Câu 1: An argument for MNCs to have a debt-intensive (thâm dụng nợ) capital structure is:
a. they are well diversified.
b. foreign government tax rules may change over time.
c. exposure to exchange rate fluctuations.
d. exposure to fund blockage.
Câu 2: According to the text, there is evidence that the debt ratios (debt/capital) of MNCs based in:
a. the U.S. tend to be generally higher than MNCs headquartered in Japan and Germany.
b. the United Kingdom tend to be generally higher than MNCs headquartered in other non-U.S. countries.
c. the U.S. tend to be generally lower than MNCs headquartered in Japan and Germany.
d. A and B
Câu 3: According to the text, the cost of capital for an international project will:
a. always be greater than the firm's cost of capital.
b. always be less than the firm's cost of capital.
c. always be the same as the firm's cost of capital.
d. none of the above
Câu 4: Which of the following factors is not expected to generally have a favorable impact on the firm's cost of capital according to the text?
a. easy access to international capital markets.
b. high degree of international diversification.
c. volatile exchange rate fluctuations.
d. all of the above
Câu 5: The capital asset pricing theory is based on the premise that:
a. only unsystematic variability in cash flows is relevant.
b. only systematic variability in cash flows is relevant. (sự thay đổi có hệ thống của các dòng tiền)
c. both systematic and unsystematic variability in cash flows are relevant.
d. neither systematic nor unsystematic variability in cash flows is relevant.
Câu 6: According to the text, MNCs:
a. use only debt financing in foreign countries to support foreign subsidiaries.
b. use only equity financing in foreign countries to support foreign subsidiaries.
c. use only parent financing in foreign countries to support foreign subsidiaries.
d. none of the above
Câu 7: The term "global" target capital structure for an MNC represents the MNC's capital structure: khi hợp nhất các công ty con
a. in the U.S.
b. relative to competitors across all countries.
c. where it has its largest subsidiary.
d. when consolidating all of its subsidiaries.
Câu 8: According to the text, an MNC's "global" target capital structure is:
a. always debt-intensive.
b. always equity-intensive.
c. sometimes different from an MNC's "local" capital structures (at subsidiaries).
d. none of the above
Câu 9: One argument for why subsidiaries should be wholly-owned by the parent is that the potential conflict of interests between the MNC's ____ is avoided.
a. managers and shareholders
b. majority shareholders and minority shareholders c. existing creditors
d. managers and creditors
Câu 10: One argument for why subsidiaries should be only partly-owned by the parent is:
a. that the potential conflict of interests between the MNC's managers and shareholders is avoided.
b. that the potential conflict of interests between the MNC's majority shareholders and minority shareholders is avoided.
c. that the potential conflict of interests between the MNC's existing creditors is avoided.
d. to motivate subsidiary managers by allowing them partial ownership.
Câu 11: Other things being equal, countries with relatively ____ populations and ____
inflation are more likely to have a low cost of capital. dân số già , lạm phát thấp vốn thấp
a. young; high b. old; high c. old; low d. young; low
Câu 12: Other things being equal, the financial leverage of MNCs will be higher if the governments of their home countries are ____ likely to rescue them (in the event of failure), and if their home countries are ____ likely to experience a recession. đòn bẩy tài chính cao khả năng cứu vớt cao ít suy thoái
a. more; more b. less; more c. less; less d. more; less
Câu 13: Based on the factors that influence a country's cost of capital, the cost of capital in less developed countries is likely to be ____ than that of the U.S. and ____ than that of Japan. nước kém phát triển khả năng sử dụng vốn cáo hơn Mỹ và Nhật Bản (các nước phát triển)
a. higher; higher b. higher; lower c. lower; lower d. lower; higher
Câu 14: According to the text, the cost of debt: thay đổi theo thời gian và không tương quan
a. for each country is somewhat stable over time.
b. among countries changes over time, and these changes are negatively correlated.
c. among countries changes over time, and these changes are positively correlated.
d. among countries changes over time, and are not correlated.
Câu 15: The term "local target capital structure" is used in the text to represent the:
a. average capital structure of local firms where the MNC's subsidiary is based.
b. average capital structure of local firms where the MNC's parent is based.
c. desired capital structure of a subsidiary of a particular MNC.
d. desired capital structure of a particular MNC overall (including all subsidiaries).
Câu 16: The term "global capital structure" is used in the text to represent the:
“global” là all subsidiaries
a. average capital structure of all MNCs across countries.
b. average capital structure of all domestic firms across countries.
c. capital structure of a subsidiary of a particular MNC.
d. capital structure of a particular MNC overall (including all subsidiaries).
Câu 17: Assume that the risk-free interest rate in the U.S. is the same as that in Country M. Assume that the government of Country M is more likely to rescue local firms thatc.
