George lends $200,000 for each new idea. George's history is that he selects low-risk projects or ideas that hit 80% of the time. What rate of return must each successful project pay George for him to break even? A. 20.50% B. 22.00% C. 23.50% D. 25.00% Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called _________ . A. translation exposure B. transaction exposure C. conversion exposure D. operating exposure If we are using foreign currency for the NPV decision, all we have to do is restate all the ________ in terms of present value and use the current exchange rate. A. domestic incremental cash flow B. foreign incremental cash flow C. salvage value D. None of these __________ financial world is one without taxes, bankruptcy, and other imperfections. A. An imperfect B. A friction-full C. A perfect D. A realistic Businesses that operate in more than one country are commonly referred to as _________ . A. multi-American firms B. multinational firms C. ultranational firms D. worldwide firms Low-dividend clientele are preferred by firms because _________. A. they pay more money per share of comparable stock than other types of investors B. high-dividend clientele are more active shareholders C. they are less critical of management decisions D. none of the above. Low dividend clientele are no more preferred than high-dividend clientele The _________ is the date when the board of directors announces the next cash dividend to the public. A. declaration date B. record date C. payment date D. ex-dividend date "Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy? A. residual dividend policy B. sticky dividend policy C. constantly declining dividend policy D. none of the above The federal government bond market is open only to ____________ . A. state government agencies B. local government agencies C. the federal government D. municipal government The decision to pay a cash dividend is within the jurisdiction of __________ . A. the board of directors of the firm B. the firm's largest labor union C. the largest shareholders of the firm Which of the statements below is FALSE? A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency. B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate. C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value. D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate _________ arise(s. from differences in customs, social norms, attitudes, assumptions, and expectations of the local society in a host country. A. Cultural risk B. Political risk C. Social fads D. Similarities in business beliefs Which of the following is NOT a reason for a high-dividend-payout policy? A. convenient and direct deposit of cash dividend B. avoidance of transaction costs for selling shares C. higher potential future returns for shareholders D. cash payments today versus uncertain cash payments tomorrow Financial leverage is the degree to which a firm or individual utilizes __________ . A. borrowed money to pay wages B. borrowed money to pay dividends C. borrowed money to magnify equity earnings D. borrowed money to diminish equity earnings Which of the following are not legitimate constraints on the dividends a firm will pay to shareholders? A. Dividends must not eat into legal capital. B. Bondholders may have covenants limiting the amount of the dividend. C. Dividends may be constrained by the amount of cash a firm has. D. All are legitimate constraints on the dividends that firms choose to pay to shareholders Multinational _________ is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency. A. capital budgeting B. dividend policy C. derivative budgeting D. agency conflicts The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these? A. political risk B. differences in business practices C. social fads D. cultural differences Specific issues related to cultural differences can arise in the management of a multinational enterprise. All of the following are related to cultural differences EXCEPT ___________ . A. a requirement to have local management B. issues with promotion of women into management positions C. issues with observation of religious holidays D. nationalization of the assets of a company by the foreign government According to the text, which of the following four cash flows should be LAST in order of priority for a firm? A. cash to pay off debts in a timely fashion B. cash to maintain operations C. cash dividends D. cash for reinvesting In regard to the cultural risks related to ownership structure, which of the statements below is FALSE? A. Cultural norms work their way into laws and regulations so that the interests of the host country will take precedence over the interest of the foreign country, the original home of the business. B. In order to start a business operation in a foreign country, it may be necessary to utilize a joint venture business form. C. Today, there are practically no industries protected against foreign ownership in host countries. D. The ownership structure of a business can be restricted once the business ventures overseas and faces the additional constraint of meeting ownership requirements of more than one government  |
