国际金融CH13

Fundamentals of Multinational Finance, 3e (Moffett)Chapter 13 Sourcing Equity Capital Globally13.1 Multiple Choice and True/False Questions1) T he choice of when and how to source equity globally is usually aided early on by the adviceofA) a n investment banker.B) y our stock broker.C) a commercial banker.D) a n underwriter.Answer: ATopic: E quity SourcingSkill: R ecognition2) I nvestment banking services include WHICH of the following?A) a dvising when a security should be cross-listedB) p reparation of stock prospectusesC) h elp to determine the price of the issueD) a ll of the aboveAnswer: DTopic: I nvestment BankingSkill: C onceptual3) M ost firms raise their initial capital in foreign markets.Answer: FALSETopic: R aising CapitalSkill: C onceptual4) W hich of the following is the typical order of sourcing capital abroad?A) A n international bond issue, then cross listing the outstanding issues on otherexchanges, then an international bond issue in the target market.B) A n international bond issue in the target market then cross listing the outstandingissues on other exchanges, then an international bond issue.C) A n international bond issue, then an international bond issue in the target market, thencross listing the outstanding issues on other exchanges.D) C ross listing the outstanding issues on other exchanges, then an international bondissue, then an international bond issue in the target market.Answer: CTopic: G lobal Equity SourcingSkill: C onceptual5) ________ are negotiable certificates issued by a bank to represent the underlying shares ofstock, which are held in trust at a foreign custodian bank.A) N egotiable CDsB) I nternational mutual fundsC) D epositary receiptsD) E urodepositsAnswer: CTopic: D epositary ReceiptsSkill: R ecognition6) D epositary receipts traded outside the United States are called ________ depositary receipts.A) E uroB) G lobalC) A mericanD) N one of the aboveAnswer: BTopic: G lobal Depositary ReceiptsSkill: R ecognition7) E ach ADR represents ________ of the shares of the underlying foreign stock.A) a multipleB) 100C) 1D) A DRs have nothing to do with foreign stocks.Answer: ATopic: A merican Depositary ReceiptsSkill: R ecognition8) A DRs cannot be exchanged for the underlying shares of the foreign stock, therefore,arbitrage cannot keep the prices in line with the foreign price of the stock.Answer: FALSETopic: A merican Depositary ReceiptsSkill: C onceptual9) W hich of the following is NOT an advantage of ADRs to U.S. shareholders?A) T ransfer of ownership is done in the U.S. in accordance with U.S. laws.B) I n the event of the death of the shareholder, the estate does not go through a foreigncourt.C) S ettlement for trading is generally faster in the United States.D) A ll of the above are advantages of ADRs.Answer: DTopic: A merican Depositary ReceiptsSkill: R ecognition10) A DRs that are created at the request of a foreign firm wanting its shares traded in the UnitedStates are ________.A) f acilitatedB) u nfacilitatedC) s ponsoredD) u nsponsoredAnswer: CTopic: A merican Depositary ReceiptsSkill: R ecognition11) W ho pays the costs of creating a sponsored ADR?A) t he foreign firm whose stocks underlie the ADRB) t he U.S. bank creating the ADRC) b oth the U.S. bank and the foreign firmD) t he SEC since they require the regulationAnswer: ATopic: A merican Depositary ReceiptsSkill: R ecognition12) A n unsponsored ADR may be initiated without the approval of the foreign firm with theunderlying stock.Answer: FALSETopic: A merican Depositary ReceiptsSkill: R ecognition13) L evel I ADRs trade primarilyA) o n the New York Stock Exchange.B) o n the American Stock Exchange.C) o ver the counter or pink sheets.D) L evel I ADRs typically do not trade at all, but instead are privately issued and helduntil maturity.Answer: CTopic: A merican