Exam 9: International Financial Markets

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

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

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

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. -If Trader's Paradise purchases euros expecting the value to rise and generate a profit for the company,it is engaging in currency ________.

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 ________.

What is the role of debt in national capital markets,and what form does company debt normally take? Describe the different types of international bonds.

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 ________.

Which of the following factors is responsible for growth in the international equity market?

________ is a prominent operational center.

Which of the following is an exchange rate that requires delivery of the traded currency within two business days?

Explain the concept of cross rates.Include the description of a vehicle currency and the role it plays in the foreign exchange market.

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

Securitization is the unbundling and repackaging of hard-to-trade financial assets into liquid financial instruments.

What is the foreign exchange market? Explain why investors use this market.

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

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

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

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

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

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