Multinational Financial Management

What is the term for a firm that operates in an integrated fashion in a number of countries, often making direct investments in fully integrated operations from raw material extraction to distribution?

Which of the following is NOT listed in the text as a primary reason for companies to 'go global'?

What term describes the price of one country’s currency in terms of another country’s currency?

If the exchange rate between the U.S. dollar and the EMU euro is EUR 0.80 per USD 1.00, and the exchange rate between the U.S. dollar and the Canadian dollar is CAD 1.25 per USD 1.00, what is the cross rate of euros to Canadian dollars?

According to the concept of interest rate parity, what should investors expect to earn on interest-bearing investments in all countries after adjusting for risk?

What does the theory of purchasing power parity (PPP) imply about the cost of identical goods in different countries?

A television set sells for 3,000 U.S. dollars. In the spot market, USD 1 equals 109 Japanese yen. If purchasing power parity holds, what should be the price of the same television set in Japan?

What are the two key implications of relative inflation rates for multinational firms?

What term is used for floating-rate bank loans available in most major trading currencies that are tied to the London Interbank Offered Rate (LIBOR)?

What is the term for the risk that arises from investing or doing business in a particular country and depends on that country’s economic, political, and social environment?

When conducting a capital budgeting analysis for a foreign project, which cash flows are considered most relevant from the perspective of the parent corporation?

What is the term for potential actions by a host government, such as expropriation or tighter currency controls, that would reduce the value of a company’s investment?

What is the technical term for a decrease in the stated par value of a currency whose value is fixed?

Which type of currency regime is determined by supply and demand, though governments may occasionally intervene to stabilize fluctuations without altering the absolute level of the rate?

What is the term for a foreign exchange rate quotation that represents the number of American dollars that can be bought with one unit of local currency?

Assume the spot exchange rate for the British pound is USD 1.2881. The 180-day forward rate is USD 1.2960. Is the British pound selling at a premium or a discount on the forward rate?

Assume that 90-day U.S. securities have a 3.5 percent annualized interest rate, whereas 90-day Canadian securities have a 4.0 percent annualized interest rate. In the spot market, 1 U.S. dollar can be exchanged for 1.4 Canadian dollars. If interest rate parity holds, what is the 90-day forward exchange rate?

An international bond underwritten by an international bank and sold to investors in countries other than the one in whose currency the bond is denominated is known as a what?

Certificates representing ownership of foreign stock held in trust, which are traded in the United States, are known as what?

When comparing capital structures across countries, the study by Rajan and Zingales found that measuring leverage as total liabilities to total assets can be misleading due to different accounting conventions, particularly for what item?

What is the term for an investment where a firm secures its supply of inputs at stable prices by, for example, an oil producer acquiring a petrochemical firm?

Which of the following is NOT one of the five major factors listed that distinguishes multinational from domestic financial management?

What is the term for the quoted price for a unit of foreign currency to be delivered 'on the spot' or within a very short period?

What is the term for a currency regime where a country has its own currency but commits to exchange it for a specified foreign money unit at a fixed rate and legislates domestic currency restrictions?

If a U.S. investor buys a foreign stock and the foreign currency in which the stock is denominated weakens relative to the dollar, what is the effect on the U.S. investor's dollar-denominated return?

The process of sending cash flows from a foreign subsidiary back to the parent company is known as what?

Which of the following is a key difference between multinational and domestic capital budgeting?

If a US company arranges to buy motors from a German manufacturer with payment of 1 million euros due in 180 days, how could it hedge this transaction?

When the foreign currency is less valuable in the forward market than in the spot market (i.e., you get more of it for a dollar), the forward currency is said to be selling at what?

If a country’s inflation rate is consistently higher than that of the United States, what is the expected long-term effect on its currency's value relative to the U.S. dollar?

What is the name for a U.S. dollar deposited in a bank outside the United States?

Why might a multinational firm choose to borrow in a country with high interest rates like Brazil, rather than one with low interest rates like Switzerland?

If a firm uses a managed-float currency regime, what does its government typically do?

If a US company must pay 200 million Swiss francs in 90 days and the 90-day forward exchange rate is 0.9509 francs per dollar, how many dollars would be required to honor the obligation?

Which of the following is NOT a type of fixed-exchange-rate regime described in the text?

If 1 British pound sells for 1.30 U.S. dollars, what should dollars sell for in pounds per dollar?

Suppose that 1 Danish krone could be purchased in the foreign exchange market today for USD 0.16. If the krone appreciated 4 percent tomorrow against the dollar, how many krones would a dollar buy tomorrow?

Assume 6-month T-bills have a nominal rate of 2 percent, while default-free Japanese bonds that mature in 6 months have a nominal rate of 1.25 percent. In the spot exchange market, 1 yen equals USD 0.0091. If interest rate parity holds, what is the 6-month forward exchange rate?

If a country's stock market index has a positive return in its local currency, but a negative return in U.S. dollar terms, what must be true about the country's currency relative to the U.S. dollar over that period?

When the US imports more goods from abroad than it exports, what is the likely effect on the U.S. dollar?

Why should firms not necessarily require higher rates of return on foreign projects than on identical projects located at home?

If the spot rate for the British pound is USD 1.2881 and the 90-day forward rate is USD 1.2925, the forward pound is selling at a what?

In the context of the 'Big Mac' index, if a Big Mac costs 49.0 kroner in Norway and USD 5.30 in the United States, and the actual exchange rate is 8.29 kroner per dollar, what is the implied PPP exchange rate?

What is a primary complication in international capital structure comparisons that makes it difficult to rely solely on reported debt ratios?

If a US corporation has a subsidiary in Germany, and the euro depreciates against the US dollar, what is the impact on the consolidated financial statements when the subsidiary's results are translated into dollars?

When a firm undertakes an investment to secure its supply of inputs at stable prices, such as an oil company buying production fields, this is referred to as what type of investment?

If 1 U.S. dollar can be exchanged for 3.58 Israeli shekels or for 109 Japanese yen in the spot market, what is the cross-exchange rate between the yen and the shekel?

According to the text, a primary reason for the move of Japanese auto production to the United States was to:

If a country has a currency board arrangement, what does this imply about its monetary policy?

Why might a US corporation seeking to raise capital choose to tap the Turkish market, according to the text?