Question 1

The Riegle-Neal Act of 1994

Accepted Answer

A) subjected foreign banks in the United States to the same branching rules that applied to U.S. banks. 
B) prohibited foreign bank branches from making commercial loans within the United States. 
C) exempted foreign bank branches from reserve requirements. 
D) subjected foreign bank branches to deposit interest rate ceilings. 
A) subjected foreign banks in the United States to the same branching rules that applied to U.S. banks. 
B) prohibited foreign bank branches from making commercial loans within the United States. 
C) exempted foreign bank branches from reserve requirements. 
D) subjected foreign bank branches to deposit interest rate ceilings.

Question 2

What is the primary motivation for loan syndication in the Euroloan market?

Accepted Answer

A) Reduction in information costs 
B) Reduction in transactions costs 
C) Risk sharing 
D) Tax advantages 
A) Reduction in information costs 
B) Reduction in transactions costs 
C) Risk sharing 
D) Tax advantages

Question 3

Currently, U.S. banks pay deposit insurance premiums on

Accepted Answer

A) domestic deposits. 
B) Eurodollar deposits. 
C) domestic and Eurodollar deposits. 
D) all deposits. 
A) domestic deposits. 
B) Eurodollar deposits. 
C) domestic and Eurodollar deposits. 
D) all deposits.

Question 4

What is a Euroloan? What are its typical characteristics? Why is it very likely to be syndicated?

Accepted Answer

A Euroloan is a loan denominated in a cu

Question 5

By 2006, international bank lending in the United States, Western Europe, and Japan amounted to

Accepted Answer

A) less than $1 billion. 
B) about $200 million. 
C) about $10 billion. 
D) several trillion dollars. 
A) less than $1 billion. 
B) about $200 million. 
C) about $10 billion. 
D) several trillion dollars.

Question 6

Why was international banking unimportant for U.S. banks, savers, and borrowers before World War II? Is it likely that its importance may ever recede to a low level again?

Accepted Answer

Before World War II the volume of trade

Question 7

Which of the following does NOT represent an important offshore market?

Accepted Answer

A) The Bahamas 
B) The Cayman Islands 
C) Puerto Rico 
D) Hong Kong 
A) The Bahamas 
B) The Cayman Islands 
C) Puerto Rico 
D) Hong Kong

Question 8

The LIBOR is the

Accepted Answer

A) accounting convention used in Europe to assess the market value of a loan. 
B) European commission which regulates the Eurocurrency market. 
C) ceiling on interest rates which may be charged on Eurodollar loans. 
D) interest rate charged on Eurodollar loans made between banks. 
A) accounting convention used in Europe to assess the market value of a loan. 
B) European commission which regulates the Eurocurrency market. 
C) ceiling on interest rates which may be charged on Eurodollar loans. 
D) interest rate charged on Eurodollar loans made between banks.

Question 9

The Foreign Bank Supervision Enhancement Act of 1991 was passed as a result of

Accepted Answer

A) the savings-and-loan crisis. 
B) the BCCI scandal. 
C) the failure of the Bank of United States. 
D) the failure of the Bank of America 
A) the savings-and-loan crisis. 
B) the BCCI scandal. 
C) the failure of the Bank of United States. 
D) the failure of the Bank of America

Question 10

Most of the foreign-exchange trading volume of banks is with

Accepted Answer

A) governments. 
B) corporations. 
C) private individuals. 
D) other banks. 
A) governments. 
B) corporations. 
C) private individuals. 
D) other banks.

Question 11

Experts studying the lending patterns of Japanese and other foreign-owned banks in the United States have found that these banks

Accepted Answer

A) have been lending most of their U.S. deposits abroad. 
B) have accumulated very few assets in the United States. 
C) have lent most of their U.S. deposits in the United States. 
D) have strong influence in some parts of the United States, but very weak influence in other parts, such as California. 
A) have been lending most of their U.S. deposits abroad. 
B) have accumulated very few assets in the United States. 
C) have lent most of their U.S. deposits in the United States. 
D) have strong influence in some parts of the United States, but very weak influence in other parts, such as California.

Question 12

The Bank of Credit and Commerce International failed because of

Accepted Answer

A) volatile interest rates. 
B) exchange rate fluctuations. 
C) fraud. 
D) overly strict regulation. 
A) volatile interest rates. 
B) exchange rate fluctuations. 
C) fraud. 
D) overly strict regulation.

Question 13

What is the international transaction currency?

Accepted Answer

A) During any period, the currency of choice in settling international transactions 
B) Currently, a weighted combination of the dollar, pound, yen, and euro 
C) The gold coins of any country 
D) A special currency issued by the International Monetary Fund for use in settling international transactions 
A) During any period, the currency of choice in settling international transactions 
B) Currently, a weighted combination of the dollar, pound, yen, and euro 
C) The gold coins of any country 
D) A special currency issued by the International Monetary Fund for use in settling international transactions

Question 14

Why did the volume of newly syndicated loans in Euromarkets decline during the 1970s and 1980s?

