Mergers and Acquisitions
On July 2, 2012, Duke Energy and Progress Energy completed a
merger that was 18 months in the making, creating the largest utility
company in the United States. Under the terms of the merger, Duke
1. The formula sheet is not intended to include all formulas. You are responsible for
learning any formula not included in this formula sheet.
2. Use this formula sheet in preparation for the exam. Do NOT bring it to the exam
venue. A formul
Self test 1
Suppose you start with $100 and buy stock for 50 when the exchange rate is 1 =
$2. One year later, the stock rises to 60. You are happy with your 20 percent return
on the stock, but when you sell the stock and exchange your 60 for dollars, y
Regulatory and Political Influence
on Accounting Practice
Critically discuss the regulatory environment
Describe the main regulatory bodies that
Self test 10
1. The United States is the largest initiator, of FDI. The largest recipient of FDI is:
Also the United States.
None of the above
2. When U.S. car makers began to build their own network of dealerships in J
Self test 2
In a fixed exchange rate regime, a country can run a balance-of-payments surplus or
deficit by increasing or decreasing:
The country's official reserves.
The balance on the capital account.
The balance on the current account.
Self test 3
1. Suppose you observe the following exchange rates: 1 = $1.25; 1 = $2.00. Calculate the
euro-pound exchange rate.
1 = 1.60
1 = 0.625
2.50 = 1
1 = 2.50
2. Suppose you observe the following exchange rates: 1 = $.85; 1 = $1.60. Calcu
Self test 8
1. A bank may establish a multinational operation for the reason of low marginal costs. The
underlying rationale being:
A. Banks follow their multinational customers abroad to prevent the erosion of their
clientele to foreign banks seeking to
Self test 4
1. Consider the following spot and forward rate quotations for the Swiss franc:
S ($/SFr) = 0.85
F1 ($/SFr) = 0.86
F2 ($/SFr) = 0.87
F3 ($/SFr) = 0.88
Which of the following is true?
The Swiss franc is definitely going to be worth
Self test 5
1. Suppose interest rates in the U.S. are 5% when the spot exchange rate is $1.55 = 1
and the interest rate in the euro zone is 8% per year. What must the one-year forward
exchange rate be?
$1.5069 = 1
$1.5429 = 1
$1 = 1.5429
Self test 6
1. Purchasing power parity states that:
A) The cost of a haircut in Columbia Missouri should be exactly the same as the cost
in Hong Kong.
B) Rates of inflation must be the same everywhere.
C) Spot exchange rates are the best predictor of expe
Self test 9
1. Systematic risk is:
A. diversifiable risk
B. the risk that remains even after investors fully diversify their portfolio holdings
C. a and b
D. none of the above
2. Regarding the mechanics of international portfolio diversification, In the g
Self test 7
1. Suppose a U.S. firm has sold an airplane to a British firm for 20 million payable in one
year. The spot exchange rate is $2.00 = 1.00; the one-year forward exchange rate is
$2.01 = 1.00. The one-year interest rate in the U.S. is 3 percent a
INVESTMENT AND PORTFOLIO MANAGEMENT (FIN3IPM)
TUTORIAL QUESTIONS SEMESTER 2/2016
You are expected to attend a 1-hour Tutorial every week, starting from Week 2 (1 August
2016). To obtain high marks for this subject, you are expected to make a serious attem
International Financial Management
Time allowed: 3 hours.
Instructions: Calculators are permitted.
One 8.5 11 inches crib sheet is allowed.
Please answer all ques
Answers to Selected Problems
a. The bank loan is a financial liability for Lanni. Lanni's IOU is the bank's financial
asset. The cash Lanni receives is a financial asset. The new financial asset created is
Lanni's promissory note held b
Bond Prices and Yield
Debt Classes: Payment Type
A security obligating issuer to pay interests and
principal to the holder on specified dates,
Coupon rate or interest rate, e.g. 4%, 5 3/4%, etc.
Face, par value or principal payment, e.g. $1000
Hong Kong University of Science and Technology
School of Business and Management
FINA 3404: International Finance
Ekkachai Saenyasiri, PhD, CFA
Room 5083, LSK Bldg
Risk and Return
ANSWERS TO SELECTED END-OF-CHAPTER QUESTIONS
a. Stand-alone risk is only a part of total risk and pertains to the risk an investor takes by
holding only one asset. Risk is the chance that some unfavorable event will occur.
International Financial Management
No points will be given by simply writing down formulas, and writing down definitions or irrelevant statements from
the book, or saying "yes," will get you zero points. Justify