Question 1

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

Accepted Answer

A)  international bonds 
B)  foreign bonds 
C)  Eurobonds 
D)  local bonds 
A)  international bonds 
B)  foreign bonds 
C)  Eurobonds 
D)  local bonds

Question 2

The profit-motivated purchase and sale of interest-paying securities denominated in different currencies is called ________.

Accepted Answer

A)  currency arbitrage 
B)  currency hedging 
C)  interest arbitrage 
D)  interest hedging 
A)  currency arbitrage 
B)  currency hedging 
C)  interest arbitrage 
D)  interest hedging

Question 3

Which of the following participate in capital markets?

Accepted Answer

A)  Governments 
B)  Mutual funds 
C)  Non-profit organizations 
D)  All of the above 
A)  Governments 
B)  Mutual funds 
C)  Non-profit organizations 
D)  All of the above

Question 4

A ________ is a system that allocates financial resources in the form of debt and equity according to their most efficient uses.

Accepted Answer

The answer of A ________ is a system that allocates...

Question 5

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

Accepted Answer

The answer of Bonds sold outside the borrower's country and...

Question 6

The most important factor fueling growth in the international bond market is high interest rates in developed nations.

Accepted Answer

A) True 
 B)False

Question 7

Booking centers are usually located on small island nations and territories with favorable tax and/or secrecy laws.

Accepted Answer

A) True 
 B)False

Question 8

Identify and explain factors responsible for the growth of the international equity market.

Accepted Answer

The growth of the international equity m

Question 9

Which of the following is NOT true of currency hedging?

Accepted Answer

A)  It is the practice of insuring against potential losses that result from adverse changes in exchange rates. 
B)  Companies use it to lessen the risk associated with international transfers of funds. 
C)  Companies use it to protect themselves in credit transactions where there is a time lag between billing and receipt of payment. 
D)  It is the instantaneous purchase and sale of a currency in different markets for profit. 
A)  It is the practice of insuring against potential losses that result from adverse changes in exchange rates. 
B)  Companies use it to lessen the risk associated with international transfers of funds. 
C)  Companies use it to protect themselves in credit transactions where there is a time lag between billing and receipt of payment. 
D)  It is the instantaneous purchase and sale of a currency in different markets for profit.

Question 10

A way to get around national restrictions on currency convertibility is to use barter.

Accepted Answer

A) True 
 B)False

Question 11

Investors increase risk by holding international securities whose prices move independently.

Accepted Answer

A) True 
 B)False

Question 12

Interest rates that the world's largest banks charge one another for loans are called ________.

Accepted Answer

interbank

Question 13

Scenario: Trader's Paradise
Trader's Paradise is a global merchant that sells a variety of products. The company operates in 48 different countries (some developed, some developing) and some former communist countries. The company faces substantial risks given differing conditions in foreign exchange markets.
-If Trader's Paradise instead purchases euros expecting the value to rise and generate a profit for the company, it is called currency ________.

Accepted Answer

A)  conversion 
B)  speculation 
C)  hedging 
D)  arbitrage 
A)  conversion 
B)  speculation 
C)  hedging 
D)  arbitrage

Question 14

Scenario: ABC Software
ABC Software is a producer of educational software for small children. The company has operations in Switzerland and would like to expand its foreign production with a new facility in China.
-The company's financial advisors recommend that ABC Software conduct most of its business in a vehicle currency. ABC Software has learned that all of the following are true of vehicle currencies EXCEPT ________.

Accepted Answer

A)  a vehicle currency is a currency used as an intermediary to convert funds between two other currencies 
B)  the U.S. dollar, Japanese yen, British pound, and European Union euro are all examples of vehicle currencies 
C)  the U.S. dollar became a vehicle currency after World War II when all of the world's major currencies were tied indirectly to the dollar because it was the most stable currency 
D)  the Chinese won is expected to become a vehicle currency in the near future as China's position in world trade continues to grow 
A)  a vehicle currency is a currency used as an intermediary to convert funds between two other currencies 
B)  the U.S. dollar, Japanese yen, British pound, and European Union euro are all examples of vehicle currencies 
C)  the U.S. dollar became a vehicle currency after World War II when all of the world's major currencies were tied indirectly to the dollar because it was the most stable currency 
D)  the Chinese won is expected to become a vehicle currency in the near future as China's position in world trade continues to grow

Question 15

What is an offshore financial center? Differentiate between an operational and a booking center, providing country examples of each.

Accepted Answer

An offshore financial center is a jurisd

Question 16

Which of the following is not a purpose of the international capital market?

