Multinational Financial Management 10th Edition 题库ch14

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1、Chapter14,TheCostofCapitalforForeignInvestmentsCHAPTER14THECOSTOFCAPITALFORFOREIGNINVESTMENTSEASY(definitional)14.1The________foragiveninvestmentistheminimumrisk-adjustedreturnrequiredbytheshareholdersofthefirmforundertakingthatinvestment.a)costofequitycapitalb)systematicriskc)a

2、ll-equitybetad)weightedaveragecostofcapitalAns:aSection:ThecostofequitycapitalLevel:Easy14.2Theminimumrisk-adjustedreturnrequiredbyshareholdersofthefirmforundertakingtheinvestmentisknownasthea)risk-freerateofreturnb)intrinsicvaluec)costofcapitald)marketrateofreturnAns:cSection:T

3、hecostofequitycapitalLevel:Easy14.3Thismayserveasareasonableproxyfortherequiredreturnonequityofaprojectwhenthereturnsandfinancialstructureoftheprojectareexpectedtobesimilartothoseofthefirm’stypicalproject.Itwouldbethea)corporate-widecostofequitycapitalb)weightedaveragecostofcapi

4、talc)projectbetad)companybetaAns:aSection:ThecostofequitycapitalLevel:Easy14.4Sinceboththeprojectriskandtheproject’sfinancialstructurecanvaryfromthecorporatenorm,toreflecttheactualvaluesofthedifferentcostcomponents,itisnecessarytoa)adjustthecostsandweights.b)alwaysrefertothecorp

5、orateweightedaveragecostofcapital.c)adjusttheproject’sbeta.d)adjusttherequiredrateofreturnoftheproject.Chapter14,TheCostofCapitalforForeignInvestmentsAns:aSection:ThecostofequitycapitalLevel:Easy14.5Onefunctionofthecostofcapitalisto________forthefirm.a)determinethedebttoequityra

6、tiob)valuefuturecashflowsc)determinethecurrentratiod)determinethecurrentlendingrateAns:bSection:ThecostofequitycapitalLevel:Easy14.6Accordingtomoderncapitalmarkettheoryanequilibriumrelationshipexistsbetweenanasset’srequiredreturnanditsassociatedrisk,whichcanberepresentedbythe___

7、____model.a)risk-returntradeoffb)capitalassetpricingc)purchasingparityd)interestrateparityAns:bSection:ThecostofequitycapitalLevel:Easy14.7Whatistheoutcomewhenthecostofequitycapitaliscombinedwithafter-taxcostofdebt?a)all-equitybetab)costofcapitalc)weightedaveragecostofcapitald)t

8、argetcapitalstructureAns:cSection:Weightedavera