Depositary ReceiptsSkill: R ecognition14) L evel II ADRs must meetA) U.S. GAAP standards.B) h ome country accounting standards.C) b oth U.S. GAAP and home country standards.D) n one of the above.Answer: ATopic: A merican Depositary ReceiptsSkill: C onceptual15) L evel ________ is the easiest standard to satisfy for issuing ADRs.A) 144aB) I IIC) I ID) IAnswer: DTopic: A merican Depositary ReceiptsSkill: R ecognition16) L evel III ADR commitment applies toA) f irms that want to list existing shares on the NYSE.B) b anks issuing foreign mutual funds.C) A DR issues of under $25,000.D) t he sale of a new equity issued in the United States.Answer: DTopic: A merican Depositary ReceiptsSkill: R ecognition17) B y cross listing and selling its shares on a foreign stock exchange a firm typically tries toaccomplish which of the following?A) i mprove the liquidity of its existing sharesB) i ncrease its share priceC) i ncrease the firmʹs visibilityD) a ll of the aboveAnswer: DTopic: C ross Listing Equity SharesSkill: C onceptual18) A DRs are considered an effective way for firms to improve the liquidity of their stock,especially if the home market is small and illiquid.Answer: TRUETopic: A merican Depositary ReceiptsSkill: C onceptual19) I n order, the largest stock exchanges in the world based on market capitalization of thesecurities traded there are ________.A) L ondon, NYSE, and NasdaqB) N YSE, Nasdaq, and LondonC) N asdaq, NYSE, and LondonD) T okyo, NYSE, and LondonAnswer: BTopic: W orld Equity MarketsSkill: R ecognition20) T he stock exchange with the greatest value of shares traded is ________.A) N YSEB) T okyoC) N asdaqD) L ondonAnswer: ATopic: W orld Equity MarketsSkill: R ecognition21) T he Tokyo exchange is the number one choice of firms looking to gain liquidity by cross-listing their equity securities.Answer: FALSETopic: W orld Equity MarketsSkill: R ecognition22) T ransaction costs for trading equity securities as measured by the bid-ask spreads are loweston which exchange?A) N YSEB) N asdaqC) L ondonD) T okyoAnswer: ATopic: W orld Equity MarketsSkill: R ecognition23) T he number of foreign firms traded on the London exchange is ________ than the numbertraded on the NYSE, and the costs of listing and disclosure in London are ________ those for the NYSE.A) l ess than; less thanB) l ess than; greater thanC) g reater than; less thanD) g reater than; greater thanAnswer: DTopic: W orld Equity MarketsSkill: R ecognition24) T he least liquid stock markets as identified by the authors offer little liquidity for their owndomestic firms, and are of little value to foreign firms.Answer: TRUETopic: M arket LiquiditySkill: C onceptual25) W hich one of the following characteristics does NOT contribute to overall market liquidity?A) S ignificant market making activities.B) R educed transaction costs.C) E ffective crisis management.D) A ll of the above contribute to efficient markets.Answer: ATopic: M arket LiquiditySkill: C onceptual26) Y our authors note several empirical studies that have foundA) n o share price effect for foreign firms that cross-list on major U.S. exchanges.B) a positive share price effect for foreign firms that cross-list on major U.S. exchanges.C) a negative share price effect for foreign firms that cross-list on major U.S. exchanges.D) n one of the above.Answer: BTopic: E mpirical Evidence of Cross-ListingSkill: R ecognition27) T he authors note empirical evidence that shows cross-listing foreign shares of stock on U.S.exchanges has a positive stock price effect. ________ for the listing of ADRs.A) T here is no stock price reactionB) T here is a negative stock price reactionC) T here is a positive stock price reactionD) N one of the above is true.Answer: DTopic: E mpirical Evidence of Cross-ListingSkill: C onceptual28) E mpirical evidence shows that new issues of equity