Test bank International Finance MCQ wordChap 13.docx

Test bank International Finance MCQ wordChap 13.docx

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TestbankInternationalFinanceMCQwordChap13

FundamentalsofMultinationalFinance,3e（Moffett）

Chapter13

SourcingEquityCapitalGlobally

13.1

MultipleChoiceandTrue/FalseQuestions

1）

Thechoiceofwhenandhowtosourceequitygloballyisusuallyaidedearlyonbytheadviceof

A）

aninvestmentbanker.

B）

yourstockbroker.

C）

acommercialbanker.

D）

anunderwriter.

Answer:

A

Topic:

EquitySourcing

Skill:

Recognition

2）

InvestmentbankingservicesincludeWHICHofthefollowing?

A）

advisingwhenasecurityshouldbecross-listed

B）

preparationofstockprospectuses

C）

helptodeterminethepriceoftheissue

D）

alloftheabove

Answer:

D

Topic:

InvestmentBanking

Skill:

Conceptual

3）

Mostfirmsraisetheirinitialcapitalinforeignmarkets.

Answer:

FALSE

Topic:

RaisingCapital

Skill:

Conceptual

4）

Whichofthefollowingisthetypicalorderofsourcingcapitalabroad?

A）

Aninternationalbondissue,thencrosslistingtheoutstandingissuesonotherexchanges,thenaninternationalbondissueinthetargetmarket.

B）

Aninternationalbondissueinthetargetmarketthencrosslistingtheoutstandingissuesonotherexchanges,thenaninternationalbondissue.

C）

Aninternationalbondissue,thenaninternationalbondissueinthetargetmarket,thencrosslistingtheoutstandingissuesonotherexchanges.

D）

Crosslistingtheoutstandingissuesonotherexchanges,thenaninternationalbondissue,thenaninternationalbondissueinthetargetmarket.

Answer:

C

Topic:

GlobalEquitySourcing

Skill:

Conceptual

5）

________arenegotiablecertificatesissuedbyabanktorepresenttheunderlyingsharesofstock,whichareheldintrustataforeigncustodianbank.

A）

NegotiableCDs

B）

Internationalmutualfunds

C）

Depositaryreceipts

D）

Eurodeposits

Answer:

C

Topic:

DepositaryReceipts

Skill:

Recognition

6）

DepositaryreceiptstradedoutsidetheUnitedStatesarecalled________depositaryreceipts.

A）

Euro

B）

Global

C）

American

D）

Noneoftheabove

Answer:

B

Topic:

GlobalDepositaryReceipts

Skill:

Recognition

7）

EachADRrepresents________ofthesharesoftheunderlyingforeignstock.

A）

amultiple

B）

100

C）

1

D）

ADRshavenothingtodowithforeignstocks.

Answer:

A

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

8）

ADRscannotbeexchangedfortheunderlyingsharesoftheforeignstock,therefore,arbitragecannotkeepthepricesinlinewiththeforeignpriceofthestock.

Answer:

FALSE

Topic:

AmericanDepositaryReceipts

Skill:

Conceptual

9）

WhichofthefollowingisNOTanadvantageofADRstoU.S.shareholders?

A）

TransferofownershipisdoneintheU.S.inaccordancewithU.S.laws.

B）

Intheeventofthedeathoftheshareholder,theestatedoesnotgothroughaforeigncourt.

C）

SettlementfortradingisgenerallyfasterintheUnitedStates.

D）

AlloftheaboveareadvantagesofADRs.

Answer:

D

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

10）

ADRsthatarecreatedattherequestofaforeignfirmwantingitssharestradedintheUnitedStatesare________.

A）

facilitated

B）

unfacilitated

C）

sponsored

D）

unsponsored

Answer:

C

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

11）

WhopaysthecostsofcreatingasponsoredADR?

A）

theforeignfirmwhosestocksunderlietheADR

B）

theU.S.bankcreatingtheADR

C）

boththeU.S.bankandtheforeignfirm

D）

theSECsincetheyrequiretheregulation

Answer:

A

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

12）

AnunsponsoredADRmaybeinitiatedwithouttheapprovaloftheforeignfirmwiththeunderlyingstock.

Answer:

FALSE

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

13）

LevelIADRstradeprimarily

A）

ontheNewYorkStockExchange.

B）

ontheAmericanStockExchange.

C）

overthecounterorpinksheets.

D）

LevelIADRstypicallydonottradeatall,butinsteadareprivatelyissuedandhelduntilmaturity.

Answer:

C

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

14）

LevelIIADRsmustmeet

A）

U.S.GAAPstandards.

B）

homecountryaccountingstandards.

C）

bothU.S.GAAPandhomecountrystandards.

D）

noneoftheabove.

Answer:

A

Topic:

AmericanDepositaryReceipts

Skill:

Conceptual

15）

Level________istheeasieststandardtosatisfyforissuingADRs.

A）

144a

B）

III

C）

II

D）

I

Answer:

D

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

16）

LevelIIIADRcommitmentappliesto

A）

firmsthatwanttolistexistingsharesontheNYSE.

B）

banksissuingforeignmutualfunds.

C）

ADRissuesofunder$25,000.

