Exam 9: International Financial Markets

One goal of currency restriction is to preserve hard currencies to pay for imports and to finance trade deficits.

With the help of microfinance,low-income entrepreneurs can borrow money at competitive rates without having to put anything up as collateral.

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. -If Sally sees a quote of ¥117.87/$,she should know that ________.

A convertible currency is traded freely in the foreign exchange market with its price determined by London banks.

The London Interbank Bid Rate (LIBID)is the interest rate that London banks charge other large banks for borrowing Eurocurrency.

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

Which of the following is a debt instrument that specifies the timing of principal and interest payments?

International transactions between two currencies other than the U.S.dollar often use the dollar as a vehicle currency.

In any exchange rate,the quoted currency is always the numerator.

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 ________.

Banks in the interbank market ________.

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

________ refers to shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows.

________ in the foreign exchange market specialize in currency futures and options transactions.

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

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/$?

The absence of government regulation in the Eurobond market ________.

________ dominates the foreign exchange market.

Briefly describe any two of the three main components of the international capital market.

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