There are potential benefits and risks from raising capital on global markets. Discuss the pros and cons in terms of risk of raising capital on global markets
What will be an ideal response?
Answer: A portfolio of international stocks represents a portfolio in which foreign securities have been added. It has the same overall risk shape as the U.S. stock portfolio, but it has a lower portfolio beta. This means that the international portfolio's market risk is lower than that of a domestic portfolio. This situation arises because the returns on the foreign stocks are not perfectly correlated with U.S. stocks (the benefits of international diversification).
The foreign exchange risks of a portfolio, whether it is a securities portfolio or the general portfolio of activities of the MNE, are reduced through international diversification. But international portfolio construction is also different in that when the investor acquires assets or securities from outside the investor's host-country market, the investor may also be acquiring a foreign currency-denominated asset. Thus, the investor has actually acquired two additional assets–the currency of denomination and the asset subsequently purchased with the currency–one asset in principle, but two in expected returns and risks. You should see, however, that the presence of currency risk may alter the correlations associated with securities in different countries and currencies.
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Answer the following statements true (T) or false (F)
1. Leadership and management are one and the same. 2. According to Bennis, a leader maintains while a manager develops. 3. According to Bennis a leader inspires trust. 4. All organizations need managers, but not all organizations need leaders. 5. According to situational leadership, a leader is the same all of the time regardless of the circumstances.
Which of the following is a measurement attribute used in U.S. GAAP to measure inventories whose usefulness (typically, in terms of salability) to the firm has declined below the cost of the inventories?
a. Current Replacement Cost b. Net Realizable Value c. Fair Value d. Present Value of Future Net Cash Flows e. Acquisition cost
Coble Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated shaper. Additional information is provided below for the most recent month: Estimates at the beginning of the month: Estimated total fixed manufacturing overhead$28,560? Capacity of the shaper 280?hoursActual results: Sales$93,000? Direct materials$11,900? Direct labor$17,200? Actual total fixed manufacturing overhead$28,560? Selling and administrative expense$4600? Actual hours of shaper use 240?hoursThe manufacturing overhead applied is closest to:
A. $28,560 B. $24,480 C. $13,286 D. $4600
The transportation method of production planning is a special case of:
A) linear programming. B) integer programming. C) queuing theory. D) goal programming.