Which statement is NOT CORRECT?
a. Multinational firms can reduce their tax liability through transfer pricing.
b. Countries that adopt a fixed exchange rate give up control of their monetary policy.
c. US companies must follow all US laws regardless of where their operations are.
The current spot rate is $.40/SF. The 6-month forward rate is $.41/SF. A call option that expires in 6-months on 100,000 SF with a strike price of $.40/SF is selling for $1,900. A put option that expires in 6-months on 100,000 SF with a strike price of $.40/SF is selling for $100. Six months from now, the spot rate will be $.39/SF (this information is unknown right now, but I’m telling you).
If you bought the put option, how much would you have made (or lost) including the original investment?
a Lost $900
b Lost $100
c Made $900
Which statement is FALSE?
b In a Spin-off, common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.
c If the shareholders gain from a merger comes at the expense of other stakeholders, then this is called hubris
d A tender offer is when the acquiring firm makes their offer directly to the target firm shareholders.