Question 1

Eurobonds fall within the regulatory domain of the European Economic Community.

Accepted Answer

A) True 
 B)False

Question 2

The relatively low correlation between the movements of stock markets in different countries indicates that countries face different economic conditions.

Accepted Answer

A) True 
 B)False

Question 3

Hedge funds

Accepted Answer

A)  are public investment funds that invest in corporate bonds and shares. 
B)  make long bets rather than short bets. 
C)  are investment funds managed by the government. 
D)  make short bets on assets that they think will decline in value. 
A)  are public investment funds that invest in corporate bonds and shares. 
B)  make long bets rather than short bets. 
C)  are investment funds managed by the government. 
D)  make short bets on assets that they think will decline in value.

Question 4

As investors increase the number of stocks in their portfolio, the portfolio's risk

Accepted Answer

A)  increases initially and declines later. 
B)  declines slowly and steadily. 
C)  increases exponentially. 
D)  declines rapidly in the beginning. 
A)  increases initially and declines later. 
B)  declines slowly and steadily. 
C)  increases exponentially. 
D)  declines rapidly in the beginning.

Question 5

Foreign bonds sold in the United States are

Accepted Answer

A)  Yankee bonds. 
B)  Uncle Sam's bonds. 
C)  Bulldogs. 
D)  Eagles. 
A)  Yankee bonds. 
B)  Uncle Sam's bonds. 
C)  Bulldogs. 
D)  Eagles.

Question 6

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

Accepted Answer

A) True 
 B)False

Question 7

What is an advantage that banks have when they deal with foreign currencies?

Accepted Answer

A)  Interest payments to customers are low when dealing with foreign currencies. 
B)  Accounts need not be maintained when dealing with foreign currencies. 
C)  Risks that investors face are low when dealing with foreign currencies. 
D)  Governments give banks more freedom when dealing with foreign currencies. 
A)  Interest payments to customers are low when dealing with foreign currencies. 
B)  Accounts need not be maintained when dealing with foreign currencies. 
C)  Risks that investors face are low when dealing with foreign currencies. 
D)  Governments give banks more freedom when dealing with foreign currencies.

Question 8

Which of the following statements is true of Eurocurrency?

Accepted Answer

A)  The Eurocurrency market is a relatively high-cost source of funds. 
B)  It is produced and banked within European countries. 
C)  Eurocurrency can be created anywhere in the world. 
D)  It is used only for internal transactions within European Union. 
A)  The Eurocurrency market is a relatively high-cost source of funds. 
B)  It is produced and banked within European countries. 
C)  Eurocurrency can be created anywhere in the world. 
D)  It is used only for internal transactions within European Union.

Question 9

Which of the following is true of the Eurobond market?

Accepted Answer

A)  There are many regulations that protect investors. 
B)  Government limitations are generally more stringent for securities denominated in foreign currencies. 
C)  There are less stringent disclosure requirements than in most domestic bond markets. 
D)  They have an unfavorable tax status. 
A)  There are many regulations that protect investors. 
B)  Government limitations are generally more stringent for securities denominated in foreign currencies. 
C)  There are less stringent disclosure requirements than in most domestic bond markets. 
D)  They have an unfavorable tax status.

Question 10

Governments give banks less freedom when they deal in foreign currencies.

Accepted Answer

A) True 
 B)False

Question 11

Entering into a forward contract will

Accepted Answer

A)  increase the risk involved in a transaction. 
B)  lower the borrower's cost of capital. 
C)  benefit the borrower because the interest rate will be lower. 
D)  raise the borrower's cost of capital. 
A)  increase the risk involved in a transaction. 
B)  lower the borrower's cost of capital. 
C)  benefit the borrower because the interest rate will be lower. 
D)  raise the borrower's cost of capital.

Question 12

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

Accepted Answer

A) True 
 B)False

Question 13

An equity loan is made when

Accepted Answer

A)  a corporation pledge equities or other assets to borrow money. 
B)  corporations avail cash loans from individuals. 
C)  a corporation sells stock to investors. 
D)  corporations issue bonds to individual investors. 
A)  a corporation pledge equities or other assets to borrow money. 
B)  corporations avail cash loans from individuals. 
C)  a corporation sells stock to investors. 
D)  corporations issue bonds to individual investors.

