Question 1

Short-term unsecured promissory notes issued by a corporation or a bank and placed directly with the investment public through a dealer are called

Accepted Answer

A)  eurocredits 
B)  eurocommercial papers 
C)  euro facilities 
D)  euronotes 
A)  eurocredits 
B)  eurocommercial papers 
C)  euro facilities 
D)  euronotes B

Question 2

How are Canadian dollar interest rates in the Euromarkets and in the Canadian domestic financial markets related?

Accepted Answer

The deposit rates in the domestic market are lower than in the Euromarkets and the lending rates are higher in the domestic market than in the Euromarket.In other words,the spread in the Euromarket is lower than in the domestic markets.The major reasons for this smaller spread are: eurodeposits are not subject to reserve requirements or deposit insurance and euromarkets are wholesale markets.

Question 3

A loss that will be exceeded with a specific probability over a specified time horizon is called:

Accepted Answer

A)  Capital reserves 
B)  Systematic risk 
C)  Value at risk 
D)  Money-market risk 
A)  Capital reserves 
B)  Systematic risk 
C)  Value at risk 
D)  Money-market risk C

Question 4

The Basle Accord calls for the following minimum bank capital

Accepted Answer

A)  Tier I capital 4%, Tier II capital 4% 
B)  Tier I capital 4%, Tier II capital 8% 
C)  Tier I capital 8%, Tier II capital 4% 
D)  Tier I capital 8%, Tier II capital 8% 
A)  Tier I capital 4%, Tier II capital 4% 
B)  Tier I capital 4%, Tier II capital 8% 
C)  Tier I capital 8%, Tier II capital 4% 
D)  Tier I capital 8%, Tier II capital 8%

Question 5

Explain Eurocommerical papers.

Accepted Answer

Eurocommercial papers are unse

Question 6

A forward rate agreement (FRA)is a contract between two banks:

Accepted Answer

A)  that allows the Eurobank to hedge the interest rate risk in mismatched deposits and credits 
B)  in which the buyer agrees to pay the seller the increased interest cost on a notional amount if interest rates fall below an agreed rate, and the seller agrees to pay the buyer the increased interest cost if interest rates increase above the agreed rate 
C)  that is structured to capture the maturity mismatch in standard-length Eurodeposits and credits 
D)  All of these 
A)  that allows the Eurobank to hedge the interest rate risk in mismatched deposits and credits 
B)  in which the buyer agrees to pay the seller the increased interest cost on a notional amount if interest rates fall below an agreed rate, and the seller agrees to pay the buyer the increased interest cost if interest rates increase above the agreed rate 
C)  that is structured to capture the maturity mismatch in standard-length Eurodeposits and credits 
D)  All of these

Question 7

In reference to capital requirements,value-at-risk analysis:

Accepted Answer

A)  refers to traditional bank loans and deposits. 
B)  refers to a "general" approach to determine the adequate bank capital. 
C)  provides a level of confidence measure of the minimum loss that can occur during a period of time. 
D)  refers to a "risk-focused" approach to determine the adequate bank capital. 
A)  refers to traditional bank loans and deposits. 
B)  refers to a "general" approach to determine the adequate bank capital. 
C)  provides a level of confidence measure of the minimum loss that can occur during a period of time. 
D)  refers to a "risk-focused" approach to determine the adequate bank capital.

Question 8

Short-term notes underwritten by a group of international investment or commercial banks called a "facility" are

Accepted Answer

A)  eurocredits 
B)  eurocommercial papers 
C)  euro facilities 
D)  euronotes 
A)  eurocredits 
B)  eurocommercial papers 
C)  euro facilities 
D)  euronotes

Question 9

The major feature that distinguishes international from domestic banks is:

Accepted Answer

A)  the type of deposits they accept. 
B)  the currency of denomination of the investments they provide. 
C)  the interest rate of the loans they make. 
D)  none of these 
A)  the type of deposits they accept. 
B)  the currency of denomination of the investments they provide. 
C)  the interest rate of the loans they make. 
D)  none of these

