Question 1

Liquidity refers to the ease with which bondholders and shareholders may convert their investments to cash.

Accepted Answer

A) True 
 B)False

Question 2

The international bond market consists of all bonds sold by issuing companies,governments,or other organizations ________.

Accepted Answer

A) within their own countries 
B) outside their own countries 
C) within developing nations 
D) within developed nations 
A) within their own countries 
B) outside their own countries 
C) within developing nations 
D) within developed nations

Question 3

Company debt normally takes the form of ________.

Accepted Answer

A) bonds 
B) equity 
C) stocks 
D) bank loans 
A) bonds 
B) equity 
C) stocks 
D) bank loans

Question 4

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.
-The company's financial advisors recommend that ABC Software conduct most of its business in a vehicle currency.Which of the following is true of vehicle currencies?

Accepted Answer

A) A vehicle currency is a contract that requires the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate. 
B) The U.S.dollar,Australian dollar,Japanese yen,and British pound 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 yuan 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 contract that requires the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate. 
B) The U.S.dollar,Australian dollar,Japanese yen,and British pound 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 yuan is expected to become a vehicle currency in the near future as China's position in world trade continues to grow.

Question 5

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

Accepted Answer

A) Securities exchanges 
B) Eurocurrency market 
C) Interbank market 
D) Over-the-counter market 
A) Securities exchanges 
B) Eurocurrency market 
C) Interbank market 
D) Over-the-counter market

Question 6

All of Europe's currencies combined are referred to as Eurocurrency.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

Certain government policies are frequent

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Describe the purposes of the international capital market.What factors account for its rapid growth?

Accepted Answer

The international capital market is a ne

Question 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

A) interbank interest rates 
B) London Interbank Bid Rates 
C) exchange rates 
D) official bank rates 
A) interbank interest rates 
B) London Interbank Bid Rates 
C) exchange rates 
D) official bank rates

Question 13

British pounds of a British trading company that are deposited in a bank are called ________.

Accepted Answer

A) Eurodollars 
B) U)S.dollars 
C) Europounds 
D) Pounds 
A) Eurodollars 
B) U)S.dollars 
C) Europounds 
D) Pounds

Question 14

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

Accepted Answer

A) barter 
B) clearing 
C) countertrade 
D) liquidity 
A) barter 
B) clearing 
C) countertrade 
D) liquidity

Question 15

An exchange rate of ¥117.87/$ indicates ________.

Accepted Answer

A) that 117.87 yen buys one dollar 
B) that 117.87 dollars buys one yen 
C) a direct quote on the dollar 
D) an indirect quote on the yen 
A) that 117.87 yen buys one dollar 
B) that 117.87 dollars buys one yen 
C) a direct quote on the dollar 
D) an indirect quote on the yen

Question 16

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 holds a currency option to purchase Swiss francs at SF 1.67/$ in 30 days,at the end of which the exchange rate is SF1.70/$,then ABC Software ________.

Accepted Answer

A) is required to follow through on a currency exchange 
B) has succeeded in hedging against exchange rate risk 
C) would exercise its currency option 
D) would not exercise its currency option 
A) is required to follow through on a currency exchange 
B) has succeeded in hedging against exchange rate risk 
C) would exercise its currency option 
D) would not exercise its currency option

Question 17

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

Accepted Answer

A) offshore financial center 
B) interbank market 
C) international financial services district 
D) Eurocurrency market 
A) offshore financial center 
B) interbank market 
C) international financial services district 
D) Eurocurrency market

Question 18

Which of the following is a major purpose of the international capital market?

Accepted Answer

A) to reduce entrepreneurial initiatives 
B) to increase the cost of borrowing 
C) to reduce risk for lenders 
D) to reduce the money supply for borrowers 
A) to reduce entrepreneurial initiatives 
B) to increase the cost of borrowing 
C) to reduce risk for lenders 
D) to reduce the money supply for borrowers

Question 19

Foreign bonds issued and traded in Asia outside Japan and normally denominated in dollars are called ________.

Accepted Answer

A) bulldog bonds 
B) yankee bonds 
C) samurai bonds 
D) dragon bonds 
A) bulldog bonds 
B) yankee bonds 
C) samurai bonds 
D) dragon bonds

Question 20

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

Accepted Answer

A) Currency hedging 
B) Currency speculation 
C) Currency swap 
D) Currency arbitrage 
A) Currency hedging 
B) Currency speculation 
C) Currency swap 
D) Currency arbitrage

Liquidity refers to the ease with which bondholders and shareholders may convert their investments to cash.

The international bond market consists of all bonds sold by issuing companies,governments,or other organizations ________.

Company debt normally takes the form of ________.

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

All of Europe's currencies combined are referred to as Eurocurrency.

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

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

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

Describe the purposes of the international capital market.What factors account for its rapid growth?

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

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

British pounds of a British trading company that are deposited in a bank are called ________.

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

An exchange rate of ¥117.87/$ indicates ________.

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

Which of the following is a major purpose of the international capital market?

Foreign bonds issued and traded in Asia outside Japan and normally denominated in dollars are called ________.

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

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

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

Liquidity refers to the ease with which bondholders and shareholders may convert their investments to cash.

The international bond market consists of all bonds sold by issuing companies,governments,or other organizations ________.

Company debt normally takes the form of ________.

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

All of Europe's currencies combined are referred to as Eurocurrency.

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

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

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

Describe the purposes of the international capital market.What factors account for its rapid growth?

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

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

British pounds of a British trading company that are deposited in a bank are called ________.

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

An exchange rate of ¥117.87/$ indicates ________.

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

Which of the following is a major purpose of the international capital market?

Foreign bonds issued and traded in Asia outside Japan and normally denominated in dollars are called ________.

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

Globalization

Cross-Cultural Business

Politics, Law, and Business Ethics

Economics and Emerging Markets

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