Multinational Financial Management by Alan Shapiro: International Financing and National Capital Markets

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CHAPTER 12
International Financing and National Capital Markets

EASY (definitional)

12.1 The most preferred form of securities for funding by firms in the U.S. has been a) debt
b) preferred stock
c) common stock
d) stock derivatives

Ans: a
Section: Corporate sources and uses of funds
Level: Easy

12.2 Financial deregulation began in _______ in 1981 and in _______ in 1986. a) Italy, Germany
b) England, France
c) the U.S., Japan
d) in the European Union, NAFTA

Ans: c
Section: Financial markets versus financial intermediaries
Level: Easy

12.3 The cost of the heavy reliance on banks by Japanese and German companies is a) less freedom of action
b) higher interest charges on loans
c) lower deposit rates
d) more control by the government

Ans: a
Section: Financial systems and corporate governance
Level: Easy

12.4 Which one of the following is NOT a consequence of a well-functioning financial market? a) greater capital accumulation
b) better projects get financed
c) lower cost of capital
d) most projects get financed

Ans: d
Section: The role and consequences of well-functioning financial markets Level: Easy

12.5 _______ is the process of replacing bank loans with securities issued in public markets. a) a drawdown
b) securitization
c) capital productivity
d) regulatory arbitrage

Ans: b
Section: Financial markets versus financial intermediaries
Level: Easy

12.6 The difference between countries in terms of company controls can be categorized into market-oriented and _______ systems. a) bank-centered
b) Anglo-Saxon
c) debt-denominated
d) keiretsu

Ans: a
Section: Financial systems and corporate governance
Level: Easy

12.7 Suppose the government of Ghana is seeking concessionary financing to build 100 new schools, which of the following agencies is most likely to provide such financing? a) the World Bank
b) the International Monetary Fund
c) the International Finance Corporation
d) the International Development Agency

Ans: d
Section: Development banks
Level: Easy

12.8 Suppose the government of Brazil is planning to develop a major hydroelectric project in order to replace oil imports and conserve scarce foreign exchange, which of the following international lending agencies is most likely to provide financing for this project? a) the World Bank

b) the International Monetary Fund
c) the International Finance Agency
d) the International Development Agency

Ans: a
Section: Development banks
Level: Easy

12.9 The most important source of funds used by companies around the world is a) internally generated cash
b) short-term external funds
c) issues of new stock
d) public debt securities

Ans: a
Section: Corporate sources and uses of funds
Level: Easy

12.10 The most important change in Japanese corporate finance in recent years has been a) the shift from internal funds to bank loans
b) the shift from internal funds to stock issues
c) the shift from external funds to internal funds
d) the dramatic rise in the payment of dividends

Ans: c
Section: Financial markets versus financial intermediaries
Level: Easy

12.11 Argentina is seeking balance‑of‑payments financing from an international lending institution. Which of the following is most likely to provide such funding? a) the World Bank
b) the International Monetary Fund
c) the International Finance Corporation
d) the International Development Agency

Ans: b
Section: Development banks
Level: Easy

12.12 Selling stock overseas is attractive to corporations because it a) may raise the price of the company's stock
b) improves the company's visibility in local markets
c) provides a pool of patient investors who are not focusing exclusively on next quarter's profits d) a and b only

Ans: d
Section: The foreign equity market
Level: Easy

12.13 Which of...