by domestic firms in the U.S. markettypically has a ________ stock price reaction and new equity issues in the U.S. markets by foreign firms with segmented domestic markets have a ________ stock price reaction.A) n egative; negativeB) p ositive; negativeC) n egative; positiveD) p ositive; positiveAnswer: CTopic: E mpirical Evidence of Cross-ListingSkill: C onceptual29) I n addition to gaining liquidity, which of the following could also be considered a legitimatereason for cross-listing equity?A) e nhance a firmʹs local imageB) b ecome more familiar with the local financial communityC) g et better local press coverageD) a ll of the aboveAnswer: DTopic: R easons for Cross-ListingSkill: C onceptual30) F or the most part, U.S. SEC disclosure requirements are ________ stringent than other, non-U.S. equity market rules.A) m oreB) l essC) a s equallyD) n one of the aboveAnswer: ATopic: S EC Disclosure RequirementsSkill: R ecognition31) A ccording to the U.S. school of thought, the worldwide trend toward fuller and morestandardized disclosure rules should ________ the cost of equity capital.A) i ncreaseB) d ecreaseC) h ave no impact onD) n one of the aboveAnswer: BTopic: D isclosure RequirementsSkill: R ecognition32) A nother school of thought about the worldwide trend toward fuller and more standardizeddisclosure rules is that the cost of U.S. level equity capital disclosureA) c hases away potential listers of equity.B) i s an onerous costly burden.C) l eads to fewer foreign firms cross listing in U.S. equity markets.D) a ll of the above.Answer: DTopic: D isclosure RequirementsSkill: R ecognition33) W hich of the following were NOT identified by the authors as an alternative instrument tosource equity in global markets?A) s ale of a directed public share issue to investors in a target marketB) p rivate placements under SEC rule 144aC) s ale of shares to private equity fundsD) a ll of the aboveAnswer: DTopic: A lternative Equity SourcesSkill: R ecognition34) A ________ is defined as one that is targeted at investors in a single country andunderwritten in whole or part by investment institutions from that country.A) S EC rule 144a placementB) d irected public share issueC) E uroequity public issueD) s trategic allianceAnswer: BTopic: D irected Public IssueSkill: R ecognition35) T he term ʺeuroʺ as used in the euro equity market impliesA) t he issuers are located in Europe.B) t he investors are located in Europe.C) b oth A and B.D) n one of the above.Answer: DTopic: E uro Equity MarketSkill: R ecognition36) E mpirical evidence has found that on average public firms that have been privatized byissuing public equity haveA) i mproved profitability.B) h igher debt levels.C) l ower real sales.D) a ll of the above.Answer: ATopic: P rivatizing Public FirmsSkill: C onceptual37) E mpirical evidence has found that on average public firms that have been privatized byissuing public equity haveA) l owered capital investment levels.B) d ecreased efficiency.C) e xpanded their employment.D) a ll of the above.Answer: CTopic: P rivatizing Public FirmsSkill: C onceptual38) S EC rule 144A permits institutional buyers to trade privately placed securities without theprevious holding periods restrictions and without requiring SEC registration.Answer: TRUETopic: S EC Rule 144ASkill: R ecognition39) P rivate equity funds (PEF) differ from traditional venture capital (VC) funds in thatA) V C operate mainly in lesser-developed countries while PEF do not.B) V C typically invest in family business whereas PEF do not.C) V C is almost unavailable to emerging markets while PEF capital is available.D) a ll of the above are true.Answer: CTopic: P rivate Equity FundsSkill: C onceptual40) S trategic alliances are normally formed by firms that expect to gain synergies from which ofthe following?A) e conomies of scaleB) e