University of San Francisco
School of Management PRACTICE FINAL EXAM
BUS 430 Prof. Sara Ding International Financial Management Spring 2013 Instructions: Answer all questions in Part A, Part B, and Part C. Write your answers for Part A on the next page and write your answers for Part B and Part C in the space provided below the question. You may use one page (double sided) of notes and a financial calculator, but no other materials.
Section:_______________________ Name:________________________ USF ID:_______________________
Score Sheet Part A (Write your answer to the multiple choice questions below) 1. ________ 2. ________ 3. ________ 4. ________ 5. ________ 6. ________ 7. ________ 8. ________ 9. ________
10. ________ 11. ________ 12. ________ 13. ________ 14. ________ 15. ________ 16. ________
Part B (Do not write here) 1. 2. 3. Part C (Do not write here) 1.
Part A Multiple Choices (2.5 points*16= 40 points) 1) If a firm lies within a country with ________ or ________ domestic capital markets, it can achieve lower global cost and greater availability of capital with a properly designed and implemented strategy to participate in international capital markets. A) liquid; segmented B) liquid; large C) illiquid; segmented D) large; illiquid 2) Which of the following is generally unnecessary in measuring the cost of debt? A) a forecast of future interest rates B) the proportions of the various classes of debt a firm proposes to use C) the corporate income tax rate D) All of the above are necessary for measuring the cost of debt. 3) Each ADR represents ________ of the shares of the underlying foreign stock. A) a multiple B) 100 C) 1 D) ADRs have nothing to do with foreign stocks. 4) Level I ADRs trade primarily A) on the New York Stock Exchange. B) on the American Stock Exchange. C) over the counter or pink sheets. D) Level I ADRs typically do not trade at all, but instead are privately issued and held until maturity. 5) By cross listing and selling its shares on a foreign stock exchange a firm typically tries to accomplish which of the following? A) Improve the liquidity of its existing shares. B) Increase its share price. C) Increase the firm's visibility. D) all of the above 6) A firm with fixed-rate debt that expects interest rates to fall may engage in a swap agreement to A) pay fixed-rate interest and receive floating rate interest. B) pay floating rate and receive fixed rate. C) pay fixed rate and receive fixed rate. D) pay floating rate and receive floating rate. 7) A firm enters into an agreement to ________ British pounds and ________ U.S. dollars. If the dollar appreciates vs. the pound the firm will realize an accounting profit on the swap transaction. A) pay; receive B) receive; pay C) pay; pay 3
D) receive; receive 8) Which of the following is an unlikely reason for firms to participate in the swap market? A) To replace cash flows scheduled in an undesired currency with cash flows in a desired currency. B) Firms may raise capital in one currency but desire to repay it in another currency. C) Firms desire to swap fixed and variable payment or receipt of funds. D) All of the above are likely reasons for a firm to enter the swap market. 9) Project evaluation from the ________ viewpoint serves some useful purposes and/but should________ the ________ viewpoint. A) local; be subordinated to; parent's B) local; not be subordinated to; parent's C) parent's; be subordinated to; local D) none of the above 10) Other things equal, a firm would rather have ________ in a depreciating currency, and________ in an appreciating currency. A) accounts receivable; accounts payable B) accounts receivable; accounts receivable C) accounts payable; accounts receivable D) none of the above 11) A centralized depository benefits the firm primarily by A) reducing the cost of repatriating funds. B) positioning profits where taxes are lowest. C) reducing the total amount of capital employed within the total...
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