Quiz Tài chính công ty đa quốc gia

CHAPTER 1
1. Reasons for management to focus on shareholder wealth maximization
include ____.
A. Shareholders are the owners of the company
B. Shareholders provide the risk capital that protects the welfare of
other constituents
C. A high stock price provides the best defense against a hostile
takeover
D. Enhanced shareholder value make it easier for the company to attract
additional equity capital
E. All of above.
2. Reductions in transportation and communication costs have ___.
A. Facilitated international production activities B. enlarged trading
areas
B. Enabled companies to exploit international cost differentials
C. Reduced technological barriers
D. All of the above.
3. Corporate governance is often narrowly defined as the prudent exercise of
ownership rights toward the goal of increased ___.
A. Shareholder value.
B. Profit
C. Profit margin on sales
D. Asset turnover
E. Sales volume
4. A global company is an organization that attempts to ___.
A. Have a worldwide presence in its market
B. Integrate its operations worldwide
C. Standardize operations in one or more of the company's functional
areas
D. A and B
E. A, B, and C.

5. The conflict between owners, employees, suppliers, and customers of a
company is known as ___.
A. Regulatory risk
B. Problem of agency
C. Conflict of multiple environments


D. Conflict of interests.
E. None of the above
6. ___ were the earliest multinationals.
A. Raw-material seekers.
B. Market seekers
C. Cost minimizes
D. Oil companies
7. Which of the following is a reason for international investment?
A. Dividends from a foreign subsidiary are tax exempt in the United
States
B. Most governments do not tax foreign corporations
C. There are possible benefits from international diversification.
D. International investments have less political risk than domestic
investments
8. Three major risks in international business are ___.
A. Political, financial and weather
B. Economic, political and people
C. Political, financial and regulatory.
D. Accounting, management and information
9. If we have foreign currency cash____, we face risk of foreign currency
____ against domestic currency
A. Inflow, depreciating.
B. Outflow, depreciating

C. Inflow, appreciating
D. None of the others
10. Environmental factors affecting international operations are as follows
except ___.
A. Foreign customs
B. Foreign economic factors
C. Foreign political situations
D. International distance.

CHAPTER 10
1. MNCs cash flows may be sensitive to changes in which of the following?
I) exchange rates


II) interest rates
III) commodity prices
A. I and II
B. Il and III
C. I, II and III.
D. I and II
2. ___ exposure is the potential for an increase or decrease in the parent
company's net worth and reported net income caused by a change in
exchange rates since the last transaction.
A. Transaction
B. Operating
C. Currency
D. Translation.
3. The main purpose of translation is
A. To prepare consolidated financial statements.
B. To help management assess the performance of foreign subsidiaries

C. To act as an interpreter for manag without foreign language skills
D. None of the others
4. Transaction exposure and operating exposure exist because of unexpected
changes in future cash flows. The difference between the two is that
________ exposure deals with cash flows already contracted for, while
____ exposure deals with future cash flows that might change because of
changes in exchange rates.
A. Transaction; operating.
B. Operating; transaction
C. Operating; accounting
D. Transaction: accounting

5. Translation exposure affects a company's ___.
I. ability to raise capital
II. earnings per share
III. stock price
IV. Salary of employees


6.

7.

8.

9.

A. I, Il and IV
B. I,II and IV
C. I,Il and III.

D. II, III and IV
Translation exposure -- - -I. Is sometimes called accounting exposure
II. Measures the affect of an exchange rate change on published financial
statement of a firm
III. Refers to the potential change in the value of outstanding obligations
due to changes in the exchange rate between the inception of a contract
and the settlement of the contract
A. I and III
B. II and III
C. I and II.
D. I, II and III
Translation exposure means that
A. A irm incurs actual losses in foreign exchange markets
B. Currency conversion takes place in foreign exchange market
C. A firm makes actual profits in foreign exchange markets
D. A firm experiences an accounting impact of exchange rate changes.
Translation exposure ___.
I. Measures the affect of an exchange rate change on published financial
statement of a firm
II. Does not involve actual cash flows
III. Does not present any financial risk to a firm
A. I and III
B. I and II.
C. II and III
D. I, II and III
When a firm has dividends payable denominated in foreign currency, the
firm is said to have
A. Economic exposure
B. Translation exposure
C. Transaction exposure.

