MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1)

Which one of the following characteristics does NOT contribute to overall market liquidity?

1)

_____
A)

significant market making activities

B)

effective crisis management

C)

reduced transaction costs

D)

All of the above contribute to efficient markets.

2)

Interest rate risks that a non-financial MNE faces can affect

2)

_____
A)

the outstanding amount of short term government securities recognized as an asset.

B)

the outstanding principal debt recognized as long term liability.

C)

the periodical levels of debt service.

D)

all of the above

3)

Eurobank is

3)

_____
A)

a department of a large commercial European bank making loans in Euros.

B)
bank incorporated in the European Union.
C)

financial intermediary that simultaneously bids for time deposits and makes loans in a currency other than that of its
home currency.
D)

All of the above are true.

4)

The foreign exchange market is NOT efficient because

4)

_____
A)

central governments dominate the foreign exchange market and everybody knows that by definition, central
governments are inefficient.
B)

market participants do not compete with one another due to the fact that trading takes place around the world and not in
a single centralized location.
C)

dealers have ask prices that are higher than bid prices.
D)

none of the reasons listed are accurate because the foreign exchange market is efficient.

5)

MNE cash flows may be sensitive to changes in which of the following?

5)

_____
A)

commodity prices

B)

exchange rates
C)

interest rates

D)

all of the above

 6)

Company X from USA has localized production near its suppliers in EU and exports its products worldwide. The
company

6)

_____
A)

is not exposed to changes in foreign exchange rates.

B)

does not have translational exposure because it consolidates its reports in US dollars.
C)

does not have transactional exposure because majority of its suppliers are invoicing in Euros.
D)

has transactional, translational and operating type of exposure.

7)

The price at which an option can be exercised is called the

7)

_____
A)

spot rate.

B)

premium.

C)

commission.

D)

strike price.

8)

The Eurocurrency loan market is characterized by narrow interest rate spreads between deposit and loan rates. This is
due in part to which of the following factors?

8)

_____
A)
The Eurocurrency market is a "wholesale" market.
B)

Eurocurrency borrowers are typically large, low-risk corporations or government entities.

C)

Loan amounts are very large, often in excess of $500,000.

D)

All of the above are legitimate reasons for the narrow spread in the Eurocurrency market.

9)

Given the following exchange rates, which of the following choices represents a potentially profitable intermarket
arbitrage opportunity?

¥129.87/$
euro 1.1226/$
euro 0.00864/¥

9)

_____
A)

$0.0077/¥

B)

¥114.96/euro

C)

¥115.69/euro

D)

$0.8908/euro

10)

Of the following, which would NOT be considered a way that government interferes with comparative advantage?

10)

_____
A)

quotas

B)
other non-tariff restrictions
C)

tariffs

D)

managerial skills

11)

When a foreign project is analyzed from the parent's point of view, the additional risk that stems from it's "foreign"
location is typically measured by ________ or ________.

11)

_____
A)

adjusting the discount rates; adjusting the timing

B)

adjusting the discount rates; adjusting the cash flows

C)

adjusting the timing; adjusting the cash flows

D)

none of the above

12)

A U.S. firm sells merchandise today to a British company for £100,000. The current exchange rate is $2.03/£, the account is
payable in three months, and the firm chooses to avoid any hedging techniques designed to reduce or eliminate the risk of
changes in the exchange rate. If the exchange rate changes to $2.05/£ the U.S. firm will realize a ________ of ________.

12)

_____
A)

gain; $2000

B)

gain; £2000

C)

loss; $2000

D)
loss; £2000

13)

Which of the following is NOT a portfolio diversification technique used by portfolio managers?

13)

_____
A)

diversify by country
B)

diversify by the size of capitalization of the securities held

C)

diversify by type of security

D)

All of the above are diversification techniques.

14)

The main advantage(s) of over-the-counter foreign currency options over exchange traded options is(are)

14)

_____
A)

expiration dates tailored to the needs of the client.

B)

client desired expiration dates.

C)

amounts that are tailor made.

D)

all of the above.

Instruction 17.1:
Use the information for the following question(s).

