Assignment
Question 1
Which of the following are not legitimate constraints on the dividends a firm will pay to shareholders?
A. Dividends must not eat into legal capital.
B. Bondholders may have covenants limiting the amount of the dividend.
C. Dividends may be constrained by the amount of cash a firm has.
D. All are legitimate constraints on the dividends that firms choose to pay to shareholders.
Question 2
Businesses that operate in more than one country are commonly referred to as _________ .
A. multi-American firms
B. multinational firms
C. ultranational firms
D. worldwide firms
Question 3
According to the text, which of the following four cash flows should be LAST in order of priority for a firm?
A. cash to pay off debts in a timely fashion
B. cash to maintain operations
C. cash dividends
D. cash for reinvesting
Question 4
_________ arise(s. from differences in customs, social norms, attitudes, assumptions, and expectations of the local society in a host country.
A. Cultural risk
B. Political risk
C. Social fads
D. Similarities in business beliefs
Question 5
Financial leverage is the degree to which a firm or individual utilizes __________ .
A. borrowed money to pay wages
B. borrowed money to pay dividends
C. borrowed money to magnify equity earnings
D. borrowed money to diminish equity earnings
Question 6
In regard to the cultural risks related to human resources management, which of the statements below is TRUE?
A. In some countries, women are restricted from management positions.
B. The hiring of local citizens instead of bringing in foreign expatriates is often a necessary part of doing business abroad.
C. Foreign expatriates would find it difficult living and working in a community where they are seen as taking away wages and livelihood from local citizens.
D. All of these statements are true.
Question 7
Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called _________ .
A. translation exposure
B. transaction exposure
C. conversion exposure
D. operating exposure
Question 8
The final distribution of cash to shareholders after a company has been sold off or discontinued operations is called a _________ dividend.
A. complete
B. liquidating
C. stock
D. optimal
Question 9
George lends $200,000 for each new idea. George's history is that he selects low-risk projects or ideas that hit 80% of the time. What rate of return must each successful project pay George for him to break even?
A. 20.50%
B. 22.00%
C. 23.50%
D. 25.00%
Question 10
Which of the following is NOT a reason for a high-dividend-payout policy?
A. convenient and direct deposit of cash dividend
B. avoidance of transaction costs for selling shares
C. higher potential future returns for shareholders
D. cash payments today versus uncertain cash payments tomorrow
Question 11
In regard to the cultural risks related to nepotism and corrupt practices, which of the statements below is TRUE?
A. The Foreign Corrupt Practices Act, passed during the administration of President Carter, makes it illegal for U. S. citizens to pay bribes to foreign officials or leaders in order to facilitate business operations.
B. If a firm does not have a competitive advantage so that it can overcome the bribery situation and still make a profit, it may be best to look somewhere else to extend business operations.
C. Companies can be forced by a local government official to hire specific individuals and place them in positions of control.
D. All of these statements are true.
Question 12
Which of the following is NOT a form of corporate dividend?
A. regular cash dividend
B. special cash dividend
C. stock dividend
D. These are all forms of corporate dividends.
Question 13
A __________ is a separate entity and in that capacity can borrow from banks, bondholders, preferred stockholders, and common shareholders.
A. limited partnership
B. sole proprietorship
C. government organization
D. public company
Question 14
__________ financial world is one without taxes, bankruptcy, and other imperfections.
A. An imperfect
B. A friction-full
C. A perfect
D. A realistic
Question 15
If we are using foreign currency for the NPV decision, all we have to do is restate all the ________ in terms of present value and use the current exchange rate.
A. domestic incremental cash flow
B. foreign incremental cash flow
C. salvage value
D. None of these
Question 16
The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these?
A. political risk
B. differences in business practices
C. social fads
D. cultural differences
Question 17
Which of the statements below is TRUE?
A. The investment decision, although minor in comparison to the financing decision, is still an important consideration.
B. The financing decision, although minor in comparison to the investing decision, is still an important consideration.
C. The financing decision is minor in comparison to the investing decision and thus can be ignored.
D. The financing and investing decisions are equally important in terms of determining firm value.
Question 18
The _________ is the date when the board of directors announces the next cash dividend to the public.
A. declaration date
B. record date
C. payment date
D. ex-dividend date
Question 19
"Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy?
A. residual dividend policy
B. sticky dividend policy
C. constantly declining dividend policy
D. none of the above
Question 20
The federal government bond market is open only to ____________ .
A. state government agencies
B. local government agencies
C. the federal government
D. municipal government