34 - 36

34. You are interested in not only US stocks but also foreign stocks. You are considering whether to invest in American Depositary Receipts (ADRs, they represent ownership in the shares of a foreign company trading on the US financial markets.) of a Japanese company and a South American company. Other than market risk and firm risk, currency risk is also a concern. You know that both firms' major profits come from their domestic operations. You believe in the future the US dollar will depreciate against Japanese yen and appreciate against Argentine peso. Which of the following is true? a. The exchange rate change will decrease the dollar price of the Japanese y's ADR and increase the dollar price of the Argentine company's ADR. b. The exchange rate change will decrease the dollar price of both companies ADRs. c. The exchange rate change will increase the dollar price of the Japanese company's ADR and decrease the dollar price of the Argentine company's ADR. d. The exchange rate change will increase the dollar price of both companies' ADRs. Questions 28-34 end. Questions 35-40 are based on the following information. Corporate finance. You are the CFO of the Stocks-and-bonds company. Both your company's stock and bonds are traded in the NYSE. 35. If you think your company's stock is currently undervalued by the market, you would like to a. issue more shares. b. repurchase some shares. c. issue more bonds. d. call back your company's old bonds and issue new bonds. 36. Another company also thinks your company's stock is currently undervalued by the market. So, it wants to buy a large number of your company's shares to control your firm. If you want to defend the takeover, you would a. issue more shares. b. repurchase some shares. c. lay off your company's employees. d. call back your company's old bonds and issue new bonds