The Wheel Deal Inc., a company that produces scooters and other wheeled non-motorized recreational equipment is
considering an expansion of their product line to Europe. The expansion would require a purchase of equipment with a
price of euro 1,200,000 and additional installation of euro 300,000 (assume that the installation costs cannot be expensed,
but rather, must be depreciated over the life of the asset). Because this would be a new product, they will not be replacing
existing equipment. The new product line is expected to increase revenues by euro 600,000 per year over current levels for
the next 5 years, however; expenses will also increase by euro 200,000 per year. (Note: Assume the after-tax operating
cash flows in years 1-5 are equal, and that the terminal value of the project in year 5 may change total after-tax cash flows
for that year.) The equipment is multipurpose and the firm anticipates that they will sell it at the end of the five years for
euro 500,000. The firm's required rate of return is 12% and they are in the 40% tax bracket. Depreciation is straight-line to
a value of euro 0 over the 5-year life of the equipment, and the initial investment (at year 0) also requires an increase in
NWC of euro 100,000 (to be recovered at the sale of the equipment at the end of five years). The current spot rate is
$0.95/euro, and the expected inflation rate in the U.S. is 4% per year and 3% per year in Europe.

15)

Refer to Instruction 17.1. What is the NPV of the European expansion if Wheel Deal first computes the NPV in euros and
then converts that figure to dollars using the current spot rate?

15)

_____
A)

-$75,310

B)

$1,684,210

C)

-$71,544

D)

$1,520,000

16)

________ is the risk that the host government will take specific steps that prevent the foreign affiliate from exercising
control over the firm's assets.

16)

_____
A)

Business income risk

B)

Inconvertibility
C)

Expropriation

D)

None of the above

17)
The authors identify two tiers of foreign exchange markets

17)

_____
A)

client and retail market.

B)

commercial and investment transactions.

C)

interbank and client markets.

D)

bank and nonbank foreign exchange.

18)

________ are NOT one of the three categories reported for foreign exchange.

18)

_____
A)

Strip transactions

B)

Spot transactions
C)

Futures transactions

D)

Swap transactions

19)

Losses from ________ exposure generally reduce taxable income in the year they are realized. ________ exposure losses
may reduce taxes over a series of years.

19)

_____
A)

transaction; Operating
 B)

transaction; Accounting
C)

operating; Transaction

D)

accounting; Operating

20)

A ________ is defined as one that targets investors in a single country and underwritten in whole or part by investment
institutions from that country.

20)

_____
A)

Euroequity public issue

B)

SEC rule 144a placement

C)

directed public share issue

D)

strategic alliance

21)

Some of the factors contributing to the emergence of India's low-cost and highly efficient software industry are

21)

_____
A)

low-cost, educated and trained labor; solid infrastructure and liberalized foreign direct investments regime in the service
sector.
B)

combination of Indian Government agricultural subsidies and the overcapacity and the low cost of the international
telecommunication networks.
C)

large number of well-educated, English-speaking technical experts willing to work for MNEs in USA and Western
Europe.
D)

None of the above

22)

Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if they have operations in
more than one country?

22)

_____
A)

for-profit companies
B)

non-for-profit organizations
C)

non-government organizations (NGOs)

D)

all of the above may be considered MNEs

23)

Assume that a call option has an exercise price of $1.50/3. At a spot price of $1.45/3, the call option has

23)

_____
A)

an intrinsic value of $0.00.

B)

an intrinsic value of -$0.04.

C)

a time value of $0.04.

D)

a time value of $0.00.

24)

Domestic currencies of one country on deposit in a second country are called

24)

_____
A)

forocurrencies.

B)

export deposits.
C)

eurocurrencies.

D)

import deposits.

25)

"BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic
development. The BRIC countries are

25)

_____
A)

Brazil, Russia, Italy, and Chile.

B)

Brazil, Russia, India, and China.

C)

Britain, Romania, Israel, and Colombia.

D)

Belgium, Romania, Italy, and Canada.

26)

Which of the following is NOT a key variable in the weighted average cost of capital (WACC) equation?

26)

_____
A)

the risk-free rate of return

B)

the market value of debt

 C)

the marginal tax rate

D)

the market value of equity

27)

Affiliate firms are consolidated on the parent's financial statements on a ________ basis.

27)

_____
A)

prorated

B)

75%

C)

50%

D)

100%

28)

The U.S. dollar suddenly changes in value against the euro moving from an exchange rate of $0.8909/euro to $0.8709/euro.
Thus, the dollar has ________ by ________.

28)

_____
A)

depreciated; 2.30%

B)

depreciated; 2.24%
C)

appreciated; 2.24%

D)

appreciated; 2.30%
 29)

________ is the ability to exercise effective control over a foreign subsidiary within a country's legal and political
environment.

