Questions from Managerial Finance

Q: Define spot exchange rate and forward exchange rate. Define and compare

Define spot exchange rate and forward exchange rate. Define and compare accounting exposures and economic exposures to exchange rate fluctuations.

Q: Explain how differing inflation rates between two countries affect their exchange rate

Explain how differing inflation rates between two countries affect their exchange rate over the long term.

Q: Recently, some branches of Donut Shop, Inc., have dropped

Recently, some branches of Donut Shop, Inc., have dropped the practice of allowing employees to accept tips. Customers who once said, “Keep the change,” now have to get used to waiting for their nicke...

Q: Discuss macro and micro political risk. What is the emerging third

Discuss macro and micro political risk. What is the emerging third path to political risk? Describe some techniques for dealing with political risk.

Q: Indicate how NPV can differ depending on whether it is measured from

Indicate how NPV can differ depending on whether it is measured from the parent MNC’s point of view or from that of the foreign subsidiary, when cash flows may be blocked by local authorities.

Q: Briefly discuss some of the international factors that cause the capital structures

Briefly discuss some of the international factors that cause the capital structures of MNCs to differ from those of purely domestic firms.

Q: Describe the difference between foreign bonds and Eurobonds. Explain how each

Describe the difference between foreign bonds and Eurobonds. Explain how each is sold, and discuss the determinant(s) of their interest rates.

Q: What are the long-run advantages of having more local debt

What are the long-run advantages of having more local debt and less MNC-based equity in the capital structure of a foreign subsidiary?

Q: What is the Eurocurrency market? What are the main factors determining

What is the Eurocurrency market? What are the main factors determining foreign exchange rates in that market? Differentiate between the nominal interest rate and the effective interest rate in this ma...

Q: Discuss the steps to be followed in adjusting a subsidiary’s accounts relative

Discuss the steps to be followed in adjusting a subsidiary’s accounts relative to third parties when that subsidiary’s local currency is expected to appreciate in value in relation to the currency of...