MBUS 308 extra credit final exam Questions and Answers ( Fully Solved) Latest Version 2024

MBUS 308 extra credit final exam Questions and Answers ( Fully Solved) Latest Version 2024 relative PPP - Answers exchange rates move by the same proportion everywhere interest rate parity - Answers interest rate difference between 2 countries is the difference in forward exchange rate exchange rate risk - Answers risk due to operating in countries with variable exchange rates (risk from changes in exchange rates between difference currencies) two main sources that can cause exchange rate risk - Answers 1. monetary policy 2. traders political risk - Answers risk related to the rules of the game (rules of trade) things that can result in political risk, things that can change the rules of the game - Answers regime change, asset forfeiture (your stuff is seized), tax changes, nationalization (government can come and take over your land) this can be why you shouldn't invest in Zimbabwe. international fisher effect - Answers real interest rates across countries is equal -if interest rates are high in one country, you'll invest in that country -if real interest rates =, the nominal interest rate - inflation will be the same in both countries -all difference in nominal interest rates is due to inflation triangle arbitrage - Answers trades in 3 or more currencies that earn a profit due to unequal implied exchange rates -overtime causes exchange rates to converge into identical implied rates merger - Answers two or more companies combine (they don't need to be publicly traded, but often are). the legal identity of one company is preserved. the legal identities are destroyed example of merger - Answers Google bought Waze, now its a subsidiary & just a portion of Google consolidation - Answers when 2 or more firms combine resulting in a new legal entity and destroying both previous entities consolidation example - Answers Comcast and Verizon combine into one new cable company called Cable4U benefits of acquisition - Answers improving corporate culture, savings on marketing/administrative costs, enter new market, reduce competition (this is why the government doesn't allow some mergers of two huge companies, i.e. Apples and Windows are not allowed to merge), economies of scale (reducing average per unit cost), complementary resources, tax advantages (don't really need to know examples of this), diversification (portfolios, getting into other industries), vertical integration (keeping things inside the firm) divestitures - Answers pulling companies apart equity carve out divestiture - Answers creating a new company from an IPO (initial public offering) sale of a subunit spin off divestiture - Answers creating a new company from a sub unit, giving the stock in the new company to existing shareholders (old company is maintained) split up divestiture - Answers creating a new company from a sub unit, giving the stock in the new company to existing shareholders (old company is destroyed) spin off example - Answers Pepsi said they dont want Mountain Dew to be a part of Pepsi anymore and they want to be their own independent corporation, so everyone who owns stock in Pepsi will also receive a portion of stock in Mountain Dew difference between carve out and spin off - Answers in both you're taking a piece of a company and making a whole new company. in a carve out you're selling the shares of the new company to the PUBLIC. in a spin off you're not selling the shares, you're giving the shares to people who already own the parent company shares. difference between spin off and split up - Answers with a split up, you have two entirely new corporations. in a spin off you have one old entity and one new one corporate defensive tactic - Answers managerial tactics to avoid being fired, demoted or suffering from a pay reduction as manager its your job to maximize the value of the corporation/your shareholders. however, some managers suck and don't do this. so, there are some routes you can take to make these shitty managers fall in line. the managers don't want this to happen, so they attempt to prevent this from happening by using these tactics.