Question 1

The existence of specific regulations and controls on dollar deposits in the United States, including interest rate ceiling imposed by the government, has contributed to the growth of the Euromarket.

Accepted Answer

A) True 
 B)False  True

Question 2

In the international context, the nominal interest rate is the stated interest rate charged on financing when only the MNC parent's currency is involved.

Accepted Answer

A) True 
 B)False  True

Question 3

All of the following are factors that can influence the operations of an MNC, EXCEPT

Accepted Answer

A)   consolidation of financial statements based on only one currency.
B)   foreign currency fluctuations.
C)   foreign ownership of portions of equity.
D)   existence of multinational capital markets. A

Question 4

If $1 Canadian costs $0.80 U.S. and $1 U.S. costs 125 Japanese yen, than $1 Canadian costs ___________Japanese yen.

Accepted Answer

A)   75
B)   156.25
C)   100
D)   125

Question 5

A partnership between a multinational company and a foreign investor in which contractuallyspecified amounts of money and expertise are contributed by the participants for statedproportions of ownership and profit is a

Accepted Answer

A)   multinational corporation.
B)   consolidation.
C)   floating relationship.
D)   joint venture.

Question 6

Joint venture is a partnership under which the participants have contractually agreed to contribute specified amounts of money and expertise in exchange for stated proportions of ownership and profit.

Accepted Answer

A) True 
 B)False

Question 7

NAFTA is a treaty establishing free trade and open markets between Europe and the Canada.

Accepted Answer

A) True 
 B)False

Question 8

Delta Systems Inc. is a Canada-based MNC that manufacturers satellite equipment. of $100,000 before foreign taxes. All after-tax earnings are to be paid to the parent as dividends. The foreign taxes include an income tax rate of35 percent and a dividend withholding tax of 10 percent. The firm's marginal tax rate in Canada is34 percent. What will be the firm's after-tax dividend income?

Accepted Answer

A)   $71,000
B)   $34,000
C)   $41,500
D)   $58,500

Question 9

The center of the Euro-equity market, which deals in international equity issues is

Accepted Answer

A)   Geneva.
B)   Tokyo.
C)   London.
D)   New York.

Question 10

The usual capital markets used by U.S.-based MNCs that desire international ownership of theirequity are

Accepted Answer

A)   Liechtenstein and Panama.
B)   Saudi Arabia and South Africa.
C)   Western Europe and Japan.
D)   Mexico and Canada.

Question 11

Canada is a member of the

Accepted Answer

A)   Mercosur Group.
B)   North American Free Trade Agreement.
C)   European Union.
D)   Asian Tigers.

Question 12

Tanks and Toilets Inc. is a Canada-based MNC that manufacturers stainless steel bathroomfixtures. of $100,000 before foreign taxes. All before-tax earnings are to be paid to the parent as interest. The foreign taxes include an income tax rate of 30 percent and an interest withholding tax of 15 percent. The firm's marginal tax rate in Canada is 45 percent. The amount of tax paid to the Canadian government would be

Accepted Answer

A)   $70,000.
B)   $45,000.
C)   $30,000.
D)   $38,250.

Question 13

A multi-national corporation (MNC) can give some protection to international cash flows by reducing its liabilities if the currency is appreciating, or by reducing its financial assets if the currency is depreciating.

Accepted Answer

A) True 
 B)False

Question 14

The existence of__________ allows multinationals to take advantage of unregulated financial marketsto invest and raise short-term funds in a variety of countries and to protect themselves from foreign exchange exposure.

Accepted Answer

A)   the International Monetary Fund
B)   the European Economic Council
C)   Eurocurrency markets
D)   a strong Canadian dollar

Question 15

Offshore Centers are cities that have achieved prominence as major centers for Euromarket business.

Accepted Answer

A) True 
 B)False

Question 16

NAFTA is an international financial market that provides for borrowing and lending currencies outside their country of origin.

Accepted Answer

A) True 
 B)False

Question 17

The Euromarket is dominated by the

Accepted Answer

A)   U.S. dollar.
B)   Japanese Yen.
C)   Canadian dollar.
D)   British Pound.

Question 18

In Canada, for integrated foreign operations, the temporal method of translation of financial statements should be used. The temporal method takes all transactions that were measured in a foreign currency and translates them into Canadian dollars using the exchanged rate in effect on the date of the original transaction.

Accepted Answer

A) True 
 B)False

Question 19

The Euromarket is the international financial market that provides for borrowing and lending currencies outside their country of origin.

Accepted Answer

A) True 
 B)False

Question 20

The interest rates offered in the Euromarket on the Canadian dollar are greatly affected by the prime rate inside Canada.

Accepted Answer

A) True 
 B)False

Exam 19: International Corporate Finance

The existence of specific regulations and controls on dollar deposits in the United States, including interest rate ceiling imposed by the government, has contributed to the growth of the Euromarket.

In the international context, the nominal interest rate is the stated interest rate charged on financing when only the MNC parent's currency is involved.

All of the following are factors that can influence the operations of an MNC, EXCEPT

If $1 Canadian costs $0.80 U.S. and $1 U.S. costs 125 Japanese yen, than $1 Canadian costs ___________Japanese yen.

A partnership between a multinational company and a foreign investor in which contractuallyspecified amounts of money and expertise are contributed by the participants for statedproportions of ownership and profit is a

Joint venture is a partnership under which the participants have contractually agreed to contribute specified amounts of money and expertise in exchange for stated proportions of ownership and profit.

NAFTA is a treaty establishing free trade and open markets between Europe and the Canada.

The center of the Euro-equity market, which deals in international equity issues is

The usual capital markets used by U.S.-based MNCs that desire international ownership of theirequity are

Canada is a member of the

A multi-national corporation (MNC) can give some protection to international cash flows by reducing its liabilities if the currency is appreciating, or by reducing its financial assets if the currency is depreciating.

The existence of__________ allows multinationals to take advantage of unregulated financial marketsto invest and raise short-term funds in a variety of countries and to protect themselves from foreign exchange exposure.

Offshore Centers are cities that have achieved prominence as major centers for Euromarket business.

NAFTA is an international financial market that provides for borrowing and lending currencies outside their country of origin.

The Euromarket is dominated by the

The Euromarket is the international financial market that provides for borrowing and lending currencies outside their country of origin.

The interest rates offered in the Euromarket on the Canadian dollar are greatly affected by the prime rate inside Canada.