

• FALSE

The initial issuance of shares by a company in an IPO typically represents no more than:

• 25%

• 35%

• 45%

• 55%

The eurobond market owes its existence to all of the following reasons unique factors EXCEPT:

•  free bond ratings

•  the absence of regulatory interference

•  less stringent disclosure practices

• favorable tax treatment

 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.

• TRUE

• FALSE

For most firms, the cost of capital decreases to a low point as the firm ________ debt financing. At some point beyond this optimal level, the cost of capital increases as the amount debt ________.

• decreases; increases

• increases; decreases

• decreases; decreases

• increases; increases

Investment banking services include which of the following?

•  advising when a security should be cross-listed

• preparation of stock prospectuses

• help to determine the price of the issue

•  all of the above