Question 1

Which of the following is not a possible bid/ask quotation for the Barbados dollar?

Accepted Answer

A)  $.50/$.51 
B)  $.49/$.50 
C)  $.52/$.51 
D)  $.51/$.52 
E)  All of these are possible bid/ask quotations. 
A)  $.50/$.51 
B)  $.49/$.50 
C)  $.52/$.51 
D)  $.51/$.52 
E)  All of these are possible bid/ask quotations.

Question 2

The more intense the competition for a traded currency, the larger the bid/ask spread.

Accepted Answer

A) True 
 B)False

Question 3

Eurodollar deposits are:

Accepted Answer

A)  dollar-denominated revenues of oil-producing countries deposited in European banks. 
B)  deposits of euros in U.S. banks. 
C)  deposits of U.S. dollars in banks in Europe (and elsewhere). 
D)  deposits of euros in European banks that are readily convertible into dollars. 
A)  dollar-denominated revenues of oil-producing countries deposited in European banks. 
B)  deposits of euros in U.S. banks. 
C)  deposits of U.S. dollars in banks in Europe (and elsewhere). 
D)  deposits of euros in European banks that are readily convertible into dollars.

Question 4

When receiving quotations on a currency's exchange rate, the bank's bid quote is the rate at which the bank is willing to sell currency.

Accepted Answer

A) True 
 B)False

Question 5

The legal protection of shareholders is the same among countries.

Accepted Answer

A) True 
 B)False

Question 6

As a result of the Sarbanes-Oxley Act, financial reporting costs were reduced, and many non-U.S. firms decided to place new issues of their stock in the United States.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not true regarding electronic communications networks (ECNs)?

Accepted Answer

A)  They have a visible trading floor. 
B)  Trades are executed by a computer network. 
C)  They have been created in many countries to match orders between buyers and sellers. 
D)  They allow investors to place orders on their computers. 
E)  All of these are true. 
A)  They have a visible trading floor. 
B)  Trades are executed by a computer network. 
C)  They have been created in many countries to match orders between buyers and sellers. 
D)  They allow investors to place orders on their computers. 
E)  All of these are true.

Question 8

​A quotation representing the value of a foreign currency in dollars is referred to as a(n) ____ quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) ____ quotation.

Accepted Answer

A)  ​direct; indirect 
B)  ​indirect; direct 
C)  ​direct; direct 
D)  ​indirect; indirect 
E)  ​cannot be answered without more information 
A)  ​direct; indirect 
B)  ​indirect; direct 
C)  ​direct; direct 
D)  ​indirect; indirect 
E)  ​cannot be answered without more information

Question 9

The international credit market primarily concentrates on:​

Accepted Answer

A)  ​short-term lending (less than one year). 
B)  ​medium-term lending. 
C)  ​credit cards for individuals. 
D)  ​providing an exchange of foreign currencies for firms that need them. 
E)  ​placing newly issued stock in foreign markets. 
A)  ​short-term lending (less than one year). 
B)  ​medium-term lending. 
C)  ​credit cards for individuals. 
D)  ​providing an exchange of foreign currencies for firms that need them. 
E)  ​placing newly issued stock in foreign markets.

Question 10

The international credit crisis that began in 2008 originated in the credit markets in the eurozone when the governments of some of the eurozone countries were unable to make interest payments on their debt.

Accepted Answer

A) True 
 B)False

Question 11

Eurobonds:

Accepted Answer

A)  can be issued only by European firms. 
B)  can be sold only to European investors. 
C)  can be issued only by European firms AND can be sold only to European investors. 
D)  None of these are correct. 
A)  can be issued only by European firms. 
B)  can be sold only to European investors. 
C)  can be issued only by European firms AND can be sold only to European investors. 
D)  None of these are correct.

Question 12

Which of the following is not true regarding the Bretton Woods Agreement?

Accepted Answer

A)  It called for fixed exchange rates between currencies. 
B)  Governments intervened to prevent exchange rates from moving more than 1 percent above or below their initially established levels. 
C)  The agreement lasted from 1944 until 1971. 
D)  Each country used gold to back its currency. 
E)  All of these are true regarding the Bretton Woods Agreement. 
A)  It called for fixed exchange rates between currencies. 
B)  Governments intervened to prevent exchange rates from moving more than 1 percent above or below their initially established levels. 
C)  The agreement lasted from 1944 until 1971. 
D)  Each country used gold to back its currency. 
E)  All of these are true regarding the Bretton Woods Agreement.

