Exam 9: International Financial Markets

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 on the spot.

An expanded money supply ________.

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

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

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

What is currency speculation? Why do some governments protect their markets from currency speculation?

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

________ is traded freely in the foreign exchange market,with its price determined by the forces of demand and supply.

While designating an exchange rate,the ________ is always the denominator.

Exchange rate risk is the risk of adverse changes in exchange rates.

The bid-ask spread in the foreign exchange market is the ________.

A bond issued by a Venezuelan company,denominated in U.S.dollars,and sold in Britain,France,and Germany is an example of a ________.

Briefly describe the three main institutions of the foreign exchange market.

An offshore financial center is usually characterized by ________.

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

The unbundling and repackaging of hard-to-trade financial assets into more liquid,negotiable,and marketable financial instruments is called ________.

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

Interest arbitrage is the profit-motivated purchase and sale of interest-paying securities denominated in different currencies.

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