Question 1

One drawback of the Eurocurrency market is

Accepted Answer

A)  increased governmental controls. 
B)  high reserve ratio requirements. 
C)  low interest rates on deposits. 
D)  exposure to foreign exchange risk. 
A)  increased governmental controls. 
B)  high reserve ratio requirements. 
C)  low interest rates on deposits. 
D)  exposure to foreign exchange risk.

Question 2

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include

Accepted Answer

A)  governments. 
B)  corporations with surplus cash. 
C)  pension funds. 
D)  insurance companies. 
A)  governments. 
B)  corporations with surplus cash. 
C)  pension funds. 
D)  insurance companies.

Question 3

The cost of capital is the difference between cost of inputs and outputs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is true of the deregulation of the financial industry?

Accepted Answer

A)  Countries can strengthen the global capital market by encouraging strict regulations. 
B)  Financial services have historically been the most deregulated of all industries. 
C)  Deregulation helped the development of an international capital market. 
D)  Deregulation compels financial services companies to remain as domestic companies. 
A)  Countries can strengthen the global capital market by encouraging strict regulations. 
B)  Financial services have historically been the most deregulated of all industries. 
C)  Deregulation helped the development of an international capital market. 
D)  Deregulation compels financial services companies to remain as domestic companies.

Question 5

Explain Eurobonds with an example.

Accepted Answer

Eurobonds are normally underwritten by a

Question 6

The risk associated with a portfolio

Accepted Answer

A)  declines exponentially as the number of stocks purchased increases and continues to decline until a point of zero risk is reached. 
B)  decreases as the investor increases the number of stocks in her portfolio. 
C)  grows exponentially with the number of stocks purchased. 
D)  increases as the investor increases the number of stocks in her portfolio. 
A)  declines exponentially as the number of stocks purchased increases and continues to decline until a point of zero risk is reached. 
B)  decreases as the investor increases the number of stocks in her portfolio. 
C)  grows exponentially with the number of stocks purchased. 
D)  increases as the investor increases the number of stocks in her portfolio.

Question 7

Using floating exchange rates will help countries reduce the risk of investing in foreign assets.

Accepted Answer

A) True 
 B)False

Question 8

Historically, ________ separated national equity markets from each other.

Accepted Answer

A)  substantial regulatory barriers 
B)  fixed exchange rates 
C)  financial similarities 
D)  desire for high levels of profit 
A)  substantial regulatory barriers 
B)  fixed exchange rates 
C)  financial similarities 
D)  desire for high levels of profit

Question 9

Which of the following statements is true of market makers?

Accepted Answer

A)  Commercial banks are not allowed to function as market makers. 
B)  Market makers are large investors who drive an economy. 
C)  Market makers facilitate only equity-based loans. 
D)  Market makers connect investors and borrowers in a capital market. 
A)  Commercial banks are not allowed to function as market makers. 
B)  Market makers are large investors who drive an economy. 
C)  Market makers facilitate only equity-based loans. 
D)  Market makers connect investors and borrowers in a capital market.

Question 10

________ deposits are regulated in all industrialized countries.

Accepted Answer

A)  U.S. currency 
B)  Domestic currency 
C)  Foreign currency 
D)  Eurocurrency 
A)  U.S. currency 
B)  Domestic currency 
C)  Foreign currency 
D)  Eurocurrency

Question 11

When using the Euromarkets, companies

Accepted Answer

A)  have funds that lack liquidity. 
B)  pay less for loans. 
C)  attract low interest rates. 
D)  are secured from foreign exchange risks. 
A)  have funds that lack liquidity. 
B)  pay less for loans. 
C)  attract low interest rates. 
D)  are secured from foreign exchange risks.

Question 12

The element of risk into investing in foreign assets is greater with ________ exchange rates.

Accepted Answer

A)  floating 
B)  pegged 
C)  fixed 
D)  managed 
A)  floating 
B)  pegged 
C)  fixed 
D)  managed

Question 13

Companies receive ________ when using the Eurocurrency market.

Accepted Answer

A)  a lower interest rate on deposits and pay more for loans 
B)  tax incentives 
C)  a higher interest rate on deposits and pay less for loans 
D)  liquid asset reserve waiver 
A)  a lower interest rate on deposits and pay more for loans 
B)  tax incentives 
C)  a higher interest rate on deposits and pay less for loans 
D)  liquid asset reserve waiver

Question 14

What is a disadvantage of the global capital market?

Accepted Answer

A)  Foreign investments may be driven by speculative flows in the market. 
B)  A truly global market reduces the liquidity of investments. 
C)  The availability of capital is low in a global capital market. 
D)  The cost of capital is more in a global market than a domestic market. 
A)  Foreign investments may be driven by speculative flows in the market. 
B)  A truly global market reduces the liquidity of investments. 
C)  The availability of capital is low in a global capital market. 
D)  The cost of capital is more in a global market than a domestic market.

Question 15

Investors can reduce the level of risk by diversifying a portfolio internationally.

Accepted Answer

A) True 
 B)False

Question 16

Briefly describe the trends observed in the global deregulation of financial services.

Accepted Answer

In country after country, financial serv

Question 17

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

Accepted Answer

A) True 
 B)False

Question 18

How does growth in global capital markets impact investing firms?

Accepted Answer

On the investment side, the growth of th

Question 19

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

Accepted Answer

A) True 
 B)False

Question 20

The Eurocurrency market is attractive to both depositors and borrowers because

Accepted Answer

A)  it allows fair trade within the European Union. 
B)  it has strong government regulations and safeguards. 
C)  of its commitment to economic growth in underdeveloped nations. 
D)  of its lack of government regulation. 
A)  it allows fair trade within the European Union. 
B)  it has strong government regulations and safeguards. 
C)  of its commitment to economic growth in underdeveloped nations. 
D)  of its lack of government regulation.

One drawback of the Eurocurrency market is

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include

The cost of capital is the difference between cost of inputs and outputs.

Which of the following statements is true of the deregulation of the financial industry?

Explain Eurobonds with an example.

The risk associated with a portfolio

Using floating exchange rates will help countries reduce the risk of investing in foreign assets.

Historically, ________ separated national equity markets from each other.

Which of the following statements is true of market makers?

________ deposits are regulated in all industrialized countries.

When using the Euromarkets, companies

The element of risk into investing in foreign assets is greater with ________ exchange rates.

Companies receive ________ when using the Eurocurrency market.

What is a disadvantage of the global capital market?

Investors can reduce the level of risk by diversifying a portfolio internationally.

Briefly describe the trends observed in the global deregulation of financial services.

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

How does growth in global capital markets impact investing firms?

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

The Eurocurrency market is attractive to both depositors and borrowers because

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

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Exam 12: The Global Capital Market

One drawback of the Eurocurrency market is

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include

The cost of capital is the difference between cost of inputs and outputs.

Which of the following statements is true of the deregulation of the financial industry?

Explain Eurobonds with an example.

The risk associated with a portfolio

Using floating exchange rates will help countries reduce the risk of investing in foreign assets.

Historically, ________ separated national equity markets from each other.

Which of the following statements is true of market makers?

________ deposits are regulated in all industrialized countries.

When using the Euromarkets, companies

The element of risk into investing in foreign assets is greater with ________ exchange rates.

Companies receive ________ when using the Eurocurrency market.

What is a disadvantage of the global capital market?

Investors can reduce the level of risk by diversifying a portfolio internationally.

Briefly describe the trends observed in the global deregulation of financial services.

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

How does growth in global capital markets impact investing firms?

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

The Eurocurrency market is attractive to both depositors and borrowers because

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters