Exam 12: The Global Capital Market

A ________ market benefits investors by providing a wider range of investment opportunities, thereby allowing them to build portfolios of international investments that diversify their risks.

________ requires a corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

Eurodollars are

________ is characterized by a lack of government regulation.

Market makers are

The relatively low correlation between the movement of stock markets in different countries indicates that

________ are normally underwritten by an international syndicate of banks.

Investors are able to reduce risks by diversifying an investment portfolio internationally, and the risk reduction effects would be greater if not for

An Italian corporation issues a bond denominated in dollars that has no regulatory interference. This is an example of a

________ is made when a corporation sells stock to investors.

If the international capital market continues to grow, financial intermediaries likely will provide less quality information about foreign investment opportunities.

Depositors are not protected against bank failures in the Eurocurrency market.

Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.

What are the financial advantages that make the Eurocurrency market attractive to both depositors and borrowers?

Write a brief note on foreign exchange risks and the cost of capital.

The cost of recording, transmitting, and processing information has doubled with advancements in technology since 1964.

What is a disadvantage of the integration of the international capital market facilitated by technology?

Borrowers can hedge against foreign exchange risks by entering into a ________ contract.

The cost of capital is

Which of the following is true of fixed-rate bonds?