29)

_____
A)

Interest rate risk

B)

Governance risk
C)

Political risk

D)

Portfolio risk

30)

________, also known as micro risks, are political risks that affect the MNE at the project and corporate level but do not
originate at the country level.

30)

_____
A)

Firm-specific risks

B)

Transfer risks
C)

Country-specific risks

D)

Global-specific risks

31)

Large international firms may be better able to exploit such competitive factors as ________ than are their domestic
competitors.

31)

_____
A)

technological expertise

B)

economies of scale
C)

product differentiation

D)

all of the above

32)

Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management
services due to increased globalization by the firm?

32)

_____
A)

credit risk management

B)

foreign consumer method of payment preferences

C)

evaluation of the credit quality of foreign buyers and sellers

D)

evaluation of foreign exchange risk

33)

Empirical research has found that systematic risk for MNEs is greater than that for their domestic counterparts. This
could be due to

33)

_____
A)

the fact that the increase in the correlation of returns between the market and the firm is less than the increase in the
standard deviation of returns of the firm.
 B)

the reduction in the correlation of returns between the firm and the market is less than the increase in the variability of
returns caused by factors such as asymmetric information, foreign exchange risk, and the like.
C)

the fact that the decrease in the correlation of returns between the market and the firm is greater than the increase in the
standard deviation of returns of the firm.
D)

none of the above. Systematic risk is less for MNEs than for their domestic counterparts.

34)

Generally speaking, a firm wants to receive cash flows in a currency that is ________ relative to their own, and pay out in
currencies that are ________ relative to their home currency.

34)

_____
A)

appreciating; depreciating

B)

depreciating; depreciating
C)

depreciating; appreciating

D)

appreciating; appreciating

35)

German company is evaluating alternatives to hedge US1M payable in three months. A money market hedge for this
transaction will be

35)

_____
A)

raising Euro denominated short term loan at annual interest rate of 2%.
B)

investing in dollar denominated short term government security yielding 0.2%.

C)

one cannot hedge payable with money market hedge

D)
there is no need to hedge since the US dollar has been constantly appreciating against the Euro in the past three months.

36)

Which of the following is cited as a good reason for NOT hedging currency exposures?

36)

_____
A)

Shareholders are more capable of diversifying risk than management.

B)

Hedging activities are often of greater benefit to management than to shareholders.

C)

Currency risk management through hedging does not increase expected cash flows.
D)

All of the above are cited as reasons NOT to hedge.

TABLE 1.1
Use the information in the table to answer the following question(s).

37)

Refer to Table 1.1. If each country specializes in their production with Austria producing only digital cameras and Russia
producing only snowboards, at a trading rate of three snowboards per digital camera, how many cameras and
snowboards will be available to be consumed in Russia if they trade 9,000 snowboards to Austria?

37)

_____
A)

3,000 snowboards and 9,000 digital cameras

B)

9,000 snowboards and 5,000 digital cameras

C)

3,000 snowboards and 3,000 digital cameras

D)

There is not enough information to answer this question.

38)

Refer to Table 1.1. Austria has a larger relative advantage over Russia in the production of ________ at a ratio of ________.

38)

_____
A)

snowboards; 8 to 3

B)

cameras; 8 to 3
C)

snowboards; 5 to 4

D)

cameras; 3 to 8

39)

Refer to Table 1.1. If each country specializes in their production with Austria producing only digital cameras and Russia
producing only snowboards, at a trading rate of three snowboards per digital camera, how many cameras and
snowboards will be available to be consumed in Austria if they trade 3,000 cameras to Russia?

39)

_____
A)

9,000 snowboards and 5,000 digital cameras

 B)

3,000 snowboards and 3,000 digital cameras

C)

3,000 snowboards and 9,000 digital cameras

D)

There is not enough information to answer this question.

40)

A forward contract to deliver British pounds for U.S. dollars could be described either as ________ or ________.

40)

_____
A)

selling dollars forward; buying pounds forward

B)

buying dollars forward; buying pounds forward

C)

selling pounds forward; buying dollars forward

D)

selling pounds forward; selling dollars forward

41)

Empirical studies indicate that MNEs have higher costs of capital than purely domestic firms. This could be due to higher
levels of

41)

_____
A)

agency costs.

B)

exchange rate risk.

C)

political risk.

D)

all of the above

 42)

Economic studies have found that international cross-listing of securities across financial markets resulted in ________
abnormal returns that were ________ for firms resident in emerging markets with a low level of legal barriers to capital
flows than for firms resident in developed countries.

