Exam 9: International Financial Markets

One of the major forces responsible for the rapid growth rate of the international capital market is ________.

An exchange rate requiring delivery of the traded currency within two business days is called a cross rate.

An excess money supply creates a borrower's market,forcing interest rates up and the cost of borrowing down.

An expanded money supply ________.

If an individual is traveling to another country and wants to exchange currencies at his bank before departing,he will be quoted the spot rate since he is exchanging that will be delivered to him with two business days.

Exchange rate risk is the risk of fluctuation in exchange rates.

Explain the function of spot rates and the spot market.

The market consisting of all the world's currencies that are banked outside their countries of origin is called the ________.

Currency arbitrage is the instantaneous purchase and sale of a currency in different markets for profit.

Scenario: Trader's Paradise Trader's Paradise is a global merchant that sells a variety of products. The company operates in forty-eight different countries (some developed, some developing) and some former communist countries. The company faces substantial risks given the differing conditions in foreign exchange markets. -When doing business with former communist countries,Trader's Paradise insists on getting paid in a currency that can be traded freely in the foreign exchange market.The price of this currency is determined by the forces of supply and demand.Which of the following is the mode of payment illustrated in this scenario?

The London Interbank Bid Rate (LIBID)is the interest rate offered by London banks to large investors for Eurocurrency deposits.

An exchange rate of ¥117.87/$ indicates ________.

________ is a decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants.

Which of the following terms refers to a stock market with no central geographic location?

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

The market in which currencies are bought and sold and their prices determined is called the ________.

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

Which of the following represents a country or territory whose financial sector features very few regulations and few,if any,taxes?

The absence of government regulation in the Eurobond market ________.

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