Question 10

Japanese yen deposited in U.S.bank are called

Accepted Answer

A)  Americoyen 
B)  Dollaroyen 
C)  Euroyen 
D)  Worldyen 
A)  Americoyen 
B)  Dollaroyen 
C)  Euroyen 
D)  Worldyen

Question 11

International Corp.can borrow $10,000,000 at LIBOR plus a lending margin of.5 percent per annum on a six-month rollover basis from Deutsche Bank in Frankfurt.Six-month LIBOR is currently 5 percent.Suppose that over the second six-month interval LIBOR rises to 6 percent.How much will International Corp.pay in interest to Deutsche Bank over the one-year period for the Eurodollar loan?

Accepted Answer

$10,000,000 × (.05 +

Question 12

ABC Bank (seller)has made a "three against six" Forward Rate Agreement (FRA),with XYZ Bank (buyer)with a notional amount of $1,000,000.The settlement and agreement rates are 6% and 5% respectively.There are 91 actual days in the three-month agreement period.
a)When is this agreement settled?
b)Who pays whom?
c)What is the dollar amount of the settlement?

Accepted Answer

a)The agreement is settled in

Question 13

ABC Bank (seller) has made a "three against six" Forward Rate Agreement (FRA), with XYZ Bank (buyer). The notional amount is $1,000,000, the settlement rate is 7%, the agreement rate is 6% and the actual number of days in the three-month agreement period is 92.
-The payment amount under this FRA is (consider 360 days a year):

Accepted Answer

A)  $2,510 
B)  $2,526 
C)  $25,555 
D)  $100,000 
A)  $2,510 
B)  $2,526 
C)  $25,555 
D)  $100,000

Question 14

ABC Bank (seller)has made a "three against six" Forward Rate Agreement (FRA),with XYZ Bank (buyer)with the following characteristics:
Notional Amount = $1,000,000
Settlement Rate = 4%
Agreement Rate = 5%
Actual number of days in the three-month agreement period = 91
a)When is this agreement settled?
b)Who pays whom?
c)What is the dollar amount of the settlement?

Accepted Answer

a)The agreement is settled in

Question 15

Since SR < AR,then

Accepted Answer

A)  ABC Bank will pay XYZ Bank a cash settlement at the beginning of the 91-day FRA period 
B)  XYZ Bank will pay ABC Bank a cash settlement at the beginning of the 91-day FRA period 
C)  ABC Bank will pay XYZ Bank a cash settlement at the end of the 91-day FRA period 
D)  XYZ Bank will pay ABC Bank a cash settlement at the end of the 91-day FRA period 
A)  ABC Bank will pay XYZ Bank a cash settlement at the beginning of the 91-day FRA period 
B)  XYZ Bank will pay ABC Bank a cash settlement at the beginning of the 91-day FRA period 
C)  ABC Bank will pay XYZ Bank a cash settlement at the end of the 91-day FRA period 
D)  XYZ Bank will pay ABC Bank a cash settlement at the end of the 91-day FRA period

Question 16

Eurodollars refers to US dollar deposits when the depository bank is located outside of:

Accepted Answer

A)  Europe 
B)  Europe, and the Caribbean 
C)  Europe, the Caribbean, or Asia 
D)  the United States 
A)  Europe 
B)  Europe, and the Caribbean 
C)  Europe, the Caribbean, or Asia 
D)  the United States

Question 17

The London Interbank Offered Rate (LIBOR)is all of the following except:

Accepted Answer

A)  the rate charged by banks on loans to other Eurobanks 
B)  the rate paid by banks on deposits from other Eurobanks 
C)  reference rate in London for Eurocurrency deposits 
D)  reference rate in London for Eurocurrency loans 
A)  the rate charged by banks on loans to other Eurobanks 
B)  the rate paid by banks on deposits from other Eurobanks 
C)  reference rate in London for Eurocurrency deposits 
D)  reference rate in London for Eurocurrency loans

Question 18

The amount of equity capital and other securities a bank holds as reserves against risky assets to reduce the probability of a bank failure is know as:

