Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 31, Problem 13CQ
International Borrowing If a U.S. firm raises funds for a foreign subsidiary, what are the disadvantages to borrowing in the United States? How would you overcome them?
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Students have asked these similar questions
Which of the following is a major benefit of international lending?
O It eliminates exchange rate risk in financial activities.
It requires reducing restrictive international trade practices in the lending and the borrowing countries.
It allows both small countries and large countries to apply similar levels of optimal taxes on the international loans.
O It allows some lenders to shift their lending to foreign borrowers who are willing to pay higher interest rates on the loans.
Why might a multinational corporation decide to borrow in a country such as Brazil,where interest rates are high, rather than in a country such as Switzerland, whereinterest rates are low?
Q. If barriers to international securities markets are reduced, will a country’s interest rate be more or less susceptible to foreign lending and borrowing activities? Explain.
Chapter 31 Solutions
Corporate Finance
Ch. 31 - Spot and Forward Rates Suppose the exchange rate...Ch. 31 - Prob. 2CQCh. 31 - Prob. 3CQCh. 31 - Prob. 4CQCh. 31 - International Risks At one point, Duracell...Ch. 31 - Multinational Corporations Given that many...Ch. 31 - Prob. 7CQCh. 31 - Exchange Rate Movements Some countries encourage...Ch. 31 - Prob. 9CQCh. 31 - Exchange Rate Risk If you are an exporter who must...
Ch. 31 - International Capital Budgeting Suppose it is your...Ch. 31 - International Capital Budgeting An investment in a...Ch. 31 - International Borrowing If a U.S. firm raises...Ch. 31 - International Investment If financial markets arc...Ch. 31 - Prob. 1MCCh. 31 - What will happen to the companys profits if the...Ch. 31 - How can the company hedge its exchange rate risk?...Ch. 31 - Taking all factors into account, should the...
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- If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?arrow_forwardWhat it a foreign trade zone, and what advantages does it offer U.S. companies?arrow_forwardWhy might a foreign government’s policies be closely monitored by investors in other countries, even if the investors plan no investments in that country? Explain how monetary policy in one country can affect interest rates in other countries.arrow_forward
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