42)

_____
A)

negative; greater

B)

negative; smaller
C)

positive; greater

D)

positive; smaller

TABLE 17.1
Use the information to answer the following question(s).

Jensen Aquatics Inc., which manufactures and sells scuba gear worldwide, is considering an investment in either Europe
or Great Britain. Consider the following cash flows for each project, assume a 12% wacc, and consider these to be average
risk projects for the firm. Answer the questions that follow.
 43)

Refer to Table 17.1. If the euro was forecast to remain constant at $1.00/euro throughout the investment period, how
would the investment decision now be characterized?

43)

_____
A)

The British investment should be chosen over the European investment.

B)

The project would be even better than forecast.

C)

The NPV is $6,420.

D)

All of the above are true.

44)

________ exposure measures the change in the present value of the firm resulting from unexpected changes in exchange
rates.

44)

_____
A)

Operating

B)

Accounting

C)

Translation
 D)

Transaction

45)

A U.S. firm sells merchandise today to a British company for £100,000. The current exchange rate is $2.03/£, the account is
payable in three months, and the firm chooses to avoid any hedging techniques designed to reduce or eliminate the risk of
changes in the exchange rate. The U.S. firm is at risk today of a loss if

45)

_____
A)

the exchange rate changes to $2.00/£.

B)

the exchange rate changes to $2.05/£.

C)

the exchange rate doesn't change.

D)

all of the above.

46)

A foreign exchange ________ is the price of one currency expressed in terms of another currency. A foreign exchange
________ is a willingness to buy or sell at the announced rate.

46)

_____
A)

quote; rate

B)

rate; quote

C)

rate; rate

D)

quote; quote
TABLE 5.1
Use the table to answer the following question(s).

47)

Refer to Table 5.1. Cross rates

47)

_____
A)

for the spot market in the table are "188.10" (using the mid rates).
B)

can be used to check on opportunities for intermarket arbitrage.

C)

are often reported in the form of a matrix in the financial newspapers.

D)

are all of the above.

48)

Refer to Table 5.1. The one-month forward bid price for dollars as denominated in Japanese yen is

48)

_____
A)

¥129.74/$.

B)

¥129.62/$.

C)

-¥20.

D)
-¥18.

49)

Capital market segmentation is a financial market imperfection caused mainly by

49)

_____
A)

institutional practices.

B)

government constraints.
C)

investor perceptions.

D)

all of the above

50)

The beginning share price for a security over a three-year period was $50. Subsequent year-end prices were $62, $58 and
$64. The arithmetic average annual rate of return and the geometric average annual rate of return for this stock were

50)

_____
A)

9.30% and 7.03%, respectively.

B)

9.30% and 6.37%, respectively.

C)

9.30% and 8.78%, respectively.

D)

9.30% and 7.89%, respectively.

51)

Forward exchange rates are normally quoted for value date of

51)
_____
A)

one, two, three, six and twelve months.

B)

two days.
C)

two years.

D)

do not have specific maturity date.

52)

A speculator in the futures market wishing to lock in a price at which they could ________ a foreign currency will
________ a futures contract.

52)

_____
A)

sell; buy

B)

buy; sell
C)

buy; buy

D)

none of the above

TABLE 7.1
Use the below mentioned table to answer the following question(s).

April 19, 2010, British Pound Option Prices (cents per pound, 62,500 pound contracts).

53)
Refer to Table 7.1. What was the closing price of the British pound on April 18, 2010?

53)

_____
A)

$1.448/£

B)

£1.448/$
C)

$14.48/£

D)

None of the above

54)

The process of acquiring an enterprise anywhere in the world has the following common elements EXCEPT

54)

_____
A)

identification and valuation of the target.

B)

the tender offer.

C)

management of the post-acquisition transition.

D)

All of the above are common elements in the process.

55)

The final ratings of the Rating agencies

55)

_____
A)

are submitted for an government approval.

B)

are made public only if the rating is in the highest category.

 C)

are made public upon the decision of the issuer to have the rating published.
D)

are published in at least three international finance news editions.

56)

Other things equal, a firm that must obtain its long-term debt and equity in a highly illiquid domestic securities market
will probably have a

56)

_____
A)

relatively low cost of capital.

B)

relatively high cost of capital.

C)

relatively average cost of capital.

D)

cost of capital that we cannot estimate from this question.

57)

________ exposure is the potential for accounting-derived changes in owner's equity to occur because of the need to
translate foreign currency financial statements into a single reporting currency.