D）

thesaleofanewequityissuedintheUnitedStates.

Answer:

D

Topic:

AmericanDepositaryReceipts

Skill:

Recognition

17）

Bycrosslistingandsellingitssharesonaforeignstockexchangeafirmtypicallytriestoaccomplishwhichofthefollowing?

A）

improvetheliquidityofitsexistingshares

B）

increaseitsshareprice

C）

increasethefirm'svisibility

D）

alloftheabove

Answer:

D

Topic:

CrossListingEquityShares

Skill:

Conceptual

18）

ADRsareconsideredaneffectivewayforfirmstoimprovetheliquidityoftheirstock,especiallyifthehomemarketissmallandilliquid.

Answer:

TRUE

Topic:

AmericanDepositaryReceipts

Skill:

Conceptual

19）

Inorder,thelargeststockexchangesintheworldbasedonmarketcapitalizationofthesecuritiestradedthereare________.

A）

London,NYSE,andNasdaq

B）

NYSE,Nasdaq,andLondon

C）

Nasdaq,NYSE,andLondon

D）

Tokyo,NYSE,andLondon

Answer:

B

Topic:

WorldEquityMarkets

Skill:

Recognition

20）

Thestockexchangewiththegreatestvalueofsharestradedis________.

A）

NYSE

B）

Tokyo

C）

Nasdaq

D）

London

Answer:

A

Topic:

WorldEquityMarkets

Skill:

Recognition

21）

TheTokyoexchangeisthenumberonechoiceoffirmslookingtogainliquiditybycross-listingtheirequitysecurities.

Answer:

FALSE

Topic:

WorldEquityMarkets

Skill:

Recognition

22）

Transactioncostsfortradingequitysecuritiesasmeasuredbythebid-askspreadsarelowestonwhichexchange?

A）

NYSE

B）

Nasdaq

C）

London

D）

Tokyo

Answer:

A

Topic:

WorldEquityMarkets

Skill:

Recognition

23）

ThenumberofforeignfirmstradedontheLondonexchangeis________thanthenumbertradedontheNYSE,andthecostsoflistinganddisclosureinLondonare________thosefortheNYSE.

A）

lessthan;lessthan

B）

lessthan;greaterthan

C）

greaterthan;lessthan

D）

greaterthan;greaterthan

Answer:

D

Topic:

WorldEquityMarkets

Skill:

Recognition

24）

Theleastliquidstockmarketsasidentifiedbytheauthorsofferlittleliquidityfortheirowndomesticfirms,andareoflittlevaluetoforeignfirms.

Answer:

TRUE

Topic:

MarketLiquidity

Skill:

Conceptual

25）

WhichoneofthefollowingcharacteristicsdoesNOTcontributetooverallmarketliquidity?

A）

Significantmarketmakingactivities.

B）

Reducedtransactioncosts.

C）

Effectivecrisismanagement.

D）

Alloftheabovecontributetoefficientmarkets.

Answer:

A

Topic:

MarketLiquidity

Skill:

Conceptual

26）

Yourauthorsnoteseveralempiricalstudiesthathavefound

A）

nosharepriceeffectforforeignfirmsthatcross-listonmajorU.S.exchanges.

B）

apositivesharepriceeffectforforeignfirmsthatcross-listonmajorU.S.exchanges.

C）

anegativesharepriceeffectforforeignfirmsthatcross-listonmajorU.S.exchanges.

D）

noneoftheabove.

Answer:

B

Topic:

EmpiricalEvidenceofCross-Listing

Skill:

Recognition

27）

Theauthorsnoteempiricalevidencethatshowscross-listingforeignsharesofstockonU.S.exchangeshasapositivestockpriceeffect.________forthelistingofADRs.

A）

Thereisnostockpricereaction

B）

Thereisanegativestockpricereaction

C）

Thereisapositivestockpricereaction

D）

Noneoftheaboveistrue.

Answer:

D

Topic:

EmpiricalEvidenceofCross-Listing

Skill:

Conceptual

28）

EmpiricalevidenceshowsthatnewissuesofequitybydomesticfirmsintheU.S.markettypicallyhasa________stockpricereactionandnewequityissuesintheU.S.marketsbyforeignfirmswithsegmenteddomesticmarketshavea________stockpricereaction.

A）

negative;negative

B）

positive;negative

C）

negative;positive

D）

positive;positive

Answer:

C

Topic:

EmpiricalEvidenceofCross-Listing

Skill:

Conceptual

29）

Inadditiontogainingliquidity,whichofthefollowingcouldalsobeconsideredalegitimatereasonforcross-listingequity?

A）

enhanceafirm'slocalimage

B）

becomemorefamiliarwiththelocalfinancialcommunity

C）

getbetterlocalpresscoverage

D）

alloftheabove

Answer:

D

Topic:

ReasonsforCross-Listing

Skill:

Conceptual

30）

Forthemostpart,U.S.SECdisclosurerequirementsare________stringentthanother,non-U.S.equitymarketrules.

A）

more

B）

less

C）

asequally

D）

noneoftheabove

Answer:

A

Topic:

SECDisclosureRequirements

Skill: