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1) consider a project of the cornell haul moving company, the timing and size of the
incremental after-tax cash flows (for an all-equity firm) are shown below in millions:
the firm's tax rate is 34%; the firm's bonds trade with a yield to maturity of 8%; the
current and target debt-equity ratio is 2; if the firm were financed entirely with equity,
the required return would be 10%
using the apv method, what is the value of the debt side effects?
a.$239,072,652.70
b.$66,891,713.66
c.$59,459,301.03
d.$660,000,000
e.none of the above
2) which of the following are correct?
a.
b.
c.
d.all of the above are correct
3) when honda, a japanese auto maker, built a factory in ohio,
a.it was engaged in foreign direct investment
b.it was engaged in portfolio investment
c.it was engaged in a cross-border acquisition
d.none of the above
4) countertrade transactions
a.are included in official trade statistics
b.are not included in official trade statistics
c.reduce trade imbalances and trade deficits
d.both a and c
5) country a can produce 10 yards of textiles or 6 pounds of food per unit of input.
country b can produce 8 yards of textiles or 5 pounds of food per unit of input.
a.country a is relatively more efficient than country b in the production of textiles
b.country b is relatively more efficient than country a in the production of food
c.country a has an absolute advantage over country b in the production of food and
textiles
d.all of the above
6) which of the lines is a graph of the profit at maturity of writing a call option on
62,500 with a strike price of $1.20 = 1.00 and an option premium of $3,125?
a.a
b.b
c.c
d.d
7) capital budgeting analysis is very important, because it
a.involves, usually expensive, investments in capital assets
b.has to do with the productive capacity of a firm
c.will determine how competitive and profitable a firm will be
d.all of the above
8) the j. p. morgan and company global government bond index is __________
representation of the individual country government bond indexes.
a.a value weighted
b.a price weighted
c.an unweighted
9) a liquid stock market
a.is one in which prices reflect all relevant information quickly
b.is one in which prices reflect all publicly available information quickly
c.is one in which prices reflect price and volume information quickly
d.is one in which investors can buy and sell stocks quickly at close to the current quoted
prices
10) mnc stands for
a.multinational corporation
b.multi-nationalized corporation
c.military national cooperation
11) with a centralized cash depository
a.a mnc can facilitate fund mobilization
b.system-wide excess cash are invested at the most advantageous rates
c.system-wide cash shortages are borrowed at the most advantageous rates
d.all of the above
12) under multilateral netting
a.each affiliate nets all its inter-affiliate receipts against all its disbursements. it then
transfers or receives the balance, respectively, if it is the net payer or receiver
b.each pair of affiliates determines the net amount due between them, and only the net
amount is transferred
c.no inter-affiliate payments are made or even computed, since no real cash flows are
involved
d.all of the above
13) in a given year, the u.s. irs places an overall limitation applied to foreign tax credits.
a.the overall limitation is limited to the amount of tax due on the foreign-source income
b.the overall limitation is limited to the amount of tax actuallypaid during the tax year
on the foreign-source income
c.the overall limitation is limited to the amount of tax that would have been due on the
foreign-source income if it had been earned in the united states
d.none of the above
14) compute the payments due in the first year on a three-year amortizing swap from
company b to company a. company a and company b both want to borrow £1,000,000
for three years. a wants to borrow floating and b wants to borrow fixed. a and b agree to
split the qsd.
a.b pays £402,114.80 to a
b.b pays £100,000 to a
c.b pays £69,788.52 to a
d.none of the above