conomies of scopeC) c omplementary marketingD) a ll of the aboveAnswer: DTopic: S trategic AlliancesSkill: C onceptual41) T he largest equity market in the world as measured by market value or annual stockturnover is in ________.A) G ermanyB) t he United StatesC) J apanD) B ritainAnswer: BTopic: L argest Equity MarketSkill: R ecognition42) T he reason more foreign firms do not sell equity securities in the U.S. and list on the NYSE isbecause ofA) t he threat of confiscation.B) d etailed U.S. disclosure rules.C) t he relative inefficiency of U.S. equity markets.D) t he foreign exchange risk of listing in U.S. dollars.Answer: BTopic: D isclosure RequirementsSkill: C onceptual43) A n MNE may cross list its shares on a foreign stock exchange so that it canA) c reate a secondary market so that shares may be used to compensate top localmanagers.B) c reate a secondary market so that shares can be used to acquire local firms.C) i ncrease the firmʹs visibility to its customers and employees.D) a ccomplish all of the above.Answer: DTopic: C ross Listed SharesSkill: C onceptual44) T he expected return on equities is greater than the expected return on debt in part becauseA) d ebt securities are serviced prior to equity securities.B) i nterest payments to bondholders are generally made only if the firm makes a profit.C) o nly a small portion of return to equity comes from increased capital appreciation.D) n one of the above.Answer: ATopic: E quity ReturnsSkill: C onceptual45) W hich of the following is NOT a motivation for the use of ADRs?A) t o reduce liquidity and increase the profitability of the firmB) t o reduce a firmʹs visibility and avoid political scrutinyC) t o increase share price by overcoming mis-pricing in a segmented and illiquid homemarketD) A ll of the above are motivations to use ADRs.Answer: CTopic: A DRsSkill: R ecognition46) W hich of the following is NOT a barrier to cross listing shares?A) F ixed income securities such as bonds are not traded in the subject market.B) i nvestor relationsC) d isclosure requirementsD) A ll are barriers to cross listing shares.Answer: ATopic: C ross Listing SharesSkill: R ecognition47) T he sale of a security to a small set of qualified institutional buyers is called aA) d epositary receipt.B) p rivate placement.C) f ixed income security.D) n one of the above.Answer: BTopic: P rivate PlacementSkill: R ecognition48) N egotiable certificates issued by a U.S. bank in the United States to represent the underlyingshares of stock, which are held in a trust at a custodian bank in a foreign country, are called ________.A) S DRsB) F DRsC) A DRsD) I OUsAnswer: CTopic: A DRsSkill: R ecognition49) W hich of the following is not a contributing factor to an individual equityʹs liquidity?A) d epth of capital availabilityB) c risis management capabilities of the market itselfC) t he degree to which the company is actually known and followed in the marketD) a ll of the aboveAnswer: DTopic: E quity LiquiditySkill: R ecognition50) A n advantage to American Depositary Receipts (ADRs) over Global Registered Shares(GRSs) isA) A DRs are able to be traded on equity exchanges around the world in a variety ofcurrencies.B) A DRs can theoretically be ʺtraded with the sunʺ following markets as they open andclose around the world.C) A DRs can be traded electronically and lack any type of specialized forms like thoseused with GRSs.D) N one of the above, these are all advantages to trading GRSs.Answer: DTopic: A merican Depositary ReceiptsSkill: R ecognition51) C ross border trading of some Canadian company securities in the U.S. preceded thedevelopment of Global Registered Shares (GRSs) by several decades.Answer: FALSETopic: G lobal Registered SharesSkill: R ecognition52) E conomic studies have found that international cross-listing of securities across financialmarkets