Chapter 13 International Financial Management

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Across
  1. 3. The required rate of return by a firm on a potential new investment in order to approve accepting the investment. The rate is typically based on the company’s current cost of capital, including debt and equity
  2. 5. A theoretical model that relates the return on an asset to its risk, where risk is the contribution of the asset to the volatility of a portfolio. Risk and return are presumed to be determined in competitive and efficient financial markets
  3. 9. A network of bilateral treaties that provide a means of reducing double taxation
  4. 10. The degree to which a firm can issue a new security without depressing the existing market price, as well as the degree to which a change in price of its securities elicits a substantial order flow
Down
  1. 1. A strategy in which the primary distinction in the estimation of the cost of equity for an individual firm using an internationalized version of the domestic capital asset pricing model is the definition of the “market” and a recalculation of the firm’s beta for that market
  2. 2. Second letter of the Greek alphabet, used as a statistical measure of risk in the Capital Asset Pricing Model
  3. 4. The average annual return of the market expected by investors over and above riskless debt
  4. 6. In portfolio theory, the risk of the market itself, i.e., risk that cannot be diversified away
  5. 7. A firm that has operating subsidiaries, branches, or affiliates located in foreign countries
  6. 8. The sum of the proportionally weighted costs of different sources of capital, used as the minimum acceptable target return on new investments