Corporate Finance
Exam Bank
Course Introduction
Corporate Finance explores the principles and practices that govern how corporations manage their financial resources to achieve strategic objectives. This course covers key topics such as capital budgeting, financial statement analysis, valuation of assets and firms, risk and return, cost of capital, and capital structure decisions. Students will also examine dividend policy, working capital management, mergers and acquisitions, and the impact of financial markets on corporate decisions. Emphasis is placed on real-world case studies and the use of quantitative tools to analyze financial data, preparing students for careers in finance, consulting, or corporate management.
Recommended Textbook Fundamentals of Multinational Finance 4th Edition by Michael H. Moffett
Available Study Resources on Quizplus
19 Chapters
1084 Verified Questions
1084 Flashcards
Source URL: https://quizplus.com/study-set/1533 Page 2
Chapter 1: Current Multinational Challenges and the Global Economy
Available Study Resources on Quizplus for this Chatper
33 Verified Questions
33 Flashcards
Source URL: https://quizplus.com/quiz/30302
Sample Questions
Q1) "BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic development.The BRIC countries are ________.
A)Belgium, Romania, Italy, and Canada
B)Brazil, Russia, India, and China
C)Britain, Romania, Israel, and Colombia
D)Brazil, Russia, Italy, and Chile
Answer: B
Q2) The exposure to foreign exchange risk known as Translation Exposure may be defined as
A)changes in reported owners' equity in consolidated financial statements caused by a change in exchange rates.
B)the impact of settling outstanding obligations entered into before change in exchange rates but to be settled after change in exchange rates.
C)the change in expected future cash flows arising from an unexpected change in exchange rates.
D)all of the above.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Financial Goals and Corporate Governance
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/30313
Sample Questions
Q1) It may be (is probably the case)that family owned businesses the world over out-perform their publicly traded brethren. Which of these factors is attributed to family owned firm dominance over public firms?
A)a focus on the long-term
B)they stick to their core business
C)fewer agency problems (manager-owner conflicts)
D)all of the above
Answer: D
Q2) "Maximize corporate wealth"
A)is the primary objective of the European/Japanese model of management.
B)as a management objective treats shareholders on a par with other corporate stakeholders such as creditors, labor, and local community.
C)has a broader definition than just financial wealth.
D)all of the above
Answer: D
Q3) Systematic risk can be eliminated through portfolio diversification.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The International Monetary System
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/30314
Sample Questions
Q1) The euro was launched in January 1999 with an official initial value against the dollar of $1.16/ .As of January 2011 the currency exchange rate was $1.40/ .Thus,over this time period the euro has ________ against the dollar by a total of ________.
A)appreciated; 82.86%
B)appreciated; 20.69%
C)depreciated; 82.86%
D)depreciated; 20.69%
Answer: B
Q2) Since the launch of the euro in January of 1999,one nation has joined the original 11 members and three nations have dropped the euro as their official currency.
A)True
B)False
Answer: False
Q3) Because there is now a European Central Bank (ECB),the members of the European Monetary Union have done away with their individual central banks.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: The Balance of Payments
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/30315
Sample Questions
Q1) The United States experienced a balance of trade ________ during the 1990s and a balance of trade ________ during the 2000s.
A)surplus; surplus
B)surplus; deficit
C)deficit; deficit
D)deficit; surplus
Q2) In general there is consensus that ________ should be free but there is no such consensus that ________ should be free.
A)international investment; international goods trade
B)international investment; international trade
C)international trade; international goods trade
D)international trade; international investment
Q3) If your company were to import and export textiles,the transactions would be recorded in the current account subcategory of ________.
A)services trade
B)income trade
C)goods trade
D)current transfers
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Current Multinational Financial Challenges: the
Credit Crisis of 2007 - 2009
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/30316
Sample Questions
Q1) The TED spread is the difference between A)T-bill rates and the Federal Funds rate.
