E&R Chapter 19 Practice Quiz
Not all countries allow MNCs the freedom to net payments. Which
of the following statements is true regarding netting?
A) The United States, Canada, and Great
Britain only allow netting between each
B) Some countries
E&R Chapter 21 Practice Quiz
The underlying principal of tax equity
is that similarly situated taxpayers should participate in the cost of operating
the government according to the same rules.
has been adopted worldwide under U.N. charter.
E&R Chapter 20 Practice Quiz
A) involves relinquishing credit that is deemed
B) is a type of medium-term financing used
to finance the sale of capital goods.
C) is the same as a banker's acceptance.
D) All of the above.
E&R Chapter 18 Practice Quiz
If a country were to offer your firm a concessionary loan,
A) the value of the loan could be
estimated explicitly as a component
of the APV.
B) your firm would simply adjust the
discount rate downward.
C) your firm would ign
E&R Chapter 17 Practice Quiz
Regarding the financial structure of foreign subsidiaries, it
may be advantageous to
A) conform to the parent firm's debt-toequity ratio
B) conform to the local norm of the
country where the subsidiary operates.
C) vary judi
E&R Chapter 13 Practice Quiz
A country's primary market is the market that has
A) the largest number of shares traded
B) the largest total value of shares traded
C) the largest number and value of shares
traded through it.
E&R Chapter 11 Practice Quiz
A correspondent bank
is established when two banks maintain correspondent bank accounts with
likes to write letters to its customers
is a small service facility staffed by parent bank personnel that
E&R Chapter 15 Practice Quiz
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% pound sterling denominated return on the
stock, but when you sell the stoc
E&R Chapter 12 Practice Quiz
Which of the following is true regarding ownership of a
A) Possession is evidence of ownership.
B) The owner's name is on the bond and
registered with the issuer.
C) The owner's name is registered with
E&R Chapter 14 Practice Quiz
Consider a plain vanilla interest rate swap. Corporation
ABC can borrow at 8% fixed or can borrow floating at
LIBOR. Corporation XYZ is somewhat less creditworthy
and can borrow at 10% fixed or can borrow floating at
E&R Chapter 9 Practice Quiz
Economic exposure measures
A)the extent to which the value of the firm will be affected by anticipated changes in
B) the extent to which the value of the firm will be affected by unexpected changes
E&R Chapter 10 Practice Quiz
Translation exposure measures
A) the extent to which the value of the
firm will be affected by anticipated
changes in exchange rates.
B) the extent to which the value of the
firm will be affected by unexpected
changes in exc
E&R Chapter 7 Practice Quiz
A call option
A) is a contract to buy a certain quantity
of a specific underlying asset at a
specific price at a specified date in the
B) gives the holder the right, but not the
obligation, to sell the underlying asse
E&R Chapter 8 Practice Quiz
Suppose that your firm is a U.S.based importer of
German automobile accessories. You pay for them in
euros and sell them in dollars. You have just ordered next
year's inventory. In one year your firm owes a paymen
In a fixed exchange rate regime, a country can run a
balanceofpayments surplus or deficit by increasing or
A) the country's official reserves.
B) the balance on the capital account.
C) the balance on the current account.
D) the trade deficit.
Multiple Choice Quiz
When large shareholders have control over a corporation,
A) there is a possibility that the large
shareholders control the managers and
incentivise them to expropriate wealth
from small outside shareholders.
there are no agency c
E&R Chapter 2 Practice Quiz
Suppose the United States and Great Britain are on the
gold standard and the price of gold in the U.S. is fixed at
$100 per ounce and the price of gold in Britain is fixed at
50 per ounce. What exchange rate should prevail
E&R Chapter 1 Practice Quiz
Since the EU accession, many Hungarians have borrowed in terms of the euro or Swiss franc to
purchase houses. However, as the forint (the Hungarian currency) was falling against the euro
and Swiss franc, the cost of the mortgag
B&M Chapter 19 Practice Quiz
Which of the following is not included in current assets?
The sustainable growth rate is equal to:
The plowback ratio times the return on equity
B&M Chapter 17 Practice Quiz
Suppose Sarah's stock price is currently $50. In the next
six months it will either fall to $30 or rise to $80. What is
the option delta of a call option with an exercise price of
Of the following assets, which is generally the most liquid?
A) Plant and equipment
D) Accounts receivable
Intangible fixed assets would include:
Net working capital (NWC) is cal
B&M Chapter 16 Practice Quiz
Which of the following is/are call options?
A) The abandonment option on an
B) Stand-by underwriting
C) A and B
D) The company's option to redeem its
bonds at a premium before maturity
Which of the follo
A project costs $14.7 million and is expected to produce
cash flows of $4 million a year for 15 years. The
opportunity cost of capital is 20%. If the firm has to issue
stock to undertake the project and issue costs are $1
If a firm permanently borrows $20 million at an interest
rate of 8%, what is the present value of the interest tax
shield? Assume a 35% tax rate.
B) $8.75 million
In order to c
B&M Chapter 12 Practice Quiz
Which of the following dividends is never in the form of cash?
The managers of a firm
The employees of a firm
The board of directo
B&M Chapter 13 Practice Quiz
Capital structure of the firm can be defined as:
A) The firm's mix of debt, equity, and
B) The firm's debt-equity ratio
C) The market imperfection that the
firm's manager can exploit
D) All of the above
B&M Chapter 10 Practice Quiz
Project analysis includes the following procedures:
Monte Carlo simulation
All of the above
After the completion of project analysis, the final decision
on the project w
B&M Chapter 11 Practice Quiz
If the capital markets are efficient, then the sale or purchase of any
security at the prevailing market price is:
A) Always a positive NPV transaction
B) Generally a zero NPV transaction
C) Is always a negative NPV transact