resulted in ________ abnormal returns that were ________ for firms resident in emerging markets with a low level of legal barriers to capital flows than for firms resident in developed countries.A) p ositive; greaterB) p ositive; smallerC) n egative; greaterD) n egative; smallerAnswer: ATopic: S ecurity Cross-listingSkill: C onceptual53) G iven the following information, what is the cost of equity for the Teevox Corporation?Expected return in the domestic market is 12%, the risk-free rate of return is 4%, the firmʹs beta is 1.1, and the required return on debt for the firm is 7%.A) 12.00%B) 10.00%C) 8.80%D) 7.70%Answer: CTopic: C ost of EquitySkill: A nalytical54) W allet Drug Company has just recently raised money abroad for the first time in the historyof the firm. Prior to the recent equity issue abroad, the firm had a D/V ratio of 40%, aneffective tax rate of 30%, a before-tax cost of debt of 9%, and a domestic beta of 1.3. The expected return on the market portfolio was 13% and the risk-free rate was 5%. After the equity issue, Wallet Drug has a D/V ratio of 50%, their after-tax cost of debt has notchanged, nor has the effective tax rate, the firmʹs international beta is 1.0, the expected return on the market portfolio is only 12%, and the risk-free rate is still 5%. What was the firmʹs WACC prior to the issue of new common stock abroad?A) 9.15%B) 11.76%C) 13%D) 15.4%Answer: BTopic: W ACCSkill: A nalytical55) W allet Drug Company has just recently raised money abroad for the first time in the historyof the firm. Prior to the recent equity issue abroad, the firm had a D/V ratio of 40%, aneffective tax rate of 30%, a before-tax cost of debt of 9%, and a domestic beta of 1.3. The expected return on the market portfolio was 13% and the risk-free rate was 5%. After the equity issue, Wallet Drug has a D/V ratio of 50%, their after-tax cost of debt has notchanged, nor has the effective tax rate, the firmʹs international beta is 1.0, the expected return on the market portfolio is only 12%, and the risk-free rate is still 5%. What is the firmʹs new cost of equity after the international issue?A) 9.15%B) 11.76%C) 12.00 %D) 15.40%Answer: CTopic: C ost of EquitySkill: A nalytical56) W allet Drug Company has just recently raised money abroad for the first time in the historyof the firm. Prior to the recent equity issue abroad, the firm had a D/V ratio of 40%, aneffective tax rate of 30%, a before-tax cost of debt of 9%, and a domestic beta of 1.3. The expected return on the market portfolio was 13% and the risk-free rate was 5%. After the equity issue, Wallet Drug has a D/V ratio of 50%, their after-tax cost of debt has notchanged, nor has the effective tax rate, the firmʹs international beta is 1.0, the expected return on the market portfolio is only 12%, and the risk-free rate is still 5%. What is the change in the firmʹs WACC after the international equity issue?A) 2.61%B) 1.74%C) 0.63%D) T here is no change in the firmʹs WACC.Answer: ATopic: S tock pricesSkill: A nalytical57) J apan has low median stock prices but more than 50% of the worldʹs highest priced sharesof stock.Answer: TRUETopic: S tock pricesSkill: R ecognition58) W hich of the following are not contributing factors to the dominance of the London andNew York Stock exchanges?A) r eady access to capitalB) m any highly qualified workersC) g ood infrastructureD) a ll are contributing factorsAnswer: DTopic: S tock ExchangesSkill: R ecognition59) W hich of the following are not contributing factors to the dominance of the London andNew York Stock exchanges?A) a ttractive tax environmentsB) l ow levels of corruptionC) a ttractive regulatory environmentsD) a ll are contributing factorsAnswer: DTopic: S tock ExchangesSkill: R ecognition60) W hich of the following are not contributing factors to the dominance of the London andNew York Stock exchanges?A) l ocationB) E nglish as the primary languageC) l ow levels of corruptionD) a ll are contributing factorsAnswer: DTopic: S tock ExchangesSkill: R ecognition61) A s measured by valued traded, the largest equity market is still located in the United States,but the largest derivatives markets are now located in Europe.Answer: FALSETopic: M arket ValuationSkill: R ecognition62) O n the global financial scene, the term ________ is used to signify the end of of marketownership by a small, privileged group of ʺseat owners.