Question 1

Harvard economist Martin Feldstein argues that the lack of patient money is due to:

Accepted Answer

A)  the flood of information, due to the internet, that investors receive about current events in other countries. 
B)  money owners and managers preferring to keep their money "home." 
C)  the relative paucity of information that investors have about foreign investments. 
D)  money owners and managers preferring to place their money in foreign investments. 
A)  the flood of information, due to the internet, that investors receive about current events in other countries. 
B)  money owners and managers preferring to keep their money "home." 
C)  the relative paucity of information that investors have about foreign investments. 
D)  money owners and managers preferring to place their money in foreign investments. C

Question 2

How can a borrower hedge against unpredictable movements in exchange rates?

Accepted Answer

A borrower can hedge against unpredictable movements in exchange rates by entering into a forward contract to purchase the required amount of the currency being borrowed at a predetermined exchange rate when the loan comes due. Although this will raise the borrower's cost of capital, the added insurance limits the risk involved in such a transaction.
When a firm borrows funds from the global capital market, it must weigh the benefits of a lower interest rate against the risks of an increase in the real cost of capital due to adverse exchange rate movements. Although using forward exchange markets may lower foreign exchange risk with short-term borrowings, it cannot remove the risk. Most importantly, the forward exchange market does not provide adequate coverage for long-term borrowings.

Question 3

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

Accepted Answer

A) True 
 B)False  True

Question 4

The cost of capital is the difference between cost of inputs and outputs.

Accepted Answer

A) True 
 B)False

Question 5

A capital market brings together those who want to invest money and those who want to borrow money.

Accepted Answer

A) True 
 B)False

Question 6

The forward exchange market does not provide adequate coverage for long-term borrowings.

Accepted Answer

A) True 
 B)False

Question 7

Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.

Accepted Answer

A) True 
 B)False

Question 8

A purely domestic capital market faces the problem of _____.

Accepted Answer

A)  foreign exchange risk 
B)  limited liquidity 
C)  lack of regulation 
D)  deregulated markets 
A)  foreign exchange risk 
B)  limited liquidity 
C)  lack of regulation 
D)  deregulated markets

Question 9

Which of the following is true of fixed-rate bonds?

Accepted Answer

A)  Returns from fixed-rate bonds are dependent on the profitability of the issuing company. 
B)  Investors get back the face value of the bond at maturity of fixed-rate bonds. 
C)  Fixed-rate bonds issue cash payoffs only at maturity of fixed-rate bonds. 
D)  Investors get a share of the company's profit when using fixed-rate bonds. 
A)  Returns from fixed-rate bonds are dependent on the profitability of the issuing company. 
B)  Investors get back the face value of the bond at maturity of fixed-rate bonds. 
C)  Fixed-rate bonds issue cash payoffs only at maturity of fixed-rate bonds. 
D)  Investors get a share of the company's profit when using fixed-rate bonds.

Question 10

Financial services is an information-intensive industry.

Accepted Answer

A) True 
 B)False

Question 11

Discuss the impact of technology on the growth of the global capital market.

Accepted Answer

Financial services is an information-int

Question 12

Explain Eurobonds with an example.

Accepted Answer

Eurobonds are normally underwritten by a

Question 13

Explain the two basic factors reflected by the relatively low correlation between the movements of stock markets in different countries.

Accepted Answer

The relatively low correlation between t

Question 14

Analysts who believe globalization of capital has serious risks argue that:

Accepted Answer

A)  capital does not shift in and out of countries as quickly as conditions change. 
B)  individual nations are becoming more vulnerable to speculative capital. 
C)  deregulation of trade is helpful for the economic growth in a country. 
D)  most of the capital that moves internationally is pursuing long term gains. 
A)  capital does not shift in and out of countries as quickly as conditions change. 
B)  individual nations are becoming more vulnerable to speculative capital. 
C)  deregulation of trade is helpful for the economic growth in a country. 
D)  most of the capital that moves internationally is pursuing long term gains.

