Exam 8: Foreign Exchange and International Financial Markets

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

The euro is the primary transaction currency for the foreign exchange market.

Low-cost Eurocurrency loans can be obtained in offshore financial centers.

Assume that the per capita income in the United States in 2010 was $36,170 while the per capita income in Japan, converted into U.S. dollars, was $38,410. Does this mean that the average Japanese citizen enjoys a higher standard of living than the average American? Why or why not?

The currencies of countries enjoying BOP trade surpluses or low inflation rates are more likely to sell at a ________.

Another name for uncovered interest arbitrage is carry trade.

Which term refers to the price of the foreign currency in terms of the home currency?

How did the Eurocurrency market develop? What role did global banks play in the process?

Swap transactions are the only mechanism for obtaining foreign exchange in the future.

The direct exchange rate and the indirect exchange rate are reciprocals of one another.

The foreign-exchange market is most likely shifting towards electronic trading for the purpose of ________.

What are the different ways to establish an overseas banking operation?

A ________ is a mutual fund that specializes in investing in a given country's firms.

Which of the following is not a common form of financial arbitrage?

Which of the following is the LEAST likely reason that the Euroloan market is the low-cost source of loans for large, credit worthy borrowers?

________ suggests that national differences in expected inflation rates yield differences in nominal interest rates among countries.

The Japanese yen makes up the largest portion of the international bond market.

Delivery takes place at two different points in time with a swap transaction.

Worldwide volume of foreign exchange trading is about ________ per day.

A bond that is issued by Nestle, a Swiss company, that is denominated in yen and sold to residents of Japan is most likely a ________.