Question 1

Tax-haven subsidiaries categorically referred to as International Offshore Financial Centers have all of the following characteristics EXCEPT ________.

Accepted Answer

A)  a low tax on foreign investment or sales income earned by resident corporations and a low dividend withholding tax on dividends paid to the parent firm.
B)  a stable currency to permit easy conversion of funds into and out of the local currency. This requirement can be met by permitting and facilitating the use of Eurocurrencies.
C)  a stable government that encourages the establishment of foreign-owned financial and service facilities within its borders.
D)  All of these answer choices are characteristics of tax-haven subsidiaries.E) None of the above
F) All of the above

Question 2

Taxation is an important cash flow issue, but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary)or the location of an investment.

Accepted Answer

A) True 
 B)False

Question 3

The market for shares sold outside the boundaries of the issuing company's home country is the ________.

Accepted Answer

A)  Eurocurrency market
B)  international bond market
C)  international equity market
D)  Euroequity marketE) All of the above
F) B) and C)

Question 4

A bond that is issued by Nestle, a Swiss company, which is denominated in yen and sold to residents of Japan is most likely a ________.

Accepted Answer

A)  Eurobond
B)  global bond
C)  foreign bond
D)  country fundE) B) and C)
F) A) and B)

Question 5

What is a transfer price? Why are transfer prices used?

Accepted Answer

A major tax challenge, as well as impedi...

Question 6

Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.

Accepted Answer

A) True 
 B)False

Question 7

A bond issued by a Brazilian company in British pounds in London is a ________.

Accepted Answer

A)  Eurobond
B)  global bond
C)  local bond
D)  foreign bondE) A) and B)
F) None of the above

Question 8

You are the chief financial officer at an MNE.What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?

Accepted Answer

One of the most important people on the ...

Question 9

Low-cost Eurocurrency loans can be obtained in offshore financial centers.

Accepted Answer

A) True 
 B)False

Question 10

The Eurocurrency market is limited to exchanges that include the euro.

Accepted Answer

A) True 
 B)False

Question 11

________ is the price between two companies that most accurately reflects the market price.

Accepted Answer

A)  Economy price
B)  Promotional price
C)  Arm's length price
D)  Average costE) A) and C)
F) A) and B)

Question 12

What term refers to a currency on deposit outside its country of issue?

Accepted Answer

A)  Eurocurrency
B)  Eurodollar
C)  Euroyen
D)  EuropoundE) C) and D)
F) B) and C)

Question 13

When using equity financing, firms run the risk of ________.

Accepted Answer

A)  losing a controlling interest to shareholders
B)  acquiring capital through the sale of shares
C)  incurring an unmanageable amount of debt
D)  falling victim to currency exchange ratesE) All of the above
F) B) and C)

Question 14

Equity financing is the degree to which a firm funds the growth of a business by debt.

Accepted Answer

A) True 
 B)False

Question 15

The OECD is concerned about transfer pricing practices because ________.

Accepted Answer

A)  transfer pricing can help maximize a company's worldwide tax liability
B)  transfer prices tend to be higher in industrial than developing countries
C)  governments use transfer prices to manipulate companies' investment strategies
D)  companies use transfer prices to manipulate prices and, therefore, taxesE) B) and D)
F) A) and B)

Question 16

A major problem with MNEs using offshore financial centers is that they may give unfair tax advantages to companies.

Accepted Answer

A) True 
 B)False

Question 17

A tax credit is a credit on goods and services paid by one member of a corporate family to another.

Accepted Answer

A) True 
 B)False

Question 18

The typical tax-haven subsidiary owns the common stock of its related operating foreign subsidiaries.

Accepted Answer

A) True 
 B)False

Question 19

The long-term financing dimension of financial management deals with the selection, issuance, and management of long-term debt and equity.

Accepted Answer

A) True 
 B)False

Question 20

A(n) ________ is a large, liquid financial asset that can be traded anywhere at any time.

Accepted Answer

A)  international stock
B)  global bond
C)  global equity
D)  EurodollarE) B) and D)
F) A) and B)

Exam 11: Global Capital Markets

You are the chief financial officer at an MNE.What are your main responsibilities in this position? What taxation issues have a significant effect on the decisions you make?

Correct AnswerverifiedOne of the most important people on the ...View AnswerShow Answer

The OECD is concerned about transfer pricing practices because ________.

Correct AnswerverifiedShow Answer

The long-term financing dimension of financial management deals with the selection, issuance, and management of long-term debt and equity.

Correct AnswerverifiedShow Answer

The market for shares sold outside the boundaries of the issuing company's home country is the ________.

Correct AnswerverifiedShow Answer

A tax credit is a credit on goods and services paid by one member of a corporate family to another.

Correct AnswerverifiedShow Answer

What is a transfer price? Why are transfer prices used?

Correct AnswerverifiedA major tax challenge, as well as impedi...View AnswerShow Answer

When using equity financing, firms run the risk of ________.

Correct AnswerverifiedShow Answer

Acquiring and allocating financial resources among the company's activities and projects is the responsibility of the financial marketing manager.

Correct AnswerverifiedShow Answer

A(n) ________ is a large, liquid financial asset that can be traded anywhere at any time.

Correct AnswerverifiedShow Answer

Tax-haven subsidiaries categorically referred to as International Offshore Financial Centers have all of the following characteristics EXCEPT ________.

Correct AnswerverifiedShow Answer

A bond issued by a Brazilian company in British pounds in London is a ________.

Correct AnswerverifiedShow Answer

The typical tax-haven subsidiary owns the common stock of its related operating foreign subsidiaries.

Correct AnswerverifiedShow Answer

The Eurocurrency market is limited to exchanges that include the euro.

Correct AnswerverifiedShow Answer

Low-cost Eurocurrency loans can be obtained in offshore financial centers.

Correct AnswerverifiedShow Answer

Taxation is an important cash flow issue, but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary)or the location of an investment.

Correct AnswerverifiedShow Answer

What term refers to a currency on deposit outside its country of issue?

Correct AnswerverifiedShow Answer

________ is the price between two companies that most accurately reflects the market price.

Correct AnswerverifiedShow Answer

A bond that is issued by Nestle, a Swiss company, which is denominated in yen and sold to residents of Japan is most likely a ________.

Correct AnswerverifiedShow Answer

A major problem with MNEs using offshore financial centers is that they may give unfair tax advantages to companies.

Correct AnswerverifiedShow Answer

Equity financing is the degree to which a firm funds the growth of a business by debt.

Correct AnswerverifiedShow Answer

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One of the most important people on the ...
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A major tax challenge, as well as impedi...
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