Question 1

Forward markets for currencies of developing countries are:​

Accepted Answer

A) prohibited. 
B) less liquid than markets for currencies of developed countries. 
C) more liquid than markets for currencies of developed countries. 
D) only available for use by government agencies. 
A) prohibited. 
B) less liquid than markets for currencies of developed countries. 
C) more liquid than markets for currencies of developed countries. 
D) only available for use by government agencies.

Question 2

The ask quote is the price at which a bank offers to sell a currency.

Accepted Answer

A) True 
 B)False

Question 3

The main participants in the international money market are:​

Accepted Answer

A) consumers. 
B) small firms. 
C) large corporations. 
D) small European firms needing European currencies for international trade. 
A) consumers. 
B) small firms. 
C) large corporations. 
D) small European firms needing European currencies for international trade.

Question 4

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 5

A currency futures contract is a contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date.

Accepted Answer

A) True 
 B)False

Question 6

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Accepted Answer

A) 10 
B) 13.28 
C) 30.12 
D) 39.84 
A) 10 
B) 13.28 
C) 30.12 
D) 39.84

Question 7

Shareholders have more voting power in some countries than in others.

Accepted Answer

A) True 
 B)False

Question 8

The term LIBOR refers to international bonds that were issued in London.

Accepted Answer

A) True 
 B)False

Question 9

The Bretton Woods Agreement is an agreement to standardize banks' capital requirements across countries; the resulting capital ratios are computed using risk-weighted assets.

Accepted Answer

A) True 
 B)False

Question 10

Assume the Canadian dollar is equal to $.88 and the Peruvian nuevo sol is equal to $.35. The value of the Peruvian nuevosol in Canadian dollars is:​

Accepted Answer

A) about .3621 Canadian dollars. 
B) about .3977 Canadian dollars. 
C) about 2.36 Canadian dollars. 
D) about 2.51 Canadian dollars. 
A) about .3621 Canadian dollars. 
B) about .3977 Canadian dollars. 
C) about 2.36 Canadian dollars. 
D) about 2.51 Canadian dollars.

Question 11

Certificates representing bundles of the stock of a non-U.S. firm are called:​

Accepted Answer

A) Eurobonds. 
B) ADRs. 
C) FRNs. 
D) LIBOR certificates. 
A) Eurobonds. 
B) ADRs. 
C) FRNs. 
D) LIBOR certificates.

Question 12

Institutional investors such as commercial banks, mutual funds, insurance companies, and pension funds from many countries are major participants in the international bond market.

Accepted Answer

A) True 
 B)False

Question 13

Under the gold standard, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not true regarding ADRs?​

Accepted Answer

A) ADRs are denominated in the currency of the stock's home country. 
B) ADRs enable U.S. investors to avoid cross-border transactions. 
C) ADRs allow non-U.S. firms to tap into the U.S. market for funds. 
D) ADRs sometimes allow for arbitrage opportunities. 
A) ADRs are denominated in the currency of the stock's home country. 
B) ADRs enable U.S. investors to avoid cross-border transactions. 
C) ADRs allow non-U.S. firms to tap into the U.S. market for funds. 
D) ADRs sometimes allow for arbitrage opportunities.

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Shareholders can have influence on a wider variety of management issues in some countries than in others.

Accepted Answer

A) True 
 B)False

Question 18

When obtaining a loan, the risk premium depends on the:​

Accepted Answer

A) risk-free interest rate of the borrower. 
B) credit risk of the borrower. 
C) borrower's stock price. 
D) lender's stock price. 
A) risk-free interest rate of the borrower. 
B) credit risk of the borrower. 
C) borrower's stock price. 
D) lender's stock price.

Question 19

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 20

Which of the following is not a factor that affects the bid/ask spread?​

Accepted Answer

A) order costs 
B) inventory costs 
C) volume 
D) All of the above factors affect the bid/ask spread 
A) order costs 
B) inventory costs 
C) volume 
D) All of the above factors affect the bid/ask spread

Exam 3: International Financial Markets

Forward markets for currencies of developing countries are:​

The ask quote is the price at which a bank offers to sell a currency.

The main participants in the international money market are:​

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

A currency futures contract is a contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date.

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Shareholders have more voting power in some countries than in others.

The term LIBOR refers to international bonds that were issued in London.

The Bretton Woods Agreement is an agreement to standardize banks' capital requirements across countries; the resulting capital ratios are computed using risk-weighted assets.

Assume the Canadian dollar is equal to $.88 and the Peruvian nuevo sol is equal to $.35. The value of the Peruvian nuevosol in Canadian dollars is:​

Certificates representing bundles of the stock of a non-U.S. firm are called:​

Institutional investors such as commercial banks, mutual funds, insurance companies, and pension funds from many countries are major participants in the international bond market.

Under the gold standard, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold.

Which of the following is not true regarding ADRs?​

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.

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

Shareholders can have influence on a wider variety of management issues in some countries than in others.

When obtaining a loan, the risk premium depends on the:​

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.

Which of the following is not a factor that affects the bid/ask spread?​

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 Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Forward markets for currencies of developing countries are:

The main participants in the international money market are:

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

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

Assume the Canadian dollar is equal to $.88 and the Peruvian nuevo sol is equal to $.35. The value of the Peruvian nuevosol in Canadian dollars is:

Certificates representing bundles of the stock of a non-U.S. firm are called:

Which of the following is not true regarding ADRs?

When obtaining a loan, the risk premium depends on the:

Which of the following is not a factor that affects the bid/ask spread?