D. Tax exposure


CHAPTER 13
1. The weighted average cost of capital (WACC) is:
A. The required rate of return for a firm’s average risk projects.
B. Not applicable for use by MNC
C. The required rate of return all of a firm’s capital investment projects
D. The required rate of return for firm risk – free investment projects


2. Which of the following is NOT a key variable in the weighted average cost
of capital (WACC) equation?
A. The before tax cost of debt
B. The risk – adjusted cost of equity
C. The total market value of the firm’s securities
D. The beta of the maket portfolio.
3. The cost of capital is:
A. The maximum rate of return an investment project must generate in
order to pay its financing costs
B. The maximum rate of return an investment project must generate in
order to pay its financing costs plus a reasonable profit
C. The minimum rate of return an investment project must generate in
order to pay its financing costs.
D. The minimum rate of return an investment project must generate in
order to pay its financing costs plus a reasonable profit
4. The capital asset pricing model (CAPM) is an approach
A. Can be applies only to domestic markets
B. Used by maketer determine the price of saleable product
C. To determine the price of equity capital.

D. None of the other
5. If the host country has higher interest rates:
A. Local debt financing by Subsidiary is lower.
B. The internal funds available to Parents is higher
C. Debt financing provided by Parents is lower
D. None of the other
6. A firm has a total asset of $1 million and debt valued at $400,000. What is
the after - tax weighed average cost of capital if the after tax cost of debt
is 12% and the cost of equity is 15%?
A. 27.0%
B. 13.5%
C. 13.8%.
D. It is impossible to determine the WACC without debt and equity betas
7. The risk – free rate is affected by
A. Demographics
B. Tax laws
C. Monetary policies


D. All of the others.
8. The Simplex Co. has cost of equity of 10.6%. The debt to equity ratio is 1/3
and a cost of debt is 8%. What is the cost of capital (Assume a tax rate of
40%)
A. 7.60%
B. 8.67%.
C. 8.00%
D. 7.14%
9. A very large firm has a debt beta of zero. If the cost of equity is 11% and
the risk – free rate is 5%, the cost of debt is:
A. 11%

B. 15%
C. 5%.
D. 6%
10. The different between the expected (or required) return for the market
portfolio and the risk – free rate of return is referred to as ____.
A. The arithmetic mean
B. The market risk premium.
C. Beta
D. The treomatric mean

11. Murry plc is currently financed by 40% debt and 60% equity. Its cost of
debt finance is 6% and its shareholders require a return of 13%. Murry is
proposing to increase its debt financing to 50% and its bank has agreed an
increase in the cost of its debt finance to 7%. What will be the new
required rate of return of its shareholders if the new capital structure has
a neutral effect on its average cost of capital?
A. 12.6%
B. 13.8%
C. 13.4%.
D. 14.2%
12. Systematic risk refers to:
A. The nondiversifiable (market) risk of an asset.
B. Economic and political risk
C. The diversifiable (company specific) risk of an asset
D. The risk that can be hedged


CHAPTER 14
1. The company's optimum capital structure is compatible with
A. None of the above

B. Minimizing the company's weighted average cost ol capital
C. Maximizing the value of the company.
D. All of the above.
E. Maximizing the company's share price
2. Multinational companies may lower their cost of capital mainly because
A. They are smart
B. None of the above
C. They can obtain additional capital internationally.
D. They have political clout
E. They have different national work forces
3. The main reasons why the international cost of capital may be different
from the purely domestic cost of capital are due to the following


A. A, B and C.
B. Tax advantages in different countries
C. Exchange rate risk
D. The company accessibility to international capital markets
E. A and B
4. The optimal capital structure ___.
A. Is the combination of debt and equity that yields the lowest cost of
capital.
B. All of the above statements are true
C. Is where the debt ratio remains fixed, but the amount of capital to be
obtained changes
D. Within the same industry stays the same from country to country
E. None of the above statements is true

5. The common stock of Global Corp. is selling at $54 per share. It expects to
pay a dividend of $4 per share and the devidend will grow at a rate of 9%

per year. What is the cost of the common stock?
A. 14.9%
B. 15.5%
C. 15%
D. 16.4%.
E. 13.7%
6. Global Corp. has bonds outstanding. The bond’s yield to maturity (beforetax cost of the bond) is 12.4% and the firm’s tax rate is 40%. What is the
after–tax cost of the bond?
A. 4.1%
B. 10.9%
C. 7.4%.
D. 6.2%
E. 12.4%
7. A US company borrows Mexican pesos for one year at 30%. During the
year, the peso depreciates 15% against the dollar. The US tax rate is 35%.
What is the after – tax cost of this debt in US dollar terms?


