Questions from Corporate Finance

Q: What does the word translation mean? Why is translation exposure sometimes

What does the word translation mean? Why is translation exposure sometimes called accounting exposure?

Q: Explain how back-to-back loans can hedge foreign exchange

Explain how back-to-back loans can hedge foreign exchange operating exposure.

Q: What is real option analysis? How is it a better method

What is real option analysis? How is it a better method of making investment decisions than using traditional capital budgeting analysis?

Q: What is a foreign tax credit? Why do countries give credit

What is a foreign tax credit? Why do countries give credit for taxes paid on foreign-source income?

Q: a. What is a value-added tax? b

a. What is a value-added tax? b. Although the value-added tax has been proposed numerous times, the Unites States has never adopted it. Why do you think the United States is so negative on it, when t...

Q: What is a transfer price, and can a government regulate it

What is a transfer price, and can a government regulate it? What difficulties and motives does a parent multinational firm face in setting transfer prices?

Q: Subsidiary Alpha in Country Able faces a 40% income tax rate

Subsidiary Alpha in Country Able faces a 40% income tax rate. Subsidiary Beta in Country Baker faces only a 20% income tax rate. Presently each subsidiary imports from the other an amount of goods and...

Q: Section 482 of the U.S. Internal Revenue Code specifies

Section 482 of the U.S. Internal Revenue Code specifies use of a “correct” transfer price, and the burden of proof that the transfer price is “correct” lies with the company. What guidelines exist for...

Q: What are the major differences in translating assets between the current rate

What are the major differences in translating assets between the current rate method and the temporal method?

Q: Answer the following questions: a. What is meant by

Answer the following questions: a. What is meant by the term “tax haven”? b. What are the desired characteristics for a country if it expects to be used as a tax haven? c. What are the advantages lea...