Which of the following is true of fixed-rate bonds?

Multiple Choice

• Returns from fixed-rate bonds are dependent on the profitability of the issuing company.

• Investors get back the face value of the bond at maturity of fixed-rate bonds.

• Fixed-rate bonds issue cash payoffs only at maturity of fixed-rate bonds.

• Investors get a share of the companys profit when using fixed-rate bonds.

The cost of capital is

Multiple Choice

• higher in a purely domestic capital market than in a global market.

• lower in a domestic capital market than in an international market.

• higher in a global market than in a purely domestic capital market.

• the same in either a global market or a purely domestic capital market.

Entering into a forward contract will

Multiple Choice

• increase the risk involved in a transaction.

• lower the borrowers cost of capital.

• benefit the borrower because the interest rate will be lower.

• raise the borrowers cost of capital.

FDI can benefit the home countrys _____ if the foreign subsidiary creates demands for home-country exports of capital equipment, intermediate goods, complementary products, and the like.

Multiple Choice

• balance of payments

• oligopolistic industry

• current accounts

• licensing endeavors