A. 6.83%.
B. 5.66%
C. 6.00%
D. 6.80%
E. 7.00%
8. The price–earnings ratio of a company is 25. What is the cost of the
common stock for this company?
A. 10%
B. 5%
C. 25%
D. 20%
E. 4%.

9. A firm just paid a dividend of $1.2. Based on your assessment of the
riskiness of the common stock, you feel it should pay a return of 20%. If
the firm’s dividends are expected to have a long-term growth rate of 4%,
what is the market value of the stock?
A. $7.50.
B. $6.20
C. $9.99
D. $5.00
E. $4.50
10. A firm’s next year earnings are expected to be $4.00 per share and the
firm follows a practic of paying out 60% of earnings as dividends. The
long-term growth rate for this firm is 5% and the approciate discount rate
is 12%. What is the price of this stock?
A. $30.00
B. $20.45
C. $30.25
D. $10.25
E. $34.29.


CHAPTER 15
1. Which of the following is not a major transfer-pricing objective?
A. Avoiding financial problems
B. Market share maximization.
C. Import duty minimization
D. Income tax minimization
2. The following statement does not apply to transfer prices ___.
A. They are usually the subject of government policing mechanisms
B. They are prices of goods and services sold between related parties

C. They cannot be manipulated by importers.
D. They are prices of goods and services sold between parents and
subsidiaries
3. A transfer price:
A. Is an accounting issue, not a finance issue
B. Is the price that one division of a firm charges to another division of a
firm.
C. None of the others
D. Does not involve actual cash flows, therefore does not impact the
share price
4. Using transfer prices -creativity, MNCs can
A. There's nothing that the host country government can do about it


5.

6.

7.

8.

9.

B. Avoid tax liabilities (but the host country might be watching)
C. Try to move blocked funds and avoid tax liabilities.
D. Try to move blocked funds (but the host country might be watching)
Which of the following statements is true?
A. A transfer price is always lower than the market price
B. A transfer price is never the same as the market price

C. A transfer price is always higher than the market price
D. None of the others.
The company A sells to B, which one below has low transfer price:
A. If tax A > tax B.
B. If tax A < tax B
C. If tax A = tax B
D. It is not enough information
Affiliate X sells 10,000 units to Affiliate Y per year. The marginal tax rates
for X and Y, respectively, are 20 percent and 30 percent. The transfer price
per unit is currently set at $1,000, but it can go as high as $1,250.
Calculate the increase in annual after-tax profits if the higher transfer
price of $1,250 per unit is used.
A. $1,250,000
B. $1,000,000
C. $250,000.
D. $500,000
Affiliate A sells 1,000 units to Affiliate B per year. The marginal income tax
rate for Affiliate A is 20 percent and the marginal income tax rate for
Affiliate B is 50 percent. The transfer price can be set at any level between
$100 and $200. Which transfer price between A and B should the parent
select.
A. $150
B. It does not matter
C. $200.
D. $100
With a MNC
A. The decision to set a transfer price can be further complicated by
exchange rate restrictions imposed by governments
B. The decision to set a transfer price is further complicated by import
duty considerations.

C. The decision to set a transfer price is further complicated by tax
considerations, if there is a difference in tax rates between the host
country and the home country
D. All of the others
10. Which ones are the intangible factors in international transfers:
A. All of them.
B. Allocated overhead
C. Headquarters services
D. Patents and trademarks

CHAPTER 17
1. Which of the following is not directly related to the cash flow analysis of a
foreign investment project?
A. Foreign exchange rate changes
B. Foreign royalty payments
C. Demand forecast
D. Foreign taxes
E. Management changes.
2. In a foreign investment analysis, which of the following objectives is most
important and relevant?
A. to maximize the subsidiary cash flows
B. to maximize the parent cash flows.
C. to maximize the project cash flows
D. to maximize the overall parent earnings
E. to maximize the project earnings
3. Many multinational companies use the risk-adjusted discounted rate and
increase the discount rate if a project's risk is
A. All of the above

