Exam 3: International Financial Markets

The preferences of corporations and governments to borrow in foreign currencies on a short-term basis and of investors to make short-term investments in foreign currencies resulted in the creation of the international bond market.

If a U.S. firm will need C$200,000 in 90 days to pay for imports from Canada and it wishes to avoid the risk from exchange rate fluctuations, it could:​

Assume a U.S. firm has to pay for Korean imports in 60 days. It expects that the Korean won will depreciate, but it still wants to hedge its risk. What type of hedging is most appropriate in this situation?​

An MNC's short-term financing decisions are satisfied in the ____ market, while its medium-term debt financing decisions are satisfied in the ____ market.

The Single European Act prevented a trend toward increased globalization in the banking industry.

The Basel Accord is an agreement among the major European countries to make regulations on imports more uniform across European countries and to reduce taxes on goods traded between these countries.

The Greece credit crisis in the 2012-2015 period refers to Greece being unable to obtain loans from any banks or governments.

The degree of financial information that must be provided by public companies is the same in all countries.

The forward market:​

The strike price is also known as the premium price.

Which currency is used the most to denominate Eurobonds?​

If companies cannot rely on stock markets to obtain funds, they will have to rely more heavily on the ____ market to raise long-term funds.

The international credit market primarily concentrates on:​

According to the text, the average foreign exchange trading around the world ____ per day.

If a U.S. firm is receiving 100,000 euros in 90 days and wishes to avoid the risk from exchange rate fluctuations, it could:​

The bid/ask spread for small retail transactions is commonly in the range of ____ percent.

At any given point in time, a bank's bid quote will be greater than its ask quote.

Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid/ask percentage spread is:​

The LIBOR varies among currencies because the market supply of and the demand for funds vary among currencies.

Which of the following is probably not appropriate for an MNC wishing to reduce its exposure to British pound payables?​