B)LIBOR and some measure of risk-less interest.
C)the Federal Funds rate and the Discount rate.
D)LIBOR and NYIBOR.
Q2) The interbank market has historically operated ________.
A)without differentiating credit premiums among qualifying participating institutions
B)without discriminating by name for qualified participants.
C)as a "no-name" market
D)with all of the above characteristics
Q3) Most commodity prices rose in the first half of 2008 but then oil prices plummeted while other commodity prices continued to rise.
A)True
B)False
Q4) To the best of your ability highlight the events from July 2007 through September 30,2008 that culminated with the 777 point fall in the DJIA.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: The Foreign Exchange Market
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/30317
Sample Questions
Q1) A spot transaction in the interbank market for foreign exchange would typically involve a two-day delay in the actual delivery of the currencies,while such a transaction between a bank and its commercial customer would not necessarily involve a two-day wait.
A)True
B)False
Q2) Because the market for foreign exchange is worldwide,the volume of foreign exchange currency transactions is level throughout the 24-hour day.
A)True
B)False
Q3) ________ make money on currency exchanges by the difference between the ________ price,or the price they offer to pay,and the ________ price,or the price at which they offer to sell the currency.
A)Dealers; ask; bid
B)Dealers; bid; ask
C)Brokers; ask; bid
D)Brokers; bid; ask
Q4) Identify and explain the three functions of the foreign exchange market.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: International Parity Conditions
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/30318
Sample Questions
Q1) Assume a nominal interest rate on one-year U.S.Treasury Bills of 3.80% and a real rate of interest of 2.00%.Using the Fisher Effect Equation,what is the exact expected rate of inflation in the U.S.over the next year?
A)1.84%
B)1.80%
C)1.76%
D)1.72%
Q2) ________ states that differential rates of inflation between two countries tend to be offset over time by an equal but opposite change in the spot exchange rate.
A)The Fisher Effect
B)The International Fisher Effect
C)Absolute Purchasing Power Parity
D)Relative Purchasing Power Parity
Q3) The authors describe an application of uncovered interest arbitrage (UIA)known as "yen carry trade." Define UIA and describe the example of yen carry trade.Why would an investor engage in the practice of yen carry trade and is there any risk of loss or lesser profit from this investment strategy?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Foreign Currency Derivatives and Swaps
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/30319
Sample Questions
Q1) Refer to Instruction 8.1.After the fact,under which set of circumstances would you prefer strategy #2? (Assume your firm is borrowing money.)
A)Your credit rating stayed the same and interest rates went up.
B)Your credit rating stayed the same and interest rates went down.
C)Your credit rating improved and interest rates went down.
D)Not enough information to make a judgment.
Q2) Which of the following statements regarding currency futures contracts and forward contracts is NOT true?
A)A futures contract is a standardized amount per currency whereas the forward contact is for any size desired.
B)A futures contract is for a fixed maturity whereas the forward contract is for any maturity you like up to one year.
C)Futures contracts trade on organized exchanges whereas forwards take place between individuals and banks with other banks via telecom linkages.
D)All of the above are true.
Q3) In option valuation,total value is equal to the intrinsic value plus the time value of the option.Define the latter two terms.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Foreign Exchange Rate Determination and Forecasting
Available Study Resources on Quizplus for this Chatper
53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/30320
Sample Questions
Q1) The Central Bank practice of the active buying and selling of the domestic currency against foreign currencies is the process of ________.
A)direct intervention
B)indirect intervention
C)coordinated intervention
D)capital controls
Q2) The ________ approach to the determination of spot exchange rates hypothesizes that the most important factors are the relative real interest rate and a country's outlook for economic growth and profitability.
A)balance of payments
B)parity conditions
C)managed float
D)asset market
Q3) During the 1990s Argentina's exports became some of the least expensive in all of South America thanks in part to the pegging of the Argentine peso to the U.S.dollar.
