Question: Briefly describe the main sources of finance

> In what positive and negative ways has the Internet changed the conduct and coordination of global business?

> Do you think global businesses should place more emphasis upon operational or tactical plans? Why?

> In what ways are corporate mission statements more than just “public relations”?

> It is anticipated that emerging-market multinationals will play a greater role in international business during this century. What mode of international business operations do you think they would choose? Why?

> 1. How does Mr. Buffett’s age affect Berkshire Hathaway’s recent strategic moves such as buying Burlington Northern Santa Fe Railroad instead of another large insurance company? 2. What does his purchase of Burlington Northern Santa Fe Railroad say about

> 1. Is ArcelorMittal a “stateless” corporation or a MNE? Where is its home country? 2. What is Mittal Steel’s core competency, and what was its strategic motive for global business?

> To partially overcome its current account deficit, the United States needs to attract FDI that could spur economic growth. What policy measures should the United States take to keep attracting FDI into the country?

> How does auditing contribute to better financial reporting?

> 1. Given the security concerns of both the EU and Russia, where should the EU’s eastern border end? Do you think the buffer states should become NATO members as well? Why or why not? 2. Should non-uniformity policies in the EU (i.e., cherry picking EU po

> It appears likely that a free trade area in much of Asia is likely by the end of 2020. What are the global implications for such a development?

> Assume that the one-year U.S. Treasury bond rate is 3% and the similar European government bond rate is 5%. Comparing these inflation rates, could it be expected that the dollar will appreciate or depreciate against the euro over the next year? If the sp

> How can the Big Mac Index be used to make PPP comparisons between countries? Using such comparisons, what can be learned about the future possible direction of exchange rates between countries?

> Briefly describe the international monetary systems implemented under the Bretton Woods, Smithsonian, and Jamaica Agreements.

> What is the difference between independent floating, managed floating, and fixed exchange rate systems? Provide an example of a direct quote of an exchange rate.

> In the BOP accounts, what are the four basic components of the current account? How can information about the financing of a country’s current account be obtained?

> NAFTA has improved Mexico-U.S. trade and investment, yet bilateral trade between the United States and China is greater than with Mexico. Why is this true?

> 1. How did Greece get into trouble with its government debt? Did joining the Eurozone help them pay rising government debts? Explain your answers. 2. Should Greece exit the euro? How would it benefit? What could go wrong? Explain your answers.

> Why are countries pushing to sign regional integration blocs?

> What are the benefits of every country using the same GAAP; that is, IFRS? Why haven’t all countries adopted IFRS?

> 1. What sources about Ecuador should you consult to obtain cultural information about this country that will need to be included in your cultural map? 2. What other aspects of Ecuadorian culture, other than its predominant religion and language, might af

> How useful is economic geography in explaining the success of regional economic integration blocs? Give examples.

> 1. Why is ethics important to doing business? 2. If all companies established a corporate ethics code, would that eliminate company financial scandals? Why or why not?

> What are some important secondary sources that companies can consult to learn about the cultures of other countries?

> What are the four characteristics of culture that global marketers must recognize?

> What types of managerial decisions in foreign countries are driven by cultural factors?

> What are some cultural factors that U.S. companies must recognize when doing business in Latin America?

> How do Gannon’s cultural metaphors differ from how Hofstede uses culture to classify countries?

> Name four elements of culture and briefly indicate why they are important when marketing products and services internationally.

> Why are internal controls important to successful company operations?

> Describe U.S. GAAP and why it differs from GAAP in other countries.

> How can ethics be taught?

> Briefly describe the financial scandals at Enron, WorldCom, Vivendi, and Parmalat; what other scandals have happened in recent years or months?

> How does corporate social responsibility contribute to successful business operations?

> Why is the ethical character of people so important to business and society?

> What do you consider the key characteristics of a person of integrity?

> Is sustainable business and economic development the answer to the globalization controversy?

> What are some steps countries can take to better enforce intellectual property rights in their jurisdictions?

> Criminal laws vary widely throughout the world. What may be a “crime” in one country, may represent permissible conduct in another locale. Why do you think there are such vast global differences in this regard?