57)

_____
A)

Accounting

B)

Transaction

C)

Economic

D)

Operating

58)
Of the following, which was NOT cited by the authors as a valuable function provided by the Eurocurrency market?

58)

_____
A)

Eurocurrency deposits are a tool used by the Federal Reserve to regulate the money supply of countries that peg their
currency against the U.S. dollar.
B)

The Eurocurrency market is a major source of short-term bank loans to finance corporate working capital needs.
C)

Eurocurrency deposits are an efficient and convenient money market device for holding excess corporate liquidity.
D)

All of the above were cited by the authors.

59)

The L in OLI refers to an advantage in a firm's home market that is a

59)

_____
A)

location-specific advantage.

B)

liability in the domestic market.

C)

longevity in a particular market.

D)

none of the above.

60)

LIBOR is

60)

_____
A)

insignificant interest rate for global financial markets' operation.

B)
Madrid and Paris Interbank Offered Rate.
C)

published by British Bankers Association (BBA) once per year.

D)

adjusted average of estimated borrowing rates in the unsecured interbank market.

61)

A/an ________ quote in the United States would be foreign units per dollar, while a/an ________ quote would be in
dollars per foreign currency unit.

61)

_____
A)

indirect; direct

B)

indirect; indirect
C)

direct; indirect

D)

direct; direct

62)

The optimal financial structure of multinational firms could differ from that of domestic firms because of

62)

_____
A)

the ability of multinational firms to diversify their cash flows internationally.

B)

the greater availability of capital to multinational firms.

C)

political pressures on the host country.

D)

all of the above.

63)
Investing in production facility in a country with low cost of labor is

63)

_____
A)

not prudent because the cost of labor will increase over time.
B)

not prudent if there is no domestic market for the produced goods.

C)

example of a market-driven advantage.

D)

example of location-specific advantage.

64)

All exchange-traded options are settled through a clearing house but over-the-counter options are not and are thus subject
to greater ________ risk.

64)

_____
A)

exchange rate

B)

country
C)

counterparty

D)

none of the above

65)

An agreement to exchange interest payments based on a fixed payment for those based on a variable rate (or vice versa) is
known as a/an

65)

_____
A)

forward rate agreement.

 B)

interest rate swap.

C)

interest rate future.

D)

none of the above

Instruction 9.1:
Use the information for the following problem(s).

Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for euro
1,250,000. The sale was made in June with payment due six months later in December. Because this is a sizable contract
for the firm and because the contract is in euros rather than dollars, Plains States is considering several hedging
alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have
gathered the following information.

• The spot exchange rate is $1.40/euro

• The six month forward rate is $1.38/euro
• Plains States' cost of capital is 11%
• The Euro zone 6-month borrowing rate is 9% (or 4.5% for 6 months)
• The Euro zone 6-month lending rate is 7% (or 3.5% for 6 months)
• The U.S. 6-month borrowing rate is 8% (or 4% for 6 months)
• The U.S. 6-month lending rate is 6% (or 3% for 6 months)
• December put options for euro 625,000; strike price $1.42, premium price is 1.5%
• Plains States' forecast for 6-month spot rates is $1.43/euro
• The budget rate, or the lowest acceptable sales price for this project, is $1,075,000 or $1.35/euro

66)

Refer to Instruction 9.1. If Plains States chooses to implement a money market hedge for the Euro receivables, how much
money will the firm borrow today?

66)
_____
A)

$1,196,172

B)

$1,201,923
C)

euro 1,201,923

D)

euro 1,196,172

67)

Which of the following statements regarding currency futures contracts and forward contracts is NOT true?

67)

_____
A)

A futures contract is for a fixed maturity whereas the forward contract is for any maturity you like up to one year.
B)

Futures contracts trade on organized exchanges whereas forwards take place between individuals and banks with other
banks via telecom linkages.
C)

A futures contract is a standardized amount per currency whereas the forward contact is for any size desired.
D)

All of the above are true.

68)

The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-
interests rather than the interests of the firm.

68)

_____
A)

rulers of sovereign states and unsavory customs officials

B)

corporate insiders and attorneys

C)
corporate insiders and rulers of sovereign states
D)

attorneys and unsavory customs officials

69)

LipTea Incorporated purchases raw materials and has processing plants around the world.
The firm finances 30% of its assets with debt and 70% with equity, has a 30% average tax rate, and can issue bonds at a
pre-tax rate of 7%. Their standard deviation of returns is roughly 1.50 times as great as the market's returns, and has a
correlation with the market of 0.45. If the risk-free rate of return is 5% and the expected return on the international
market portfolio is 14%, what is the firm's WACC?