Other things being equal, Country M's firms are likely to use a ____ degree of financial leverage than U.S. firms. If a firm based in Country M had the same degree of financial leverage and the same operating characteristics as a U.S. firm, its cost of capital would be ____ than that of the U.S. firm.
a. higher; higher b. higher; lower c. lower; lower d. lower; higher
Câu 18: When an MNC's firm's cost of capital rises, it would be ____ likely to divest an existing project, other things held constant. cost of capital tăng more divest existing project
a. more b. less
c. neither; there is no effect
d. neither; MNCs do not ever divest projects
Câu 19: Which of the following is not a factor that favorably affects an MNC's cost of capital, according to your text? favourably tỷ giá hối đoái
a. exchange rate risk.
b. size.
c. access to international capital markets.
d. international diversification.
Câu 20: According to your text, which of the following is not a factor that affects an MNC's cost of capital unfavorably? unfavourably size
a. exchange rate risk.
b. country risk.
c. an increase in the risk-free interest rate.
d. size.
Câu 21: The ____ an MNC, the ____ its cost of capital is likely to be. MNC càng lớn
cost of capital càng thấp a. larger; higher
b. larger; lower c. smaller; lower d. A and C
Câu 22: Zoro Corporation has a beta of 2.0. The risk-free rate of interest is 5%, and the return on the stock market overall is expected to be 13%. What is the required rate of return on Zoro stock?
a. 21%.
b. 41%.
c. 16%.
d. 13%.
e. none of the above
Câu 23: Which of the following is not a reason provided in the text regarding why the cost of debt can vary across countries?
a. differences in the risk-free rate.
b. a high price-earnings multiple.
c. differences in the risk premium.
d. differences in demographics.
Câu 24: In general, MNCs probably prefer to use ____ foreign debt when their foreign subsidiaries are subject to ____ local interest rates. lãi thấp muốn sử dụng nhiều
a. more; low b. more; high c. less; low d. B and C
Câu 25: In general, MNCs probably prefer to use ____ foreign debt when their foreign subsidiaries are subject to potentially ____ local currencies. ( nội tệ suy yếu muốn sự dụng nợ nhiều)
a. more; strong b. more; weak c. less; strong d. less; weak e. B and D
Câu 26: A firm's cost of ____ reflects an opportunity cost: what the existing shareholders could have earned if they had received the earnings as dividends and invested the funds themselves.
a. debt
b. retained earnings c. new common equity d. none of the above
Câu 27: The ____ the cost of capital, the ____ will be a project's net present value for a project with a given set of expected cash flows. ( cost of capital thấp NPV cao)
a. lower; higher b. higher; higher c. lower; lower d. none of the above
Câu 28: To the extent that individual economies are ____ each other, net cash flows from a portfolio of subsidiaries should exhibit ____ variability, which may reduce the probability of bankruptcy.
a. dependent on; less b. dependent on; more c. independent of; less d. independent of; more
Câu 29: In general, a firm ____ exposed to exchange rate fluctuations will usually have a ____ distribution of possible cash flows in future periods. ( exchange rate nhiều cash flow nhiều)
a. more; narrower b. less; wider
c. more; wider d. none of the above
Câu 30: According to the CAPM, the required rate of return on stock is a positive function of all of the following, except:
a. the risk-free rate of interest.
b. the market rate of return.
c. the stock's beta.
d. the company's earnings.
Câu 31: The lower a project's beta, the ____ is the project's ____ risk. Beta thấp rủi ro thấp
a. lower; systematic b. lower; unsystematic c. higher; systematic d. higher; unsystematic
Câu 32: Capital asset pricing theory suggests that ____ risk of projects can be ignored and that ____ is relevant.
a. unsystematic; unsystematic b. unsystematic; systematic c. systematic; unsystematic d. systematic; systematic
Câu 33: Capital asset pricing theory would most likely suggest that the cost of capital is generally ____ for ____.
a. higher; MNCs
b. lower; domestic firms c. lower; MNCs
d. none of the above
Câu 34: Assume the following information for Pexi Co., a U.S.-based MNC that is considering obtaining funding for a project in Germany: U.S. risk-free rate = 4%
German risk-free rate = 5% Risk premium on dollar-denominated debt provided by U.S.
creditors = 3% Risk premium on euro-denominated debt provided by German creditors = 4% Beta of project = 1.2 Expected U.S. market return = 10% U.S. corporate tax rate = 30% German corporate tax rate = 40%
Câu 35: Refer to question 34. What is Pexi's cost of dollar-denominated debt?
a. 7.0%.
b. 8.0%.
c. 6.3%.
d. 4.9%.
Câu 36: Refer to question 35. What is Pexi's cost of dollar-denominated equity?
a. 12.0%.
b. 11.2%.
c. 10.0%.
d. 7.2%.