Question 13

Assume a Japanese firm invoices exports to the United States in U.S. dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the U.S. dollar to ____ against the yen, it would likely wish to hedge. It could hedge by ____ dollars forward.​

Accepted Answer

A)  ​depreciate; buying 
B)  ​depreciate; selling 
C)  ​appreciate; selling 
D)  ​appreciate; buying 
A)  ​depreciate; buying 
B)  ​depreciate; selling 
C)  ​appreciate; selling 
D)  ​appreciate; buying

Question 14

Eurobonds:

Accepted Answer

A)  are usually issued in bearer form. 
B)  typically carry several protective covenants. 
C)  cannot contain call provisions. 
D)  are usually issued in bearer form AND typically carry several protective covenants. 
A)  are usually issued in bearer form. 
B)  typically carry several protective covenants. 
C)  cannot contain call provisions. 
D)  are usually issued in bearer form AND typically carry several protective covenants.

Question 15

The U.S. dollar is not accepted as a medium of exchange in:

Accepted Answer

A)  industrialized countries outside the United States. 
B)  in any Latin American countries. 
C)  in Eastern European countries where foreign exchange restrictions exist. 
D)  None of these are correct. 
A)  industrialized countries outside the United States. 
B)  in any Latin American countries. 
C)  in Eastern European countries where foreign exchange restrictions exist. 
D)  None of these are correct.

Question 16

According to the text, the forward rate is commonly used for:​

Accepted Answer

A)  ​hedging. 
B)  ​immediate transactions. 
C)  ​previous transactions. 
D)  ​bond transactions. 
A)  ​hedging. 
B)  ​immediate transactions. 
C)  ​previous transactions. 
D)  ​bond transactions.

Question 17

The ADR of a British firm is convertible into 3 shares of stock. The share price of the firm was 30 pounds when the British market closed. When the U.S. market opens, the pound is worth $1.63. The price of this ADR should be $____.

Accepted Answer

A)  48.90 
B)  146.70 
C)  55.21 
D)  None of these are correct. 
A)  48.90 
B)  146.70 
C)  55.21 
D)  None of these are correct.

Question 18

Between 2014 and 2017, U.S.-based MNCs issued large quantities of Eurobonds to take advantage of low interest rates in the eurozone.

Accepted Answer

A) True 
 B)False

Question 19

A currency put option provides the right, but not the obligation, to buy a specific currency at a specific price within a specific period of time.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not true about syndicated loans?

Accepted Answer

A)  A borrower that receives a syndicated loan incurs various fees besides the interest rate. 
B)  The loans must be denominated in U.S. dollars. 
C)  The loans are provided by a group of banks to a borrower. 
D)  All of these are true. 
A)  A borrower that receives a syndicated loan incurs various fees besides the interest rate. 
B)  The loans must be denominated in U.S. dollars. 
C)  The loans are provided by a group of banks to a borrower. 
D)  All of these are true.

Exam 3: International Financial Markets

Which of the following is not a possible bid/ask quotation for the Barbados dollar?

The more intense the competition for a traded currency, the larger the bid/ask spread.

Eurodollar deposits are:

When receiving quotations on a currency's exchange rate, the bank's bid quote is the rate at which the bank is willing to sell currency.

The legal protection of shareholders is the same among countries.

As a result of the Sarbanes-Oxley Act, financial reporting costs were reduced, and many non-U.S. firms decided to place new issues of their stock in the United States.

Which of the following is not true regarding electronic communications networks (ECNs)?

​A quotation representing the value of a foreign currency in dollars is referred to as a(n) ____ quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) ____ quotation.

The international credit market primarily concentrates on:​

The international credit crisis that began in 2008 originated in the credit markets in the eurozone when the governments of some of the eurozone countries were unable to make interest payments on their debt.

Eurobonds:

Which of the following is not true regarding the Bretton Woods Agreement?

Assume a Japanese firm invoices exports to the United States in U.S. dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the U.S. dollar to ____ against the yen, it would likely wish to hedge. It could hedge by ____ dollars forward.​

Eurobonds:

The U.S. dollar is not accepted as a medium of exchange in:

According to the text, the forward rate is commonly used for:​

The ADR of a British firm is convertible into 3 shares of stock. The share price of the firm was 30 pounds when the British market closed. When the U.S. market opens, the pound is worth $1.63. The price of this ADR should be $____.

Between 2014 and 2017, U.S.-based MNCs issued large quantities of Eurobonds to take advantage of low interest rates in the eurozone.

A currency put option provides the right, but not the obligation, to buy a specific currency at a specific price within a specific period of time.

Which of the following is not true about syndicated loans?

Multinational Financial Management: an Overview

International Flow of Funds

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Capital Structure and Cost of Capital

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

A quotation representing the value of a foreign currency in dollars is referred to as a(n) quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) quotation.

The international credit market primarily concentrates on:

Assume a Japanese firm invoices exports to the United States in U.S. dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the U.S. dollar to against the yen, it would likely wish to hedge. It could hedge by dollars forward.

According to the text, the forward rate is commonly used for: