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chapter 17

By Hector Morris,2014-06-07 13:53
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chapter 17

    CHAPTER 17

    ? MULTIPLE CHOICES

    1. The cost of capital

    A) Is defined as K = (1 λ)K + λ(1 – t)I l

    B) Is the minimum rate of return an investment project must generate in order to pay its

    financing costs

    C) Is an accounting number reflecting historical costs

    D) Is an accounting number reflecting historical costs. None of the above

    2. Companies can benefit from cross-border listing of stocks in what ways? A) The company can expand its potential investor base, which will lead to a higher stock

    price and a lower cost of capital

    B) Cross-listing can enhance the liquidity of the company’s stock

    C) Cross listing may improve the company’s corporate governance and transparency

    D) All of the above

    3. If international financial markets are fully integrated rather than segmented

    A) Investors would require, on average, lower expected returns on securities B) Investors would require, on average, higher expected returns on securities

    C) Investors would require, the same expected returns on securities

    D) None of the above.

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