Câu 37: When an MNC is considering financing a portion of a foreign project within the foreign country, the best method to account for a foreign project's risk is to:
a. derive net present values based on the WACC.
b. adjust the weighted average cost of capital for the risk differential.
c. derive the net present value of the equity investment.
d. none of the above
Câu 38: In general, the ____ the cost of capital, the ____ the NPV of a project that is evaluated with this cost of capital. ( cost of capital cao đánh giá thấp)
a. higher; higher b. lower; lower c. higher; lower d. A and B
Câu 39: The capital asset pricing model suggests that the required return on a firm's stock is a positive function of:
a. the risk-free rate of interest.
b. the market rate of return.
c. the stock's beta.
d. all of the above
Câu 40: The capital asset pricing model suggests that the required return on a firm's stock is a negative function of:
a. the risk-free rate of interest.
b. the market rate of return.
c. the stock's beta.
d. none of the above
Câu 41: The cost of capital can vary among countries because:
a. MNCs based in some countries do not have a competitive advantage over others.
b. MNCs may be able to adjust their international operations and sources of funds to capitalize on differences in the cost of capital among countries.
c. of country differences in tax laws or monetary supply. (luật thuế và cung ứng tiền tệ)
d. none of the above.
Câu 42: Werner Corporation has a target capital structure that consists of 40% debt and 60% equity. Werner can borrow at an interest rate of 10%. Also, Werner has
determined its cost of equity to be 14%. Werner's tax rate is 40%. What is Werner's weighted average cost of capital?
a. 10.80%
b. 12.40%
c. 9.20%
d. None of the above
Câu 43: The U.S. risk-free rate is currently 3%. The expected U.S. market return is 10%. Solso, Inc. is considering a project that has a beta of 1.2. What is the cost of dollar- denominated equity?
a. 8.4%
b. 11.4%
c. 10%
d. None of the above
Câu 44: Which of the following is least likely to influence an MNC's capital structure?
a. The stability of MNC's cash flows b. The MNC's credit risk
c. The MNC's access to earnings
d. The MNC's decision to invest excess cash in a Treasury bill rather than in a bank
e. None of the above
Câu 45: Which of the following is not a host country characteristic than can affect an MNC's capital structure decision?
a. The strength of host country currencies b. The country risk in host countries
c. Political decisions to increase penalties for criminals d. Tax laws in host countries
Câu 46: If the parent ____ the debt of the subsidiary, the subsidiary's borrowing capacity might be ____.
a. does not back; increased b. backs; decreased
c. does not back; decreased d. backs; increased
e. C and D
Câu 47: In general, MNCs probably do not prefer to use ____ foreign debt when their foreign subsidiaries are subject to ____ local interest rates ( không thích sử dụng nhiều nợ khi lãi suất cao )
a. B and C b. more; high c. less; low d. more; low
Câu 49: Which of the following has unwanted effects on an MNC's cost of capital, according to your textbook?
a. size.
b. international diversification.
c. access to international capital markets.
d. exchange rate fluctuation.
Câu 50: According to your text, which of the following is a factor that affects an MNC's cost of capital unfavorably?
a. country risk.
b. All of above is correct.
c. an increase in the risk-free interest rate.
d. exchange rate risk.
Câu 51: Pepsi Co., a U.S.-based MNC that is considering obtaining funding for a project in Australia. U.S. government bonds yields 4%, Australian risk-free rate = 5%. Risk premium on dollar-denominated debt provided by U.S. creditors = 3%, Risk premium on Australian dollars-denominated debt provided by Australian creditors = 4%, Beta of project = 1.2. The return of S&P500 is 10%. U.S. corporate tax rate = 30%. Australian corporate tax rate = 40%. What is Pepsi's cost of dollar-denominated debt in percentage? (write down the number only, round up to 1 decimal number)
Rf = 5%
Rd= 4%
Beta = 1.2
*US
Premium = 3%
Tax = 30%
*Australia Premium = 4%
Tax = 40%
Cost of debt = (4%+5%)*(1-30%) =
Câu 52: Capital asset pricing theory would most likely suggest that the cost of capital is generally ____ for ____?
a. higher; MNCs
b. higher; domestic firms
c. lower; domestic firms d. none of the above
Câu 53: Other things being equal, the financial leverage of MNCs will be lower if the governments of their home countries are ____ likely to rescue them (in the event of failure), and if their home countries are ____ likely to experience a recession
a. more; less b. less; more c. more; more d. less; less
Câu 55: Which of the following is a reason for MNCs to borrow debts heavily a. foreign government tax rules may change over time.
b. exposure to fund blockage.
c. they are well diversified.
d. exposure to exchange rate fluctuations.
