Question 1
1.
The capital asset pricing model (CAPM) is an approach:
Answer
a. to determine the price of equity capital.
b. used by marketers to determine the price of saleable product.
c. that can be applied only to domestic markets.
d. none of the above.
1.5 points
Question 2
1.
If a firm lies within a country with ________ or ________ domestic capital markets, it can
achieve lower global cost and greater availability of capital with a properly designed and
implemented strategy to participate in international capital markets.
Answer
a. liquid; segmented
b. liquid; large
c. illiquid; segmented
d. large; illiquid
1.5 points
Question 3
1.
Which of the following would be appropriate as goal(s) of both domestic and international
portfolio managers is
Answer
a. to maximize return for a given level of risk, or minimize risk for a given level of return.
b. minimize the number of unique securities held in their portfolio.
c. maximize their WACC.
d. all of the above
1.5 points
Question 4
1.
The choice of when and how to source equity globally is usually aided early on by the
advice of
Answer
a. an investment banker.
b. your companys stock broker.
c. a commercial banker.
d. an undertaker.
1.5 points
Question 5
1.
Which of the following is NOT a factor critical to the success of project financing?
Answer
a. Separability of the project from its investors.
b. Long-lived and capital intensive singular projects.
c. Cash flow predictability from third part commitments.
d. All of the above are critical factors for project financing.
1.5 points
Question 6
1.
Depositary receipts traded outside the United States are called ________ depositary
receipts.
Answer
a. Euro
b. Global
c. American
d. None of the above
1.5 points
Question 7
1.
Which of the following is NOT a contributing factor to the segmentation of capital
markets?
Answer
a. Complete transparency.
b. Asymmetric availability of information.
c. Insider trading.
d. All of the above are contributing factors.
1.5 points
Question 8
1.
By cross listing and selling its shares on a foreign stock exchange a firm typically tries to
accomplish which of the following EXCEPT?
Answer
a. Improve the liquidity of its existing shares.
b. Decrease its share price.
c. Increase the firms visibility.
d. all of the above
1.5 points
Question 9
1.
________ are domestic currencies of one country on deposit in a second country.
Answer
a. LIBORs
b. Eurocurrencies
c. Federal funds
d. Discount window deposits
1.5 points
Question 10
1.
Other things equal, and assuming efficient markets, if a Honda Accord costs $21,375 in the
U.S. then at an exchange rate of $1.98/, the Honda Accord should cost ________ in Great
Britain.
Answer
a. 21,375
b. 18,365
c. 10,795
d. 42,322
1.5 points
Question 11
1.
Which of the following is NOT an advantage of ADRs to U.S. shareholders?
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