Accepted Answer

A)  Reduces risk for lenders 
B)  Expands the money supply for borrowers 
C)  Reduces the cost of money to borrowers 
D)  Preserves hard currencies to finance trade deficits 
A)  Reduces risk for lenders 
B)  Expands the money supply for borrowers 
C)  Reduces the cost of money to borrowers 
D)  Preserves hard currencies to finance trade deficits

Question 17

What is the foreign exchange market? Explain why investors use this market.

Accepted Answer

The answer of What is the foreign exchange market? Explain...

Question 18

Governments impose currency restrictions to ________.

Accepted Answer

A)  protect a currency from speculators 
B)  preserve hard currencies to finance trade deficits or repay debts 
C)  keep resident individuals and businesses from investing in other nations 
D)  all of the above 
A)  protect a currency from speculators 
B)  preserve hard currencies to finance trade deficits or repay debts 
C)  keep resident individuals and businesses from investing in other nations 
D)  all of the above

Question 19

Scenario: ABC Software
ABC Software is a producer of educational software for small children. The company has operations in Switzerland and would like to expand its foreign production with a new facility in China.
-ABC Software has had difficulty obtaining funds to expand and a friend of the CEO recommends the company explore an offshore financial center, which ________.

Accepted Answer

A)  is a country or territory whose financial sector features very few regulations and few, if any, taxes 
B)  tends to be characterized by political and economic instability making them cheap, but risky sources of funds 
C)  typically lends money to companies that have had difficulty getting financing elsewhere because of poor credit records 
D)  is a financial center located in a resort community that is popular among financiers, and therefore allows companies seeking financing to make lucrative contacts 
A)  is a country or territory whose financial sector features very few regulations and few, if any, taxes 
B)  tends to be characterized by political and economic instability making them cheap, but risky sources of funds 
C)  typically lends money to companies that have had difficulty getting financing elsewhere because of poor credit records 
D)  is a financial center located in a resort community that is popular among financiers, and therefore allows companies seeking financing to make lucrative contacts

Question 20

Identify and explain the types of currency instruments used in the forward market.

Accepted Answer

The answer of Identify and explain the types of currency...

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

The profit-motivated purchase and sale of interest-paying securities denominated in different currencies is called ________.

Which of the following participate in capital markets?

A ________ is a system that allocates financial resources in the form of debt and equity according to their most efficient uses.

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

The most important factor fueling growth in the international bond market is high interest rates in developed nations.

Booking centers are usually located on small island nations and territories with favorable tax and/or secrecy laws.

Identify and explain factors responsible for the growth of the international equity market.

Which of the following is NOT true of currency hedging?

A way to get around national restrictions on currency convertibility is to use barter.

Investors increase risk by holding international securities whose prices move independently.

Interest rates that the world's largest banks charge one another for loans are called ________.

What is an offshore financial center? Differentiate between an operational and a booking center, providing country examples of each.

Which of the following is not a purpose of the international capital market?

What is the foreign exchange market? Explain why investors use this market.

Governments impose currency restrictions to ________.

Identify and explain the types of currency instruments used in the forward market.

Globalization

Cross-Cultrual Busines

Politics, Law, and Business Ethics

Economic Systems and Development

International Trade

Business-Government Trade Relations

Foreign Direct Investment

Regional Economic Integration

International Money System

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters

Exam 9: International Financial Markets

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

The profit-motivated purchase and sale of interest-paying securities denominated in different currencies is called ________.

Which of the following participate in capital markets?

A ________ is a system that allocates financial resources in the form of debt and equity according to their most efficient uses.

Bonds sold outside the borrower's country and denominated in the currency of the country in which they are sold are called ________.

The most important factor fueling growth in the international bond market is high interest rates in developed nations.

Booking centers are usually located on small island nations and territories with favorable tax and/or secrecy laws.

Identify and explain factors responsible for the growth of the international equity market.

Which of the following is NOT true of currency hedging?

A way to get around national restrictions on currency convertibility is to use barter.

Investors increase risk by holding international securities whose prices move independently.

Interest rates that the world's largest banks charge one another for loans are called ________.

What is an offshore financial center? Differentiate between an operational and a booking center, providing country examples of each.

Which of the following is not a purpose of the international capital market?

What is the foreign exchange market? Explain why investors use this market.

Governments impose currency restrictions to ________.

Identify and explain the types of currency instruments used in the forward market.

Globalization

Cross-Cultrual Busines

Politics, Law, and Business Ethics

Economic Systems and Development

International Trade

Business-Government Trade Relations

Foreign Direct Investment

Regional Economic Integration

International Money System

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters