LOS f, (Part 1): Explain why firms choose to be listed abroad.

Q1. Which of the following is a good reason for a U.S. company to list its shares on a foreign stock exchange?

A)   Avoid SEC registration and listing requirements.

B)   Provide additional advertising opportunities for a U.S. company’s products.

C)   Create additional trading opportunities for the company’s investment bankers.

Q2. The Universal Pipe Corporation (UPC) wishes to list its common shares on the Frankfurt Stock Exchange. UPC does not currently have any business in Germany. Which of the following is least likely a valid reason for UPC to list its securities on the Frankfurt exchange?

A)   Listing a company abroad provides additional advertising opportunities for the company's products and services.

B)   International diversification makes the firm a more attractive takeover candidate for domestic companies.

C)   Being on the exchange will provide broad diversification for its shares with a large German investor base.

Q3. LTD Corporation is concerned that Aquire, Inc. may wish to launch a hostile take-over of LTD. Which of the following strategies is a good defensive measure?

A)   Broad global ownership diversification of a company’s shares can minimize a hostile take-over.

B)   Purchase a foreign company in a different market place to create a broader investor base.

C)   Concentration of shares among certain financial institutions who favor company changes.

LOS f, (Part 1): Explain why firms choose to be listed abroad. fficeffice" />

Q1. Which of the following is a good reason for a ffice:smarttags" />U.S. company to list its shares on a foreign stock exchange?

A)   Avoid SEC registration and listing requirements.

B)   Provide additional advertising opportunities for a U.S. company’s products.

C)   Create additional trading opportunities for the company’s investment bankers.

Correct answer is B)

There are four reasons why a company may want to list its securities abroad.

§   A company may desire a broader diversification of its capital across international boundaries.

§   Concern of take-over acquisitions by domestic competitors is minimized by global diversification of the company’s shares.

§   In the case where a company wants to raise additional external financing, exposure to broader capital markets provides access to additional resources.

§   Listing a company abroad provides additional advertising opportunities for the company’s products and services.

Q2. The Universal Pipe Corporation (UPC) wishes to list its common shares on the Frankfurt Stock Exchange. UPC does not currently have any business in Germany. Which of the following is least likely a valid reason for UPC to list its securities on the Frankfurt exchange?

A)   Listing a company abroad provides additional advertising opportunities for the company's products and services.

B)   International diversification makes the firm a more attractive takeover candidate for domestic companies.

C)   Being on the exchange will provide broad diversification for its shares with a large German investor base.

Correct answer is B)

The following are reasons why a company may want to list its securities abroad:

§   A company may desire a broader diversification of its capital across international boundaries.

§   Concern of take-over acquisitions by domestic competitors is minimized by global diversification of the company’s shares.

§   In the case where a company wants to raise additional external financing, exposure to broader capital markets provides access to additional resources.

§   Listing a company abroad provides additional advertising opportunities for the company’s products and services.

Q3. LTD Corporation is concerned that Aquire, Inc. may wish to launch a hostile take-over of LTD. Which of the following strategies is a good defensive measure?

A)   Broad global ownership diversification of a company’s shares can minimize a hostile take-over.

B)   Purchase a foreign company in a different market place to create a broader investor base.

C)   Concentration of shares among certain financial institutions who favor company changes.

Correct answer is A)

One good reason why a company may want to list its securities abroad is concern of take-over acquisitions by domestic competitors. This can be minimized by global diversification of the company’s shares.