İŞLETME FİNANSI II - Deneme Sınavı - 9

Types of business according to the balance of payment:

-Payments for goods and services
-Salaries for non-residents
-Income from investments
-Current transfers
-Capital transfers
-Direct and portfolio investment
-Reserve actives flows

The widely used communications network is the Society of Worldwide Interbank Financial Telecommunications (SWIFT).

The widely used communications network is the Society of Worldwide Interbank Financial Telecommunications (SWIFT), which began operations in Europe in 1973, and is jointly owned by more than 2,000 member banks.

After the transaction is electronically confirmed over SWIFT, the USD transfers are generally done through the Clearing House Interbank Payments System (CHIPS).

The foreign currency or foreign exchange market (FOREX market) is the decentralized worldwide market in which currencies are traded.

Determinants of Foreign Exchange Rate: 

a- Political Riss

1. Capital controls
2. Black market in currencies
3. Exchange rate spreads
4. Risk premium on securities and FDI

The bid rate is the rate at which they want to buy a base currency.

Real Exchange Rate: This is the nominal exchange rate adjusted for the relative price levels in the home country and in the country whose currency is used in the quoted process with the national currency.

Target distribution ratio is the percentage of net income distributed to the shareholders through cash dividends or stock repurchases.

Target payout ratio is the percentage of net income paid out as cash dividends

There are four types for stock repurchases; 1. Open-market repurchase. The company makes a public announcement to buy back its own share of stock in the open market that is the most common method. There exist certain daily buy-back limits on the number of shares in open market share repurchases. For instance, the SEC Rule 10b-18, introduced in 1983, dictates that the company cannot repurchase more than 25 % of the average daily trading volume in the US. 2. Tender Offer. The company can repurchase a number of shares through a tender offer in which it offers to buy shares at a specified price. 3. Dutch auction. The company specifies a price range that it is willing to pay, and shareholders offer how many shares they are willing to sell at that specific price range. The company then buys shares from the lowest priced offers. If there are not enough shares offered at the lowest price to accomplish the desired buy-back, the issuer may accept offers from the next higher priced. 4. Targeted Repurchase. The company can repurchase a block of shares at a negotiated price from major shareholders. The most important example is greenmail transactions, in which the shares are repurchased at a large premium over the current market price

Targeted Repurchase. The company can repurchase a block of shares at a negotiated price from major shareholders. The most important example is greenmail transactions, in which the shares are repurchased at a large premium over the current market price.

Dutch auction. The company specifies a price range that it is willing to pay, and shareholders offer how many shares they are willing to sell at that specific price range. The company then buys shares from the lowest priced offers. If there are not enough shares offered at the lowest price to accomplish the desired buy-back, the issuer may accept offers from the next higher priced.

Tender Offer. The company can repurchase a number of shares through a tender offer in which it offers to buy shares at a specified price

Stock dividend is a dividend paid in the form of additional shares of stock rather than cash.

Dividend irrelevance theory states that a company’s dividend policy has no effect on whether its value or its cost of capital.

Clientele effect is a tendency of a company to attract a set of investors whose particular needs for current versus future cash flow match with company’s dividend payouts.

Bird-in-the-hand dividend theory states that a company’s value will be maximized by setting a high dividend payout ratio.

Cross-border M&A is a form of business combination between two firms in two different countries. In highly competitive global markets, M&A is seen as a strategic tool for creating value. The correct answer is A.

Conglomerate M&A is between unrelated firms in different industries. The correct answer is A.