发布时间 : 星期日 文章Chapter 17 Multinational Cost of Capital and Capital Structure更新完毕开始阅读
Chapter 17 Multinational Cost of Capital and Capital Structure
1. An argument for MNCs to have a debt-intensive capital structure is: A) they are well diversified.
B) foreign government tax rules may change over time. C) exposure to exchange rate fluctuations. D) exposure to fund blockage.
ANSWER: A
2. According to the text, there is evidence that the debt ratios (debt/capital) of MNCs based in:
A) the U.S. tend to be generally higher than MNCs headquartered in Japan and Germany. B) the United Kingdom tend to be generally higher than MNCs headquartered in other non-U.S. countries.
C) the U.S. tend to be generally lower than MNCs headquartered in Japan and Germany. D) A and B
ANSWER: C
3. According to the text, the cost of capital for an international project will: A) always be greater than the firm's cost of capital. B) always be less than the firm's cost of capital. C) always be the same as the firm's cost of capital. D) none of the above
ANSWER: D
4. Which of the following factors is not expected to generally have a favorable impact on the firm's cost of capital according to the text? A) easy access to international capital markets. B) high degree of international diversification. C) volatile exchange rate fluctuations. D) all of the above
ANSWER: C
5. The capital asset pricing theory is based on the premise that: A) only unsystematic variability in cash flows is relevant. B) only systematic variability in cash flows is relevant.
C) both systematic and unsystematic variability in cash flows are relevant. D) neither systematic nor unsystematic variability in cash flows is relevant.
ANSWER: B
6. According to the text, MNCs:
A) use only debt financing in foreign countries to support foreign subsidiaries. B) use only equity financing in foreign countries to support foreign subsidiaries. C) use only parent financing in foreign countries to support foreign subsidiaries. D) none of the above
ANSWER: D
7. The term \ structure: A) in the U.S.
B) relative to competitors across all countries. C) where it has its largest subsidiary.
D) when consolidating all of its subsidiaries.
ANSWER: D
8. According to the text, an MNC's \ A) always debt-intensive. B) always equity-intensive.
C) sometimes different from an MNC's \ D) none of the above
ANSWER: C
9. One argument for why subsidiaries should be wholly-owned by the parent is that: A) the potential conflict of interests between the MNC's managers and shareholders is avoided.
B) the potential conflict of interests between the MNC's majority shareholders and minority shareholders is avoided.
C) the potential conflict of interests between the MNC's existing creditors is avoided. D) the potential conflict of interests between the MNC's managers and creditors is avoided.
ANSWER: B
10. One argument for why subsidiaries should be only partly-owned by the parent is: A) that the potential conflict of interests between the MNC's managers and shareholders is avoided.
B) that the potential conflict of interests between the MNC's majority shareholders and minority shareholders is avoided.
C) that the potential conflict of interests between the MNC's existing creditors is avoided.
D) to offer some protection against threats of any adverse actions by the host government.
ANSWER: D
11. The cost of capital for MNCs based in the U.S. has been generally _______ than MNCs based in Germany and _______ than MNCs based in Japan. A) lower; lower B) lower; higher C) higher; higher D) higher; lower
ANSWER: C
12. Other things being equal, countries with relatively _______ populations and _______ inflation are more likely to have a low cost of capital. A) young; high B) old; high C) old; low D) young; low
ANSWER: C
13. Other things being equal, the financial leverage of MNCs will be higher if the
governments of their home countries are _______ likely to rescue them (in the event of failure), and if their home countries are _______ likely to experience a recession. A) more; more B) less; more C) less; less D) more; less
ANSWER: D
14. Based on the factors that influence a country's cost of capital, the cost of capital in less developed countries is likely to be _______ than that of the U.S. and _______ than that of Japan.
A) higher; higher B) higher; lower C) lower; lower D) lower; higher
ANSWER: A
15. According to the text:
A) the cost of debt for each country is somewhat stable over time.
B) the cost of debt for countries change over time, and these changes are negatively correlated.
C) the cost of debt for countries change over time, and these changes are positively correlated.
D) the cost of debt for countries change over time, and are not correlated.
ANSWER: C
16. The term \
A) the average capital structure of local firms where the MNC's subsidiary is based. B) the average capital structure of local firms where the MNC's parent is based. C) the desired capital structure of a subsidiary of a particular MNC.
D) the desired capital structure of a particular MNC overall (including all subsidiaries).
ANSWER: C
17. The term \ A) the average capital structure of all MNCs across countries.
B) the average capital structure of all domestic firms across countries. C) the capital structure of a subsidiary of a particular MNC.
D) the capital structure of a particular MNC overall (including all subsidiaries).
ANSWER: D
18. An MNC may deviate from its target capital structure in each country where financing is obtained, yet still achieve its target capital structure on a consolidated basis. A) true. B) false.
ANSWER: A
19. Assume that the risk-free interest rate in the U.S. is the same as that in Country M. Assume that the government of Country M is more likely to rescue local firms that experience financial problems. Other things being equal, Country M's firms are likely to use a _______ degree of financial leverage than U.S. firms. If a firm based in Country M had the same degree of financial leverage and the same operating characteristics as a U.S. firm, its cost of capital would be _______ than that of the U.S. firm. A) higher; higher B) higher; lower C) lower; lower D) lower; higher
ANSWER: B
20. When an MNC's firm's cost of capital rises, it would be _______ likely to divest an existing project, other things held constant. A) more
B) less
C) neither; there is no effect
D) neither; MNCs do not ever divest projects
ANSWER: A
21. Which of the following is not a factor that favorably affects an MNC's cost of capital, according to your text? A) exchange rate risk. B) size.
C) access to international capital markets. D) international diversification.
ANSWER: A
22. According to your text, which of the following is not a factor that affects an MNC's cost of capital unfavorably? A) exchange rate risk. B) country risk. C) political risk. D) size.
ANSWER: D
23. The ____________ an MNC, the __________ its cost of capital is likely to be. A) larger; higher B) larger; lower C) smaller; lower D) A and C
ANSWER: B
24. MNC Corporation has a beta of 2.0. The risk-free rate of interest is 5%, and the return on the stock market overall is expected to be 13%. What is the required rate of return on MNC stock? A) 21%. B) 41%. C) 16%. D) 13%.
E) none of the above
ANSWER: A
SOLUTION: 5% + 2 (13% - 5%) = 21%.