ʺA) g lobalizationB) d emutualizationC) i nstitutionalizationD) d iversificationAnswer: BTopic: D emutualizationSkill: R ecognition63) T he Sarbanes-Oxley Act in the U.S. has encouraged more and more international firms to listtheir securities in the US and pulled firms away from London.Answer: FALSETopic: S arbanes-OxleySkill: R ecognition64) C ontrary to many of the firms that trade financial securities and derivatives in their markets,the worldʹs financial exchanges are splitting into smaller more specialized units rather thanmerging into larger exchanges.Answer: FALSETopic: S tock ExchangesSkill: R ecognition13.2 Essay Questions1) A DRs are a popular investment tool for many U.S. investors. In recent years severalalternatives for investing in foreign equity securities have become available for U.S.investors, yet ADRs remain popular. Define what an ADR is and provide at least threeexamples of the advantages they may hold over alternative foreign investment vehicles forU.S. investors.Answer: Depositary receipts are negotiable certificates issued by a bank to represent theunderlying shares of stock held in trust at a foreign custodian bank. Those receiptstraded in the U.S. and denominated in dollars are called American depositary receipts(ADR). Because ADRs can be exchanged for the underlying foreign security, arbitragekeeps the prices in line. Even though U.S. investors can invest directly into someforeign equity markets, ADRs do offer some technical advantages. Among thoseadvantages are that dividends are received in dollars rather than a foreign currency,ADRs are in registered form rather than bearer form, transfer of ownership is done inaccordance with U.S. laws, and in the event of death, probate is in the U.S. and notabroad. Taxes are easier, trading costs are typically lower, and settlement is also faster.2) W hat 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 toand why.Answer: The student must give his/her own opinion and supporting background. In either case the following should be noted: Increased disclosure should decrease uncertainty thusincreasing stock price. However, increased disclosure requirements result in increasedcosts in the form of initial preparation of financial statements, on-going costsassociated with regular development of financial statements, and the costs ofgathering and distributing information about the form on an on-going basis. As theauthors state, disclosure is a two-edged sword.。

《国际金融》教学大纲一、课程的性质和任务《国际金融》是广播电视大学财经科金融（含开放教育专科金融专业各方向）、国际贸易、财税等专业的基础理论课，是金融、国际贸易专业的必修课以及相关专业的选修课。

《国际金融》阐述的是国际金融学科的最一般规律、国际金融学的基本理论，介绍国际金融的基本业务和基础知识。

通过本课程的学习，可以使学生明确国际金融学科的研究对象、牢固掌握国际金融的最基本概念、初步了解国际金融的基本业务，为学好其他国际经济方面的业务课程打下坚实的基础。

学习《国际金融》课程也可以更好地完善金融专业学生的知识结构、开阔视野、提高学生从事宏观经济工作的综合素质。

二、与相关课程的衔接《国际金融》属于基础理论课，不管是金融、国际贸易专业的必修还是其他专业的选修，《国际金融》都是在修完《政治经济学》、《货币银行学》等公共基础课之后开设的，因此，本课程在大纲的编写和今后的教学实施过程中，都应该格外重视它的基础性与理论性。

《国际金融》的后续课程主要有：现代金融业务、企业金融行为、金融专题讲座、金融市场、商业银行经营管理、国际贸易理论与实务、国际结算、外贸英语函电等。

三、课程教学的基本要求1、正确认识课程的性质、任务及其研究对象，全面了解课程的体系、结构，对国际金融学科有一个总体的把握；2、牢固掌握国际金融学的基本概念，深刻理解国际金融的基本理论，掌握国际金融的基本原理和学科方法，了解国际金融学科的发展前沿；3、学会理论联系实际，掌握运用所学理论知识和国际金融学的原理和方法分析现实国际金融问题和具体案例的能力；学习掌握从国际金融业务实践中探索一般规律和理论概括的思维方法。

四、教学方法与教学形式1、文字教材：2000年秋季至2002年春季期间，中央电大《国际金融》课程的基本文字教材包括：(1)主教材：《国际金融》（穆怀朋编著，中国金融出版社出版）(2)辅助教材：《国际金融导读》（朱志忠编著，中国金融出版社出版）。