Accepted Answer

A)  Value-at-risk 
B)  Bank capital adequacy 
C)  Negotiable certificate of deposit 
D)  Eurocurrency reserve 
A)  Value-at-risk 
B)  Bank capital adequacy 
C)  Negotiable certificate of deposit 
D)  Eurocurrency reserve

Question 19

Find the VAR for a portfolio of $100M with daily standard deviation on return of 0.5% over 30-day period.Note: z1% = 2.326

Accepted Answer

A)  Below $5M 
B)  Between $5M and $10M 
C)  Between $10M and $20M 
D)  Above $20M 
A)  Below $5M 
B)  Between $5M and $10M 
C)  Between $10M and $20M 
D)  Above $20M

Question 20

Which of the following statements is not true about Eurocredits?

Accepted Answer

A)  Eurocredits are short-to medium term loans of Eurocurrency extended by Eurobanks 
B)  Euorcredits are denominated in currencies other than the home currency of the Eurobank 
C)  Eurocredits are often syndicated loans 
D)  Eurocredits are less risky than other loans 
A)  Eurocredits are short-to medium term loans of Eurocurrency extended by Eurobanks 
B)  Euorcredits are denominated in currencies other than the home currency of the Eurobank 
C)  Eurocredits are often syndicated loans 
D)  Eurocredits are less risky than other loans

Short-term unsecured promissory notes issued by a corporation or a bank and placed directly with the investment public through a dealer are called

How are Canadian dollar interest rates in the Euromarkets and in the Canadian domestic financial markets related?

A loss that will be exceeded with a specific probability over a specified time horizon is called:

The Basle Accord calls for the following minimum bank capital

Explain Eurocommerical papers.

A forward rate agreement (FRA)is a contract between two banks:

In reference to capital requirements,value-at-risk analysis:

Short-term notes underwritten by a group of international investment or commercial banks called a "facility" are

The major feature that distinguishes international from domestic banks is:

Japanese yen deposited in U.S.bank are called

Since SR < AR,then

Eurodollars refers to US dollar deposits when the depository bank is located outside of:

The London Interbank Offered Rate (LIBOR)is all of the following except:

The amount of equity capital and other securities a bank holds as reserves against risky assets to reduce the probability of a bank failure is know as:

Find the VAR for a portfolio of $100M with daily standard deviation on return of 0.5% over 30-day period.Note: z_1% = 2.326

Which of the following statements is not true about Eurocredits?

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

International Portfolio Investment

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

International Tax Environment

Corporate Governance Around the World

Filters

Exam 6: International Banking and Money Market

Short-term unsecured promissory notes issued by a corporation or a bank and placed directly with the investment public through a dealer are called

How are Canadian dollar interest rates in the Euromarkets and in the Canadian domestic financial markets related?

A loss that will be exceeded with a specific probability over a specified time horizon is called:

The Basle Accord calls for the following minimum bank capital

Explain Eurocommerical papers.

A forward rate agreement (FRA)is a contract between two banks:

In reference to capital requirements,value-at-risk analysis:

Short-term notes underwritten by a group of international investment or commercial banks called a "facility" are

The major feature that distinguishes international from domestic banks is:

Japanese yen deposited in U.S.bank are called

Since SR < AR,then

Eurodollars refers to US dollar deposits when the depository bank is located outside of:

The London Interbank Offered Rate (LIBOR)is all of the following except:

The amount of equity capital and other securities a bank holds as reserves against risky assets to reduce the probability of a bank failure is know as:

Find the VAR for a portfolio of $100M with daily standard deviation on return of 0.5% over 30-day period.Note: z1% = 2.326

Which of the following statements is not true about Eurocredits?

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

International Bond Market

International Equity Markets

Futures and Options on Foreign Exchange

Interest Rate and Currency Swaps

International Portfolio Investment

Management of Economic Exposure

Management of Transaction Exposure

Management of Translation Exposure

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

Exports and Imports

International Tax Environment

Corporate Governance Around the World

Filters

Find the VAR for a portfolio of $100M with daily standard deviation on return of 0.5% over 30-day period.Note: z_1% = 2.326