Exam (elaborations)

IB 449 Exam 1 || with 100% Errorless Solutions.

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Course
IB 449

Institution
IB 449

Foreign Exchange correct answers Cash flows occur in markets with different currencies National Capital Markets correct answers Euromarke trading e.g. issuing bonds in $'s to investors in Japan Market Segmentation correct answers Risk may be priced deferentially across countries due to market...

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Uploaded on August 16, 2024
Number of pages 5
Written in 2024/2025
Type Exam (elaborations)
Contains Questions & answers

foreign exchange

Institution IB 449
Course IB 449

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IB 449 Exam 1 || with 100% Errorless Solutions.
Foreign Exchange correct answers Cash flows occur in markets with different currencies

National Capital Markets correct answers Euromarke trading e.g. issuing bonds in $'s to
investors in Japan

Market Segmentation correct answers Risk may be priced deferentially across countries due to
market imperfections such as government regulations, transaction costs, and asymmetric
information

Other Risks correct answers Cultural, political, exchange rate

Taxes correct answers Corporations and individual investors
Repatriation of cash flows
Transfer pricing

Accounting Requirements correct answers U.S accounting Standards

Multinational Corporation correct answers is a firm involved in producing and selling goods and
services in more than one country

Potential Reasons for a firm to become internationally diversified correct answers Raw materials
Market Share
Cost Minimization
Investor Diversification
Operating synergies
Taxes

International Monetary Fund (IMF) correct answers - Established at the Bretton Woods
COnference
- Promotes international monetary stability
- oversees exchange-rate policies in member countries
- advises developing countries about how to turn their economies around

World Bank correct answers - promotes economic development by providing loans
- usually focus on large infrastructure projects
- International Development Association extends low interest loans to poor nations

International Finance Corporation (IFC) correct answers - Finance various projects in the private
sector through loans and equity participation
- serves as a catalyst

Bank for International Settlements correct answers - Acts as the central banks for industrial
countries' central bank
- Helps banks manage and invest their foreign exchange reserves

, World Trade Organization correct answers Provides a forum for multilateral trade negotiations
and to settle trade disputes

Export-Import Bank (Eximbank) correct answers - US government agency to promote
international trade
- Finances, guarantees, and insures the export of American goods and services

Agency Costs correct answers costs that are incurred to ensure that managers act in the best
interest of shareholders

Corporate Governance:
Market Sourced correct answers (US,UK,Canada,Australia)
- efficient equity markets; ownership dispersion

Corporate Governance:
Family sourced correct answers (HK, Indonesia, Malaysia, Singapore)
- management and ownership interlinked; family ownership

Corporate Governance:
Bank sourced correct answers (Korea, Germany)
- government authority in bank lending; lack of disclosure; family control

Corporate Governance:
Government Involvement correct answers (China, Russia)
- state ownership; lack of disclosure; concentrated ownership

Law and Corporate Governance correct answers - Ownership structure varies from country to
country
Pyramid - one controlling shareholder owns a company that may or may not be publicly traded

Recommendations by the Cadbury Committee correct answers - Boards of public firms should
include at least 3 independent directors
- CEO and Chairsperson held by two different people
- Board should meet regularly

Corporate Gov. Breakdowns Examples correct answers Samsung (illegal activity), VW
(employee rep recieves 2 mil in "special bonus)
One Tel (compensations)
Royal Ahold (1.2 B in fraud)

Valuation is measured by? correct answers Tobin's Q
stock market returns

Tobin's Q correct answers Market value of equity + the book value of assets - book value of
equity / book value of assets

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Exam (elaborations)

IB 449 Exam 1 || with 100% Errorless Solutions.

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