Accepted Answer

A) International regulation of these markets increased. 
B) There were significant defaults on loans to less developed countries. 
C) Interest rate volatility increased. 
D) Inflation increased. 
A) International regulation of these markets increased. 
B) There were significant defaults on loans to less developed countries. 
C) Interest rate volatility increased. 
D) Inflation increased.

Question 15

An agency office of a foreign bank

Accepted Answer

A) is subject to the same branching restrictions as U.S. banks. 
B) is subject to the same FDIC insurance requirements as U.S. banks. 
C) may not make loans within the United States. 
D) may not accept deposits from U.S. residents. 
A) is subject to the same branching restrictions as U.S. banks. 
B) is subject to the same FDIC insurance requirements as U.S. banks. 
C) may not make loans within the United States. 
D) may not accept deposits from U.S. residents.

Question 16

The International Banking Act of 1978

Accepted Answer

A) equalized deposit rates being paid by banks in different countries. 
B) reduced the cost advantages that foreign banks had previously enjoyed in the United States. 
C) brought the Eurodollar market under the control of U.S. regulators. 
D) was an agreement reached under the auspices of the United Nations to allow banks to operate more freely in foreign countries. 
A) equalized deposit rates being paid by banks in different countries. 
B) reduced the cost advantages that foreign banks had previously enjoyed in the United States. 
C) brought the Eurodollar market under the control of U.S. regulators. 
D) was an agreement reached under the auspices of the United Nations to allow banks to operate more freely in foreign countries.

Question 17

Booking sites are

Accepted Answer

A) international banking facilities that have been authorized to provide Eurodollar banking in the United States. 
B) offices in London where foreign exchange trading takes place. 
C) offices in Hong Kong and Singapore where unregulated trading in Eurodollars takes place. 
D) located within European central banks and provide European governments with access to the Eurodollar market. 
A) international banking facilities that have been authorized to provide Eurodollar banking in the United States. 
B) offices in London where foreign exchange trading takes place. 
C) offices in Hong Kong and Singapore where unregulated trading in Eurodollars takes place. 
D) located within European central banks and provide European governments with access to the Eurodollar market.

Question 18

Eurodollars are

Accepted Answer

A) dollar deposits in the United States owned by European residents. 
B) dollar deposits in the United States owned by non-U.S. residents. 
C) deposits denominated in dollars in banks outside the United States. 
D) dollars that may only be spent on European goods and services. 
A) dollar deposits in the United States owned by European residents. 
B) dollar deposits in the United States owned by non-U.S. residents. 
C) deposits denominated in dollars in banks outside the United States. 
D) dollars that may only be spent on European goods and services.

Question 19

Through the early 1970s the largest borrowers on Euromarkets were

Accepted Answer

A) U.S. banks. 
B) foreign banks. 
C) governments and state-owned enterprises. 
D) multinational corporations. 
A) U.S. banks. 
B) foreign banks. 
C) governments and state-owned enterprises. 
D) multinational corporations.

Question 20

Which of the following is NOT a reason that IBFs have been desirable to banks?

Accepted Answer

A) They are not subject to Federal Reserve regulation. 
B) They are exempt from reserve requirements. 
C) They are exempt from federal restrictions on interest payments to depositors. 
D) They are often free from state and local taxation. 
A) They are not subject to Federal Reserve regulation. 
B) They are exempt from reserve requirements. 
C) They are exempt from federal restrictions on interest payments to depositors. 
D) They are often free from state and local taxation.

Exam 16: Banking in the International Economy

The Riegle-Neal Act of 1994

What is the primary motivation for loan syndication in the Euroloan market?

Currently, U.S. banks pay deposit insurance premiums on

What is a Euroloan? What are its typical characteristics? Why is it very likely to be syndicated?

By 2006, international bank lending in the United States, Western Europe, and Japan amounted to

Why was international banking unimportant for U.S. banks, savers, and borrowers before World War II? Is it likely that its importance may ever recede to a low level again?

Which of the following does NOT represent an important offshore market?

The LIBOR is the

The Foreign Bank Supervision Enhancement Act of 1991 was passed as a result of

Most of the foreign-exchange trading volume of banks is with

Experts studying the lending patterns of Japanese and other foreign-owned banks in the United States have found that these banks

The Bank of Credit and Commerce International failed because of

What is the international transaction currency?

Why did the volume of newly syndicated loans in Euromarkets decline during the 1970s and 1980s?

An agency office of a foreign bank

The International Banking Act of 1978

Booking sites are

Eurodollars are

Through the early 1970s the largest borrowers on Euromarkets were

Which of the following is NOT a reason that IBFs have been desirable to banks?

Introducing Money and the Financial System

Money and the Payments System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Business of Banking

The Banking Industry

Banking Regulation: Crisis and Response

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters