Exam 9: International Financial Markets

The spread of nationalization encourages the growth of the international equity market.

Scenario: Sally Goes to Japan Sally Johnson has identified a market for her company's products in Japan. She is excited about expanding her company, but knows that she needs to learn how the foreign exchange market works before she can successfully sell her products abroad. -Which of the following is true about a quote of ¥117.87/$?

Scenario: ABC Software ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China. -If ABC Software simultaneously purchases and sells foreign exchange for two different dates,the company is said to be involved in ________.

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

Banks in the interbank market ________.

The ________ is the currency that dominates the foreign exchange market.

Why is London most likely the top market for trading foreign exchange?

The exchange rate at which a bank will purchase a currency is called a ________ rate.

How does the international capital market reduce the cost of money for borrowers? What are the two components for every quoted exchange rate?

Booking centers are usually located on small territories with high taxes and/or secrecy laws.

The ease with which bondholders and shareholders may convert their investments into cash is called ________.

All foreign exchange transactions can be performed in the over-the-counter (OTC)market.

Which of the following is used by governments for the convertibility of currencies in their countries?

A currency used as an intermediary to convert funds between two other currencies in the foreign exchange market is called a ________.

Increased regulation of national capital markets has been instrumental in the slowing down the expansion of the international capital market.

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

An exchange rate calculated using two other exchange rates is called a(n)________.

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. -To insure against potential losses that result from adverse changes in exchange rates,Trader's Paradise should use currency ________.

Forward rates represent the expectations of currency traders and bankers regarding a currency's future spot rate.

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