Exam 9: International Financial Markets

The world's three most important financial centers are ________.

The world's largest banks exchange currencies at spot and forward rates in the ________.

The practice of insuring against potential losses that result from adverse changes in exchange rates is called currency arbitrage.

A ________ is the simultaneous purchase and sale of foreign exchange for two different dates.

________ and ________ are the two primary means by which companies obtain external financing.

In a quoted exchange rate of $1.69/British pound, the British pound is called the ________.

When small groups of low-income entrepreneurs borrow money at competitive rates without having to put up collateral, the process is known as obtaining ________.

The exchange rate requiring delivery of the traded currency within two business days is called the ________.

The purchase or sale of a currency with the expectation that its value will change and generate a profit is called ________.

All of the following are true of booking centers EXCEPT that ________.

The practice of insuring against potential losses that result from adverse changes in exchange rates is called ________.

Differentiate between currency speculation and currency arbitrage. Which is riskier?

________ refers to the shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows.

Today, the most important factor fueling growth in the international bond market is ________.

By issuing bonds in the international bond market, borrowers from newly industrialized and developing countries can borrow money from other nations where interest rates are lower.

Which of these is a country or territory whose financial sector features very few regulations and few, if any, taxes?

A convertible currency (or soft currency) is traded freely in the foreign exchange market with its price determined by the London banks.

The rate at which one currency is exchanged for another depends on the size of the transaction, the trader conducting it, and general economic conditions.

Why do governments impose currency restrictions and how can companies get around such restrictions?

A rise in a country's currency forces borrowers to shell out more local currency to pay off the interest owed on bonds denominated in an unaffected currency.