Give five reasons why a firm might cross-list and sell its shares on a very liquid stock exchange.
> Explain how the check-the-box regulatory change altered the effectiveness of Subpart F income regulations.
> Key to understanding most theories is what they say and what they don’t. Name four or five key limitations to the theory of comparative advantage.
> For what reason might an exporter use standard international trade documentation (letter of credit, draft, order bill of lading) on an intrafirm export to its parent or sister subsidiary?
> Define cross-crediting and explain why it may or may not be consistent with a worldwide tax regime.
> What is Section 482 of the U.S. Internal Revenue Code and what guidelines does it recommend when setting transfer prices?
> What is the income tax effect, and how may a multinational firm alter transfer prices as a result of the income tax effect?
> What is fund positioning?
> 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?
> What is a controlled foreign corporation and what is its significance in global tax management?
> What is earnings stripping, and what are some examples of how multinational firms pursue it?
> What is a foreign tax credit? Why do countries give credit for taxes paid on foreign source income?
> Distinguish between the three levels of commitment for ADRs traded in the United States.
> Define and explain the theory of comparative advantage.
> Why should a foreign project be evaluated both from a project and parent viewpoint?
> Various governments have established agencies to insure against nonpayment for exports and/or to provide export credit. This shifts credit risk away from private banks and to the citizen taxpayers of the country whose government created and backs the age
> Why might different documentation be used for an export to a nonaffiliated foreign buyer who is a new customer, as compared with an export to a nonaffiliated foreign buyer to whom the exporter has been selling for many years?
> What is usually included within a tax treaty?
> What is a withholding tax and why do governments impose them?
> What is a value-added tax, and how does it differ from an income tax?
> What is meant by tax deferral in the U.S. system of taxation? What is the deferral privilege?
> What is the difference between a direct tax and an indirect tax?
> What is the difference between the worldwide and territorial approaches to taxation?
> What is tax neutrality? What is the difference between domestic neutrality and foreign neutrality?
> What is meant by the term ‘tax morality’? If for example, your company has a subsidiary in Russia where some believe tax evasion is a fine art, should you comply with Russian tax laws or violate the laws as do your local competitors?
> Why have eurocurrencies and LIBOR remained the centerpiece of the global financial marketplace for so long?
> What do the terms active and passive mean in the context of U.S. taxation of foreign source income?
> What is the primary objective of multinational tax planning?
> What is the difference between a GDR, ADR, and GRS? How are these differences significant?
> What is a depositary receipt? What are equity shares listed and issued in foreign equity markets in this form?
> What is a directed public issue? What is the purpose of this kind of an international equity issuance?
> What are the alternative structures available for raising equity capital on the global market?
> What are the three key elements related to raising equity capital in the global marketplace?
> How does borrowing in a foreign currency change the risk associated with debt?
> How does the multinational’s ability to diversify its cash flows alter its ability to use greater amounts of debt?
> How do the motivations of individuals, both inside and outside the organization or business, define the limits of financial globalization?
> What technological change is even changing the symbols we use in the representation of different country currencies?
> What are the primary alternatives for the external financing of a foreign subsidiary?
> What is the difference between "internal" financing and "external" financing for a subsidiary?
> Should foreign subsidiaries of multinational firms conform to the capital structure norms of the host country or to the norms of their parent's country?
> What are the primary methods of funding foreign subsidiaries, and how do host government concerns affect those choices?
> What is the difference between a eurobond and a foreign bond and why do two types of international bonds exist?
> If the cost of debt is less than the cost of equity, why doesn’t the firm’s cost of capital continue to decrease with the use of more and more debt?
> What are the primary alternative instruments available for raising debt on the international marketplace?
> What is the advantage of securitized debt instruments sold on a market versus bank borrowing for multinational corporations?
> What is private equity and how do private equity funds differ from traditional venture capital firms?
> What is a private placement? What are the comparative pros and cons of private placement versus a pubic issue?
> Explain the strategies used by an MNE to counter blocked funds.
> What are the main barriers to cross-listing abroad?
> What are the main reasons causing firms to cross-list abroad?
> What is the significance of IPOs versus FOs?
> ADRs and GDRs can be sponsored or unsponsored. What does it mean and will it matter to the investors purchasing the shares?
> Why does the strategic path to sourcing equity start with debt?
> Portfolio asset allocation can be accomplished along many dimensions depending on the investment objective of the portfolio manager. Identify the various dimensions.