A)True
B)False
Q4) Describe the Russian ruble collapse through August of 1998.
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Transaction and Translation Exposure
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/30303
Sample Questions
Q1) Refer to Instruction 10.1.What is the cost of a put option hedge for Plains States' euro receivable contract? (Note: Calculate the cost in future value dollars and assume the firm's cost of capital as the appropriate interest rate for calculating future values.)
A)$27,694
B)$26,250
C)euro 27,694
D)euro 26,250
Q2) ________ is a technique used by MNEs to deal with currency exposure.
A)No counter-measure
B)Speculation
C)Hedging
D)All are techniques MNEs could use.
Q3) A foreign subsidiary's ________ currency is the currency used in the firm's day-to-day operations.
A)local
B)integrated
C)notational dollar
D)functional
To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 11: Operating Exposure
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/30304
Sample Questions
Q1) An MNE has a contract for a relatively predictable long-term inflow of Japanese yen that the firm chooses to hedge by paying for imports from Canada in Japanese yen.This hedging strategy is known as ________.
A)a natural hedge
B)currency-switching
C)matching
D)diversification
Q2) Which of the following is NOT an acceptable hedging technique to reduce risk caused by a relatively predictable long-term foreign currency inflow of Japanese yen?
A)Import raw materials from Japan denominated in yen to substitute for domestic suppliers.
B)Pay suppliers from other countries in yen.
C)Import raw materials from Japan denominated in dollars.
D)Acquire debt denominated in yen.
Q3) Which of the following is NOT an example of a financial cash flow?
A)parent invested equity capital
B)interest on intrafirm lending
C)payment for goods and services
D)intrafirm principal payments
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: The Global Cost and Availability of Capital
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/30305
Sample Questions
Q1) Which of the following is NOT a portfolio diversification technique used by portfolio managers?
A)diversify by type of security
B)diversify by the size of capitalization of the securities held
C)diversify by country
D)All of the above are diversification techniques.
Q2) In general the geometric mean will be ________ the arithmetic mean for a series of returns.
A)less than B)greater than C)equal to D)greater than or equal to
Q3) If a company fails to accurately predict it's cost of equity,then
A)the firm's wacc will also be inaccurate.
B)the firm may not be using the proper interest rate to estimate NPV.
C)the firm my incorrectly accept or reject projects based on decisions made using the cost of capital computed with an incorrect cost of equity.
D)all of the above are true.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Sourcing Equity and Debt Globally
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/30306
Sample Questions
Q1) An MNE may cross list its shares on a foreign stock exchange so that it can
A)create a secondary market so that shares may be used to compensate top local managers.
B)create a secondary market so that shares can be used to acquire local firms.
C)increase the firm's visibility to its customers and employees.
D)accomplish all of the above.
Q2) One of the most important factors in making debt less expensive than equity is
A)the seniority of equity obligations to debt claims.
B)the tax deductibility of dividends.
C)the tax deductibility of equity.
D)the seniority of debt obligations to equity claims.
Q3) The MNE in an effort to minimize the cost of external funds should choose ________ funds to minimize ________.
A)internal; debt financing
B)internal; taxes and political risk
C)external; debt financing
D)external; taxes and political risk
Q4) What are the two schools of thought regarding the worldwide trend toward increased financial disclosure by publicly traded firms.Explain which school of thought you hold to and why.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Multinational Tax Management
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/30307
Sample Questions
Q1) Transfer pricing is a strategy that may be used by MNEs to
A)reduce consolidated corporate income taxes.
B)partially finance a subsidiary in another country.
C)transfer funds from a subsidiary to the parent corporation.
D)all of the above.
Q2) A tax that is a form of social redistribution of income is defined as a/an ________ tax.
A)un-American
B)transfer
C)flat
D)none of the above
Q3) ________ taxes are applied to income and ________ taxes are applied to some other measurable performance characteristic of the firm.