> What are some arguments in favor of permitting at least some level of “corruption” in the conduct of business throughout the world?

> Are there any places in the world, today, where “pure”, “free market” capitalism exists? If so, what is it about these locations that permits this ideological approach to thrive?

> What is the difference between management accounting and financial accounting?

> Do you think, overall, that countries in the world are becoming more democratic, or less democratic, in nature? Why?

> 1. Why do you think the democracy of Ghana continues to permit local towns or regions to have tribal chiefs, kings, and the like? Do you think this tradition will continue into the future? 2. Would you have made the same decision as King Peggielene Barte

> While domestic institutions play an important role in the globalization process, what are some of the fundamental policy measures that those countries need to promote in order to benefit from globalization?

> Globalization can be facilitated only if national governments are willing to participate in that process. What roles can the three major international institutions play to be a part of this facilitation process?

> How can companies competitively set international prices while avoiding allegations of dumping?

> How should a business organization choose a location for its production facilities?

> Argue why some companies should pursue global production and other companies should not.

> List the factors that a firm should consider when making an outsourcing decision.

> What derivative securities can be used to hedge the effects of fluctuations in currency values on the cash flows of firms and investors?

> 1. How would you decide what defines an American car and an American car company? 2. What is the impact of global operations and supply-chain management on the “nationality” of goods and services?

> What are the primary sources of information about the creditworthiness of credit applicants?

> Describe the three steps involved in evaluating credit applicants.

> Describe the marginal costs and benefits associated with each of the following changes in a firm’s credit and collection policies: a. Increasing the credit period from 7 to 30 days b. Increasing the cash discount from 1 to 2 percent c. Offering a seas

> Discuss at least two reasons why a firm might want to offer seasonal datings to its customers.

> Define the following terms: a. Average collection period b. Bad-debt loss ratio c. Aging of accounts

> What are the major credit policy variables a firm can use to control its level of receivables investment?

> Under what conditions would a firm prefer the following? a. A “fixed-rate” term loan from a bank b. A “floating-rate” term loan, with the rate tied to the bank’s prime rate

> Define the following: a. A conditional sales contract b. A chattel mortgage

> What institutions are the primary suppliers of business term loans?

> Define the following and give an example of each: a. Affirmative covenants b. Negative covenants c. Restrictive covenants

> What are the differences between the purchase method and the pooling of interests method of accounting for mergers?

> What are the major factors that influence the effective cost of a term loan?

> Discuss the advantages and disadvantages of the following types of term loans: a. Those that require equal periodic payments b. Those that require equal periodic reductions in outstanding principal c. Balloon loans d. Bullet loans

> Under what circumstances might a firm prefer intermediate-term borrowing to either long- or short-term borrowing?

> Why do you think it is easier for firms with weak credit positions to obtain lease financing than bank loan financing?

> It has been argued that leasing is almost always more expensive than borrowing and owning. Do you think this is true? Why or why not? Under what circumstances is leasing likely to be more desirable than direct ownership?

> What effect does leasing have on the stability of a firm’s reported earnings?

> How can leasing allow a firm to effectively “depreciate” land?

> One advantage that has often been claimed of lease financing is that it creates “off balance sheet” financing. Evaluate this benefit in light of FASB Standard No. 13.

> From a tax perspective, what primary requirements in a lease transaction must be met in order for the IRS to consider the transaction a genuine lease? Why is a favorable IRS ruling regarding the tax status of a lease important to both the lessor and the

> How does a leveraged lease differ from a non-leveraged financial lease? What type of firm or organization is most likely to take advantage of the leveraged lease financing option? What type of individual or financial institution is most likely to act as

> Explain what happens to the post-merger earnings-per-share figure when a company with a relatively high P/E ratio acquires a company with a lower P/E ratio, assuming that the exchange ratio is based on current stock market prices and no synergy exists.

> What are the primary differences between operating leases and financial leases?

> What are the marginal returns and costs associated with a more liberal extension of credit to a firm’s customers?

> Nullcom Inc. has debentures (face value ¼ $1,000) outstanding that are convertible into common stock at a price of $40 per share. The debentures pay an interest rate of 9 percent per annum and have a remaining life of 10 years. Nonconvertible debentures

> Five years ago, in conjunction with a financial restructuring, Laurenberg Electric sold a $100 million issue of bonds at a coupon interest rate of 12 percent. Each bond came with 30 detachable warrants. Each warrant entitled the holder to purchase one sh

> The Wolverine Corporation has a convertible preferred stock outstanding. The par value of this preferred stock is $100, and it pays a $10 dividend. The preferred stock is callable at 103 percent of par value. It has 10 years remaining until maturity and

> The Findlay Company has debentures outstanding (par value ¼ $1,000) that are convertible into common stock at a price of $50 per share. The convertible bonds have a coupon interest rate of 9 percent and mature in 18 years. The convertible bonds are calla

> The Monroeville Company has warrants outstanding that expire in five years. Each warrant entitles the holder to purchase 0.5 shares of common stock at an exercise price of $32 per share. Determine the formula value and premium over the formula value if t

> The Oil City Company plans to sell an additional 1 million shares of common stock through a rights offering. The company currently has 12 million shares outstanding. Each shareholder will receive one right for each share currently held. Therefore, each r

> Oswego Manufacturing Company has decided to sell additional common stock through a rights offering. The company has 50 million shares outstanding and plans to sell an additional 5 million shares through the rights offering. Each shareholder will receive

> Calculate the after-tax component cost of capital, kc, for a 7.5 percent convertible debenture sold at par and due to mature in 25 years. The conversion ratio is 25, and conversion is expected to occur at the end of 10 years, when the common stock price

> What methods do financial analysts use to value merger candidates? What are the limitations of each method?

> You own 10 Bitterroot Industries Inc. 8 percent convertible debentures maturing in 2030. The conversion ratio of the debentures is 30, and the debentures are callable at $1,070 each. You bought the debentures when they were originally issued in 2000 for

> The capital structure of Whitefield Mills Inc. is as follows: Long-term debt………………………………………..……………$250 Million Common stock, $1 par………..………………..25 million Contributed capital in excess of par value…….….150 million Retained earnings………………………….……………..350

> Shaw Products Company, whose present balance sheet is summarized here, is considering issuing $100 million of 6 percent subordinated debentures (par value = $1,000), which are convertible into common stock at a price of $40. a. Show the pro forma balan

> Horizon Corporation has warrants to purchase common stock outstanding. Each warrant entitles the holder to purchase one share of the company’s common stock at an exercise price of $20 a share. Suppose the warrants expire on September 1, 2020. One year pr

> The Manchester Corporation has warrants presently outstanding, and each warrant entitles the holder to purchase one share of the company’s common stock at an exercise price of $20 a share. If the market price of the warrants is $8 and the common stock pr

> Automatic Data Processing issued $150 million of 6½ percent convertible debentures maturing in 2020. The debentures are convertible into common stock at $83.45 a share. The company’s common stock was trading at about $67 a share when the convertibles wer

> The LeMonde Corporation has debentures outstanding (par value ¼ $1,000) that are convertible into the company’s common stock at a price of $25 per share. The convertibles have a coupon interest rate of 6 percent and mature 20 years from now. In addition,

> The BWS Corporation stock is selling at $50 a share today. a. Calculate the value of a BWS put option if its exercise price is $40 and it expires today. b. What can you say about the value of a BWS put option if its exercise price is $40 and it expires

> The BWS Corporation stock is selling at $50 a share today. a. Calculate the value of a BWS call option if its exercise price is $40 and it expires today. b. What can you say about the value of a BWS call option if its exercise price is $40 and it expir

> Why would a firm use an interest rate swap as part of its financing strategy?

> What are some of the reasons why firms merge with other firms?

> What is the preemptive right of common stockholders? In what type of company is the preemptive right important? Unimportant?

> How can a company effectively force conversion of a convertible security?

> What is the relationship between conversion value, bond value, and market value for a convertible security?

> Why do companies issue convertible securities?

> In what ways are convertible securities and warrants similar? Dissimilar?