69)

_____
A)

8.38%
B)

12.24%
C)

7.75%
D)

There is not enough information to answer this question.

70)

US automotive firm manufacturing in Eastern Europe is an example of ________ strategic motive to become a MNE.

70)

_____
A)

US automotive firms do not invest outside of US

B)

political safety and raw material seekers

C)

large domestic corporation trying to gain access to overseas cutting edge technology and managerial expertise
D)

market and production efficiency seekers

71)
Which of the following is NOT a contract specification for currency futures trading on an organized exchange?

71)

_____
A)

size of the contract

B)

last trading day

C)

maturity date

D)

All of the above are specified.

72)

A foreign currency ________ gives the purchaser the right, not the obligation, to buy a given amount of foreign exchange
at a fixed price per unit for a specified period.

72)

_____
A)

swap

B)

future

C)

option

D)

forward

73)

Polaris Inc. has a significant amount of bonds outstanding denominated in yen because of the attractive variable rate
available to the firm in yen when the loan was made. However, Polaris does not have significant receivables in yen.
Options available to Polaris to consider the risk of such a loan include which one of the following?

73)

_____
 A)

doing nothing to offset the need for yen

B)

developing a currency swap of paying dollars and receiving yen

C)

developing an interest rate swap of receiving a variable rate while paying a fixed rate
D)

Polaris may engage in any of the strategies to a varying degree of effectiveness.

74)

Most financial theorists believe that the optimal capital structure is a ________ with a debt to total value ratio somewhere
around ________.

74)

_____
A)

point; 25%

B)

point; 50%
C)

range; 10%-40%

D)

range; 30%-60%

75)

ADRs that are created at the request of a foreign firm wanting its shares traded in the United States are

75)

_____
A)

sponsored.

B)

facilitated.

C)
unsponsored.

D)

unfacilitated.

76)

Foreign exchange ________ earn a profit by a bid-ask spread on currencies they purchase and sell. Foreign exchange
________, on the other hand, earn a profit by bringing together buyers and sellers of foreign currencies and earning a
commission on each sale and purchase.

76)

_____
A)

speculators; arbitragers

B)

dealers; brokers
C)

brokers; dealers

D)

central banks; treasuries

77)

If a MNE needed to obtain, outside of its domestic market, medium-term credit with an established secondary market it
would most likely pursue

77)

_____
A)

syndicated credits.

B)

the international bond market.

C)

international bank loans.

D)

some type of euronote.

If the direct quote for a U.S. investor for British pounds is $1.43/£, then the indirect quote for the U.S. investor would be
________ and the direct quote for the British investor would be ________.

78)

_____
A)

£0.699/$; $1.43/£

B)

$0.699/£; £0.699/$
C)

£1.43/£; £0.699/$

D)

£0.699/$; £0.699/$

79)

Several years ago the Danish equity market prohibited ownership of foreign securities thus few institutional analysts
outside of Denmark bothered to follow Danish equity securities. This particular fact led to market segmentation due to

79)

_____
A)

taxation.

B)

asymmetric information.
C)

financial risk.

D)

political risk.

80)

Which of the following is NOT a form of FDI?

80)

_____
A)
Greenfield investment

B)

joint venture
C)

wholly-owned affiliate

D)

exporting
 ANSWERS

1)

A
2)

D
3)

C
4)

D
5)

D
6)

D
7)

D
8)

D
9)

B
10)

D
11)

B
12)

A
13)

D
14)

D
15)

C
16)

C
17)
C
18)

A
19)

A
20)

C
21)

A
22)

D
23)

A
24)

C
25)

B
26)

A
27)

A
28)

D
29)

B
30)

A
31)

D
32)

B
33)

B
34)

A
 35)

B
36)

D
37)

C
38)

B
39)

A
40)

C
41)

D
42)

C
43)

B
44)

A
45)

D
46)

B
47)

D
48)

B
49)

D
50)

B
51)

A
52)
C
53)

A
54)

D
55)

C
56)

B
57)

A
58)

A
59)

A
60)

D
61)

A
62)

D
63)

D
64)

C
65)

B
66)

D
67)

D
68)

C
69)

A
 70)

D
71)

D
72)

C
73)

D
74)

D
75)

A
76)

B
77)

D
78)

D
79)

B
80)