A)Income; direct
B)Indirect; income
C)Indirect; direct
D)Direct; indirect
Q4) What is a value-added tax? Where is this type of tax in wide usage? Why do you suppose this form of taxation has not been widely accepted in the United States?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Foreign Direct Investment and Political Risk
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/30308
Sample Questions
Q1) A ________ is establishing a production or service facility from the ground up.
A)joint venture
B)licensing agreement
C)greenfield investment
D)wholly-owned facility
Q2) MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.
A)True
B)False
Q3) Which of the following would NOT be considered a non-tariff barrier to trade?
A)inconsistent customs and administrative entry procedures
B)unduly stringent or discriminating standards imposed on imports in the name of protecting health, safety, and quality
C)established import procedures that make importing more difficult
D)All of the above are non-tariff trade barriers.
Q4) Banks are very hesitant to engage in fronting loans because of the low probability of repayment and thus their risk exposure up to a 100% loss.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Multinational Capital Budgeting and Cross-Border Acquisitions
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/30309
Sample Questions
Q1) The only proper way to estimate the NPV of a foreign project is to discount the appropriate cash flows first and then convert them to the domestic currency at the current spot rate.
A)True
B)False
Q2) Real option analysis is a particularly powerful device when addressing potential investment projects ________.
A)that do not commence until future dates.
B)with extremely long life spans.
C)both A and B.
D)None of the above.
Q3) ________ is the risk that a foreign government will place restrictions such as limiting the amount of funds that can be remitted to the parent firm,or even expropriation of cash flows earned in that country.
A)Exchange risk
B)Foreign risk
C)Political risk
D)Unnecessary risk
Q4) What is project financing and what are the factors critical to its success?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: International Portfolio Theory and Diversification
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/30310
Sample Questions
Q1) Which of the following statements is NOT true?
A)International diversification benefits induce investors to demand foreign securities.
B)An international security adds value to a portfolio if it reduces risk without reducing return.
C)Investors will demand a security that adds value.
D)All of the above are true.
Q2) Beta may be defined as
A)the measure of systematic risk.
B)a risk measure of a portfolio.
C)the ratio of the variance of the portfolio to the variance of the market.
D)all of the above.
Q3) The Sharpe measure uses ________ as the measure of risk and the Treynor measure uses ________ as the measure of risk.
A)standard deviation; variance
B)beta; variance
C)standard deviation; beta
D)beta; standard deviation
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Working Capital Management
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/30311
Sample Questions
Q1) For the MNE a repositioning of profits helps the firm realize greater after-tax profits from the same amount of sales.
A)True
B)False
Q2) ________ is NOT an advantage provided to MNEs by a central depository.
A)Obtaining information
B)Holding precautionary cash balances
C)Reducing interest rate costs
D)All of the above are advantages.
Q3) ________ is the process that cancels via offset all,or part,of the debt owed by one entity to another related entity.
A)Syndicated banking
B)Centralized depositing
C)Multilateral netting
D)Debt cancellation
Q4) Your authors identify four constraints on repositioning funds.Identify and describe three of these constraints.
Q5) What are the advantages to the parent firm of unbundling the remittance of profits?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: International Trade Finance
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/30312
Sample Questions
Q1) The primary advantage of a letter of credit is that it reduces risk.
A)True
B)False
Q2) ________ may be required so that the contents of containers can be identified,either for customs purposes or for importer identification of the contents of separate containers.
A)Banker's acceptances
B)Commercial invoices
C)Consular invoices
D)Packing lists
Q3) Which of the following relationships between importing and exporting parties would require the least detailed contract to conduct business?
A)affiliated party
B)unaffiliated unknown party
C)known unaffiliated party
D)domestic supplier
Q4) Most drafts in international trade are "clean."
A)True
B)False
Q5) What is the Import-Export Bank and how can it aid in export financing?
Page 21
To view all questions and flashcards with answers, click on the resource link above.