Question 14

An important drawback of a purely domestic capital market is that the

Accepted Answer

A)  investment does not receive protection from governments. 
B)  investments are riskier than in global capital markets. 
C)  market lacks a strong regulatory mechanism. 
D)  cost of capital tends to be higher than it is in a global market. 
A)  investment does not receive protection from governments. 
B)  investments are riskier than in global capital markets. 
C)  market lacks a strong regulatory mechanism. 
D)  cost of capital tends to be higher than it is in a global market.

Question 15

The liquidity of the market is ________ in a purely domestic capital market.

Accepted Answer

A)  held in reserves 
B)  unlimited 
C)  based upon the stock market 
D)  limited 
A)  held in reserves 
B)  unlimited 
C)  based upon the stock market 
D)  limited

Question 16

Hedge funds position themselves to make ________ bets on assets that they think will ________.

Accepted Answer

A)  long; weather a volatile market 
B)  long; increase in value 
C)  short; weather a volatile market 
D)  short; increase in value 
A)  long; weather a volatile market 
B)  long; increase in value 
C)  short; weather a volatile market 
D)  short; increase in value

Question 17

Financial services is an information-intensive industry.

Accepted Answer

A) True 
 B)False

Question 18

Analysts who believe globalization of capital has serious risks argue that

Accepted Answer

A)  capital does not shift in and out of countries as quickly as conditions change. 
B)  individual nations are becoming more vulnerable to speculative capital flows. 
C)  deregulation of trade is helpful for the economic growth in a country. 
D)  most of the capital that moves internationally is pursuing long-term gains. 
A)  capital does not shift in and out of countries as quickly as conditions change. 
B)  individual nations are becoming more vulnerable to speculative capital flows. 
C)  deregulation of trade is helpful for the economic growth in a country. 
D)  most of the capital that moves internationally is pursuing long-term gains.

Question 19

Eurobonds are

Accepted Answer

A)  denominated in the currency of the country in which they are issued. 
B)  normally underwritten by an international syndicate of banks. 
C)  denominated in a currency that is accepted by the European Union. 
D)  sold outside the borrower's county with reference to the originating currency. 
A)  denominated in the currency of the country in which they are issued. 
B)  normally underwritten by an international syndicate of banks. 
C)  denominated in a currency that is accepted by the European Union. 
D)  sold outside the borrower's county with reference to the originating currency.

Question 20

________ can inject risk into foreign currency borrowing.

Accepted Answer

A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates 
A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates

Eurobonds fall within the regulatory domain of the European Economic Community.

The relatively low correlation between the movements of stock markets in different countries indicates that countries face different economic conditions.

Hedge funds

As investors increase the number of stocks in their portfolio, the portfolio's risk

Foreign bonds sold in the United States are

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

What is an advantage that banks have when they deal with foreign currencies?

Which of the following statements is true of Eurocurrency?

Which of the following is true of the Eurobond market?

Governments give banks less freedom when they deal in foreign currencies.

Entering into a forward contract will

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

An equity loan is made when

An important drawback of a purely domestic capital market is that the

The liquidity of the market is ________ in a purely domestic capital market.

Hedge funds position themselves to make bets on assets that they think will .

Financial services is an information-intensive industry.

Analysts who believe globalization of capital has serious risks argue that

Eurobonds are

________ can inject risk into foreign currency borrowing.

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

Exam 12: The Global Capital Market

Eurobonds fall within the regulatory domain of the European Economic Community.

The relatively low correlation between the movements of stock markets in different countries indicates that countries face different economic conditions.

Hedge funds

As investors increase the number of stocks in their portfolio, the portfolio's risk

Foreign bonds sold in the United States are

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

What is an advantage that banks have when they deal with foreign currencies?

Which of the following statements is true of Eurocurrency?

Which of the following is true of the Eurobond market?

Governments give banks less freedom when they deal in foreign currencies.

Entering into a forward contract will

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

An equity loan is made when

An important drawback of a purely domestic capital market is that the

The liquidity of the market is ________ in a purely domestic capital market.

Hedge funds position themselves to make ________ bets on assets that they think will ________.

Financial services is an information-intensive industry.

Analysts who believe globalization of capital has serious risks argue that

Eurobonds are

________ can inject risk into foreign currency borrowing.

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

Hedge funds position themselves to make bets on assets that they think will .