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:
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