Exam 8: Foreign Exchange and International Financial Markets

The world's largest trading markets include which one of the following?

What is the difference between a Eurocurrency and a Eurobond?

A(n) ________ is the price of the home currency in terms of the foreign currency.

Two-point arbitrage involves profiting from price differences in two geographically different markets.

If a foreign currency is selling at a forward premium, the foreign exchange market believes that the currency will depreciate over time.

The price of foreign exchange is set by demand and supply in the marketplace.

Why have international banks increasingly provided their own overseas operations rather than using correspondent banks?

A forward transaction ________.

When an overseas banking operation is jointly owned by a parent bank and a local or foreign partner, what is it called?

The carry trade tries to exploit differences in the interest rates between countries. .

What is the international Fisher effect? Explain how it relates to the foreign-exchange market?

What is the difference between a call option and a put option?

Which of the following is a characteristic of most offshore financial centers?

MNCs can cross-list their common stocks on multiple stock exchanges.

Explain how the rising value of the Canadian dollar relative to the U.S. dollar affects Canadian consumers, Canadian visitors to the United States, and Canadian exporters to the United States.

Exchange rates are quoted both directly and indirectly.

During one week in August 2007, the yen rose 4 percent versus the U.S. dollar, 9 percent against the Australian dollar, and 11 percent relative to the New Zealand dollar.

What term refers to a currency on deposit outside its country of issue?

Currency futures represent only 1 percent of the foreign-exchange market.

What is a currency selling at if the forward price is less than the spot price?