> What are the fundamental distinctions which the international CAPM tries to capture which traditional domestic CAPM does not?
> What is the main advantage that international portfolio managers have compared to portfolio managers limited to domestic-only asset allocation?
> Both domestic and international portfolio managers are asset allocators. What is their portfolio management objective?
> What are some of the characteristics of a well-designed dispute resolution process?
> What is an equity risk premium? For an equity risk premium to be truly useful, what need it do?
> What are the classifications used in defining risk in the estimation of a firm’s cost of equity?
> What are the benefits of achieving a lower cost and greater availability of capital?
> How does capital mobility typically differ between industrialized countries and emerging market countries?
> Which do most countries control, capital inflows or capital outflows? Why?
> What factors seem to play a role in a government's choice to restrict capital mobility?
> Has capital mobility improved steadily over the past 50 years?
> Ultimately, what actions did Novo take to escape its segmented market?
> Global integration has given many firms access to new and cheaper sources of funds beyond those available in their home markets. What are the dimensions of a strategy to capture this lower cost and greater availability of capital?
> What were the impacts on Novo as a result of operating in a segmented market? What were the primary causes of the market segmentation?
> What are the primary pros and cons of using a gradual investing strategy to mitigate political risk?
> Why might emerging market multinationals list their shares abroad?
> What is the paradox?
> Do multinational firms have higher lower betas than their domestic counterparts?
> Do multinational firms use relatively more or less debt than their domestic counterparts? Why?
> Do multinational firms have a higher or lower cost of capital than their domestic counterparts? Is this surprising?
> Firms located in illiquid and segmented emerging markets would benefit from nationalizing their own cost of capital. What do they need to do, and what conditions must exist for their efforts to succeed?
> What is the effect of market liquidity and segmentation on a firm's cost of capital?
> What is market segmentation, and what are the six main causes of market segmentation?
> What is meant by the term market liquidity? What are the main disadvantages for a firm to be located in an illiquid market?
> What are the most common challenges a firm resident in a segmented market faces in regards to its access to capital?
> Answer the following questions about OPIC: a. What is OPIC? b. What types of political risks can OPIC insure against?
> The key to managing operating exposure at the strategic level is for management to recognize a disequilibrium in parity conditions when it occurs and to be pre-positioned to react most appropriately. How can this task best be accomplished?
> The objective of both operating and transaction exposure management is to anticipate and influence the effect of unexpected changes in exchange rates on a firm's future cash flows. What strategic alternative policies exist to enable management to manage
> Explain how the concept of macroeconomic uncertainty expands the scope of analyzing operating exposure.
> According to financial theory, which is more important to the value of the firm, financing or operating cash flows?
> What are examples of static exposures versus dynamic exposures?
> Explain the time horizons used to analyze and measure unexpected changes in exchange rates.
> Why do unexpected exchange rate changes contribute to operating exposure, but expected exchange rate changes do not?
> Why do many firms only allow hedging of booked exposures, and not quotation or backlog exposures?
> What do you see as the primary difference between operating exposure and translation exposure? Would this have the same meaning to a private firm as a publicly traded firm?
> According to surveys of corporate practices, which currency exposures do most firms regularly hedge?
> What is investment insurance, and what organizations provide such coverage?
> What are the main differences between losses from transaction exposure and translation exposure?
> What is hyperinflation and what are the consequences for translating foreign financial statements in countries experiencing hyperinflation?
> How do some firms attempt to hedge their long-term operation exposure with contractual hedges? What assumptions do they make in order to justify contractual hedging of their operating exposure? How effective is such contractual hedging in your opinion?
> Explain how currency swaps can hedge foreign exchange operating exposure. What are the accounting advantages of currency swaps?
> Explain how back-to-back loans can hedge foreign exchange operating exposure. Would firms have any specific worries about their partner in a back-to-back loan arrangement?
> An alternative arrangement for managing operating exposure between firms with a continuing buyer-supplier relationship is risk sharing. Explain how risk sharing works.
> Explain how matching currency cash flows can offset operating exposure.
> Operating exposures can be partially managed by adopting operating or financing policies that offset anticipated foreign exchange exposures. What are four of the most commonly employed proactive policies?
> How can a multinational firm diversify operations? How can it diversify its financing? Do you believe these are effective ways of managing operating exposure?
> Define operating exposure, economic exposure, and competitive exposure. Can you provide any insights into what may be behind the use of the different terms?