Câu 57: When an MNC's firm's cost of capital reduced, it would be ____ likely to divest an existing project, other things held constant
a. more
b. neither; there is no effect
c. neither; MNCs do not ever divest projects d. less
Câu 58: According to the textbook, the cost of capital for an international project will a. always be less than the firm's cost of capital.
b. none of the above
c. always be greater than the firm's cost of capital.
d. always be the same as the firm's cost of capital.
Câu 59: The U.S. treasury bonds yields currently 3%. The expected return of S&P 500 index is 10%. Disney, Inc. is considering a project that has a beta of 1.2. What is the cost of dollar-denominated equity in percentage? (Write down the number only, round up to 1 decimal number)
Re = Rf + B*(Rm - Rf) = 3% + 1.2*(10% - 3%) = 11.4%
Câu 60: In general, MNCs probably do not prefer to use ____ foreign debt when their foreign subsidiaries are subject to potentially ____ local currencies?
a. less; weak b. more; strong c. less; strong d. more; weak
Câu 61: CAPM does not need which of the following assumptions a. only residual risk is relevant.
b. only unsystematic variability in cash flows is relevant.
c. none of above is correct
d. both systematic and unsystematic variability in cash flows are relevant.
Câu 62: The U.S. treasury bonds yields currently 5%. The expected return of S&P 500 index is 13%. Marvel, Inc. is considering a project that has a beta of 2. What is the required rate of return on Marvel stock in percentage? (Write down the number only, round up to 0 decimal number)
Re = Rf + B*(Rm - Rf) = 5% + 2*(13% - 5%) = 21%
Câu 63: According to the CAPM model, the required rate of return on stock does not have a relationship with
a. the market rate of return.
b. the stock's beta.
c. None of above is correct d. the risk-free rate of interest.
Câu 64: One argument for why subsidiaries should be wholly-owned by the parent is that the potential conflict of interests between the MNC's ____ is avoided
a. managers and creditors b. managers and shareholders
c. none of above is correct ( majority shareholders and minority shareholders)
d. existing creditors
Câu 66: The term "global" target capital structure for an MNC does not represent the MNC's capital structure
a. in the U.S.
b. where it has its largest subsidiary.
c. relative to competitors across all countries.
d. none of above is correct
→ Nếu là “present” thì chọn when consolidating all of its subsidiaries
Câu 67: Other things being equal, countries with relatively ____ populations and ____
inflation are more likely to have a high cost of capital?
a. old; high b. old; low c. young; low d. young; high
Câu 68: Vingroup has a target capital structure that consists of 40% debt and 60%
equity. it can borrow a loan from BIDV at an interest rate of 10%. Also, Vingroup has determined its cost of equity to be 14%. Currently, the corporate tax rate in Vietnam is 40%. What is its weighted average cost of capital in percentage? (Write down the number only, round up to 1 decimal number)
WACC = (1-Tc)*Rd*Wd + Re*We
= (1-40%)*10%*40% + 14%*60%
= 10.8%
Câu 69: In general, a firm ____ exposed to exchange rate fluctuations will usually havea ____ distribution of possible cash flows in future periods
a. more; wider b. less; wider c. more; narrower d. none of the above
Câu 70: The ____ an MNC, the ____ its cost of capital is less likely to be a. smaller; lower
b. larger; higher c. larger; lower d. smaller, higher
Câu 71: The higher a project's beta, the ____ is the project's ____ risk?
a. lower; systematic b. lower; unsystematic c. higher; unsystematic d. higher; systematic
Câu 72: One argument for why subsidiaries should not be only partly-owned by the parent is
a. that the potential conflict of interests between the MNC's majority shareholders and minority shareholders is avoided.
b. none of above is correct
c. that the potential conflict of interests between the MNC's existing creditors is avoided.
d. that the potential conflict of interests between the MNC's managers and shareholders is avoided.
Câu 73: CAMP theory suggests that ____ risk of projects can be ignored and that ____ is relevant
a. systematic; unsystematic b. systematic; systematic c. unsystematic; unsystematic d. unsystematic; systematic
Câu 75: Which of the following factors is expected to generally have an unfavorable impact on the firm's cost of capital
a. easy access to international capital markets.
b. guarantee of debt
c. high degree of international diversification.
d. volatile exchange rate fluctuation
Câu 76: The cost of capital in Vietnam countries is likely to be ____ than that of the UK.
and ____ than that of Canada a. lower; higher
b. higher; lower c. lower; lower d. higher; higher
Câu 77: Assume that the risk-free interest rate in the U.S. is the same as that in China.
Assume that the government of China is less likely to rescue local firms that experience financial problems. Other things being equal, China's firms are likely to use a ____
degree of financial leverage than U.S. firms. If a firm based in China had the same degree of financial leverage and the same operating characteristics as a U.S. firm, its cost of capital would be ____ than that of the U.S. firm
a. lower; higher b. higher; higher c. lower; lower d. higher; lower