Task: Answer the below questions with at least five sentences each, thoroughly and in your own words.
Q1. What impact does the globalization of capital markets have on a manager's estimate of an appropriate cost of capital used to estimate the value of a subsidiary headquartered in a foreign country?
Q2. What are the characteristics of a cyclical company? How does the valuation of a cyclical company differ from the valuation of a noncyclical company? Compare and contrast the differences of evaluating firms in the electric generation industry compared to firms in the automotive manufacturing industry.
Q3. How does increasing competition impact business fluctuations, and how does it impact a firm's price power?
Q4. As the import of the business cycle declines, how should this affect the pattern of share prices for a formerly cyclically impacted firm?
Q5. Why does the cost of capital differ in various nations?
Q6. What is a transfer price?
Q7. In interpreting profits and cash flows, why would a value analyst be concerned by generally accepted accounting standards of the various nations in which your units operate?
Q8. How does the reliability and transparency of published financial data of firms in various parts of the world compare with the published data of U.S. firms, especially since the financial scandals in the United States in recent years?