Exam 3

fixed-for-floating rate interest rate swap, where on coutnerparty exchanges the interest payments of a floating-rate debt obligations for fixed-rate interest payments of the other counter party
AND
fixed-for-fixed rate debt service (currency swap), where one counterparty exchanges the debt service obligations of a bond denominated in one currency for the debt service obligations of the other counterparty denominated in another currency

immeasurable? or none of the options? (check video)

can act as a broker, bringing together counterparties to a swap, and/or as a dealer, standing ready to buy and sell swaps

As a broker, the swap bank matches counterparties but does not assume any risk of the swap
AND
Today's swap banks serve as dealers or market makers
AND
A swap bank can be an international commercial bank, an investment bank, a merchant bank, or an independent operator

if the swap bank is successful in getting counterparties to both legs of the swap at these prices, he will have an annual profit of 10 basis points.

Toyota and Nissan made direct investments in America.

they become MNCs
AND
they reduce their tax rate since they can tell each country that they do business in that they paid their taxes in other countries
AND
they can exploit workers by paying them below-market wages in depreciating currencies

Greenfield investment
AND
cross-boarder M&A
AND
establishing new production facilities in a foreign country

when they undertake foreign direct investments (FDI)
AND
with the establishment of new production facilities in foreign countries such as Honda's Ohio plant
AND
when they become involved in mergers with and acquisitions of existing foreign businesses

$31 billion

weighing the after-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight
AND
K = (1 − λ)Kl + λ (1 − τ)i
where:
K = weighted average cost of capital
Kl = cost of equity capital for a leveraged firm
i = before-tax borrowing cost
τ = marginal corporate income tax rate
λ = debt-to-total-market-value ratio

The debt-to-total market value ratio is λ

The cost of equity capital for a levered firm is Kl

K = (1 − λ)Kl + λ (1 − τ)i will be minimized

involves, usually expensive, investments in capital assets
AND
has to do with the productive capacity of a firm
AND
will determine how competitive and profitable a firm will be

distinguish between the market value of a levered firm and the market value of an unlevered firm
AND
discern the blocking of certain cash flows by the host country from being legally remitted to the parent
AND
consider foreign currency fluctuations or extra taxes imposed by the host country on foreign exchange remittances

It is generally the case that the costs of international trade outweigh the benefits.

a banker's acceptance

cash in advance, letter of credit/time draft, consignment, and open account

after taking title to the goods via a bill of lading, the importer's bank accepts the time draft.