Question 15

Global capital market often lack information about the fundamental quality of foreign investments.

Accepted Answer

A) True 
 B)False

Question 16

Depositors are not protected against bank failures in the Eurocurrency market.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of the use of information technology in financial services?

Accepted Answer

A)  Information technology prevents the spread of financial crises. 
B)  Financial services are an information-intensive industry. 
C)  Financial services do not use decisions making systems. 
D)  It does not require to process large volumes of information. 
A)  Information technology prevents the spread of financial crises. 
B)  Financial services are an information-intensive industry. 
C)  Financial services do not use decisions making systems. 
D)  It does not require to process large volumes of information.

Question 18

What are the financial advantages that make the Eurocurrency market attractive to both depositors and borrowers?

Accepted Answer

The main factor that makes the Eurocurre

Question 19

Eurodollars:

Accepted Answer

A)  refer to the exchange value of dollar with Euro. 
B)  are used to pay for imports from Europe. 
C)  are dollars banked outside of the United States. 
D)  refer to the exchange buffer that Euro has against dollar. 
A)  refer to the exchange value of dollar with Euro. 
B)  are used to pay for imports from Europe. 
C)  are dollars banked outside of the United States. 
D)  refer to the exchange buffer that Euro has against dollar.

Question 20

Entering into a forward contract will:

Accepted Answer

A)  increase the risk involved in a transaction. 
B)  lower the borrower's cost of capital. 
C)  benefit the borrower because their interest rate will be lower. 
D)  raise the borrower's cost of capital. 
A)  increase the risk involved in a transaction. 
B)  lower the borrower's cost of capital. 
C)  benefit the borrower because their interest rate will be lower. 
D)  raise the borrower's cost of capital.

Harvard economist Martin Feldstein argues that the lack of patient money is due to:

How can a borrower hedge against unpredictable movements in exchange rates?

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

The cost of capital is the difference between cost of inputs and outputs.

A capital market brings together those who want to invest money and those who want to borrow money.

The forward exchange market does not provide adequate coverage for long-term borrowings.

Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.

A purely domestic capital market faces the problem of _____.

Which of the following is true of fixed-rate bonds?

Financial services is an information-intensive industry.

Discuss the impact of technology on the growth of the global capital market.

Explain Eurobonds with an example.

Explain the two basic factors reflected by the relatively low correlation between the movements of stock markets in different countries.

Analysts who believe globalization of capital has serious risks argue that:

Global capital market often lack information about the fundamental quality of foreign investments.

Depositors are not protected against bank failures in the Eurocurrency market.

Which of the following statements is true of the use of information technology in financial services?

What are the financial advantages that make the Eurocurrency market attractive to both depositors and borrowers?

Eurodollars:

Entering into a forward contract will:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 12: The Global Capital Market

Harvard economist Martin Feldstein argues that the lack of patient money is due to:

How can a borrower hedge against unpredictable movements in exchange rates?

Debt loans include cash loans from banks and funds raised from the sale of corporate bonds to investors.

The cost of capital is the difference between cost of inputs and outputs.

A capital market brings together those who want to invest money and those who want to borrow money.

The forward exchange market does not provide adequate coverage for long-term borrowings.

Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.

A purely domestic capital market faces the problem of _____.

Which of the following is true of fixed-rate bonds?

Financial services is an information-intensive industry.

Discuss the impact of technology on the growth of the global capital market.

Explain Eurobonds with an example.

Explain the two basic factors reflected by the relatively low correlation between the movements of stock markets in different countries.

Analysts who believe globalization of capital has serious risks argue that:

Global capital market often lack information about the fundamental quality of foreign investments.

Depositors are not protected against bank failures in the Eurocurrency market.

Which of the following statements is true of the use of information technology in financial services?

What are the financial advantages that make the Eurocurrency market attractive to both depositors and borrowers?

Eurodollars:

Entering into a forward contract will:

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters