Which is true regarding the financial structure of a foreign subsidiary:

Select one:

a. option to conform to the parent company's capital structure

b. avail all available options

c. option to judiciously capitalize on opportunities to lower taxes, reduce financing costs and risks, and take advantage of market imperfections

d. option to conform to the local norm of the country where the subsidiary operates

Using variation of expected stock returns of those of the market index, and correlation between the expected stock returns of and the market, we can estimate ________ risk

Select one:

a. Systematic

b. Unsystematic

c. Diversifiable

d. Total

Imperfections in the capital market which lead to financial market segmentation include which of the following:

Select one:

a. high securities transaction costs

b. all of the choices

c. asymmetric information between domestic and foreign-based investors

d. foreign exchange risks

For a firm to obtain its long-term debt and equity in a highly illiquid domestic capital market implies that it has a:

Select one:

a. Relatively low cost of capital

b. Cost of capital that cannot be estimate

c. Relatively average cost of capital

d. Relatively high cost of capital

When comparing multinational firms with domestic ones, the following is NOT true:

Select one:

a. MNEs tend to rely more on short and intermediate term debt

b. MNEs have greater foreign exchange risk

c. MNEs have higher agency costs

d. MNEs have greater costs of asymmetric information