B. Lower than normal risk
C. Greater than normal risk.
D. Cannot tell
E. The same as normal risk


4. A foreign investment project with an initial cost of $15,000 is expected to
produce net cash flows of $8,000, $9,000, $10,000, and $11,000 for each
of the next four years. The firm's cost of capital is 12 percent, but the
international financial manager perceives the risk of this particular project
is much higher than 12 percent. The international financial manager feels
that a 20 percent discount rate would be appropriate for the project.
What is the risk-adjusted net present value of the project?
A. About $7,900
B. $8,000.
C. About $7,400
D. About $8,500
E. About $9,000.
5. A multinational company is considering the establishment of a two-year
project in Germany with a $8 million initial investment. The company's
cost of capital is 12 percent. The required rate of return on this project is
18 percent. The project with no salvage value after two years is expected
to generate net cash flows of 12 million euros in year 1 and 30 million
euros in year 2. Assume no taxes and a stable exchange rate of $0.60 per
euro. What is the net present value of the project in dollar terms?
A. about $12 million
B. about $ 8 million
C. about $11 million.
D. about $30 million
E. about $10 million

6. A foreign project has an initial investment of $1,400. Its net cash flows are
expected to be $900, $1,000, and $1,400 for each of the next three years.
The certainty equivalent coefficients of the project are 0.75, 0.55, and 0.35
for each of the next three years. With a 6-percent riskless rate of return,
determine the certain net present value of the project.
A. about $140.
B. about $2,400
C. about $450
D. about $2,500
E. about $1,500
7. Which of the following is not a major political risk?
A. Tax changes


B. Expropriation
C. Restrictions on remittances of dividends
D. High inflation rates.
E. Exchange controls
8. The operational restrictions associated with political risk do not include
the following measure
A. Confiscation of business assets.
B. Employee policies
C. Breaches in agreements
D. Locally shared ownership
E. Loss of transfer freedom
9. Defensive measures before investment to avoid political risk of a foreign
project include ___.
A. Careful negotiations
B. Adapting to host-country goals
C. Concession agreements

D. All of the above.
E. Planned divestment
10. To become a good citizen of a host country, the multinational company
should take the following actions except ___.
A. Hire local people for managerial positions
B. Make the equity of the subsidiary available to local investors
C. Deflate the subsidiary's profits.
D. Use a large amount of locally-supplied raw materials
E. Maintain a competitive edge

BÀI KIỂM TRA LỚP KHÁC

1. A tax that is effectively a sales tax at each stage of production is defined
as a/an ____ tax
a. none of the bove
b. equitable
c. value-added tax
d. flat
2. Which of the following is NOT an example of an operating cash flow?


3.

4.

5.

6.

7.

8.

a. Royalities and liciense fees
b. Management fees and distributed overhead
c. Rent and lease payments
d. Dividend paid to parent company
Losses from ____ exposure generally reduce taxable income in the year
they are realized. ____ exposure losses may reduce tax series of years.
a. Transaction; Operating
b. Operating; transaction
c. Transaction; accounting
d. Accounting; operating
____ is the ability to exercise effective control over a foreign subsidiary
within a country’s legal and political enviroment.
a. Governance risk
b. Portfolio risk
c. Political risk
d. Interest rate risk
A _____ is a shared ownership in a fogeign business.
a. Wholly-owned affiliate
b. Joint venture
c. Licensing agreement
d. Greenfield investment
____ exposure deals with cash flows that result from existing contractual
obligations.
a. Transaction
b. Operating
c. Economic
d. Translation

A foreign subsidiary’s ____ currency used in the firm’s day-to-day
operations.
a. Local
b. Integrated
c. Notational dollar
d. Functional
Systematic risk:
a. Is measured with standard deviation
b. Is measured with beta
c. None of the bove
d. Is the standard deviation of security’s return.


9. Which one the following management techniques is likely to best offset
the risk of long-run exposure to receivables denominated in a particular
foreign currency?
a. Increase sales in this country
b. Lend money in the foriegn currency in question
c. Increase sales to that country
d. Borrow money in the foreign currency in question
10.Tim, a US investor, makes an investment in Britain and earns 14% on the
investment while the British pound appreciates against the USD. What is
Tim’s total return?
a. 6.00%
b. 22.00%
c. 23.12%
d. 4.88%