Question 1

Eurocurrency can be created anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 2

_____ are sold outside of the borrower's country and are denominated in the currency of the country in which they are issued.

Accepted Answer

A)  Micro bonds 
B)  Eurobonds 
C)  Foreign bonds 
D)  Regulatory bonds 
A)  Micro bonds 
B)  Eurobonds 
C)  Foreign bonds 
D)  Regulatory bonds

Question 3

In a(n) _____, the limited pool of investors implies that borrowers must pay more to persuade investors to lend them their money.

Accepted Answer

A)  purely domestic market 
B)  mixed market 
C)  international market 
D)  purely Euro market 
A)  purely domestic market 
B)  mixed market 
C)  international market 
D)  purely Euro market

Question 4

Which of the following is a drawback of the Eurocurrency market?

Accepted Answer

A)  Borrowing funds within their home country can expose a company to foreign exchange risk. 
B)  The probability of a bank failure that would cause depositors to lose their money is greater. 
C)  The system is over-regulated and, therefore, more costly. 
D)  The higher interest rate received on home-country deposits reflects the costs of insuring against bank failure. 
A)  Borrowing funds within their home country can expose a company to foreign exchange risk. 
B)  The probability of a bank failure that would cause depositors to lose their money is greater. 
C)  The system is over-regulated and, therefore, more costly. 
D)  The higher interest rate received on home-country deposits reflects the costs of insuring against bank failure.

Question 5

The risk associated with a portfolio:

Accepted Answer

A)  declines exponentially as the number of stocks purchased increases and continues to decline until a point of zero risk is reached. 
B)  decreases as the investor increases the number of stocks in her portfolio. 
C)  grows exponentially with the number of stocks purchased. 
D)  increases as the investor increases the number of stocks in her portfolio. 
A)  declines exponentially as the number of stocks purchased increases and continues to decline until a point of zero risk is reached. 
B)  decreases as the investor increases the number of stocks in her portfolio. 
C)  grows exponentially with the number of stocks purchased. 
D)  increases as the investor increases the number of stocks in her portfolio.

Question 6

When using the Euromarkets, companies:

Accepted Answer

A)  have funds that lack liquidity. 
B)  pay less for the loans. 
C)  attract low interest rates. 
D)  are secured from foreign exchange risks. 
A)  have funds that lack liquidity. 
B)  pay less for the loans. 
C)  attract low interest rates. 
D)  are secured from foreign exchange risks.

Question 7

A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if U.S. dollar appreciates against the Chinese currency.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Accepted Answer

A)  A global market reduces the liquidity of investments and increases the chances of incurring losses. 
B)  Investments in the global capital market are faced with a lack of quality information. 
C)  Investments in the global capital market are not conducive to diversification. 
D)  The cost of capital is more in a global market and this increases the level of risk associated with it. 
A)  A global market reduces the liquidity of investments and increases the chances of incurring losses. 
B)  Investments in the global capital market are faced with a lack of quality information. 
C)  Investments in the global capital market are not conducive to diversification. 
D)  The cost of capital is more in a global market and this increases the level of risk associated with it.

Question 9

What is a capital market? Define market makers.

Accepted Answer

A capital market brings together those w

Question 10

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

Accepted Answer

A) True 
 B)False

Question 11

The liquidity of the market is _____ in a purely domestic capital market.

Accepted Answer

A)  held in reserves 
B)  unlimited 
C)  based upon the stock market 
D)  limited 
A)  held in reserves 
B)  unlimited 
C)  based upon the stock market 
D)  limited

Question 12

Historically, substantial regulatory barriers separated national equity markets from each other.

Accepted Answer

A) True 
 B)False

Question 13

The systematic risk is the:

Accepted Answer

A)  movement in a stock portfolio's value that is attributable to the individual selections made for that portfolio. 
B)  level of diversifiable risk in an economy. 
C)  movement of the economy of a country. 
D)  level of non-diversifiable risk in an economy. 
A)  movement in a stock portfolio's value that is attributable to the individual selections made for that portfolio. 
B)  level of diversifiable risk in an economy. 
C)  movement of the economy of a country. 
D)  level of non-diversifiable risk in an economy.

Question 14

Systematic risk refers to movements in a stock portfolio's value that are:

Accepted Answer

A)  attributable to macroeconomic forces affecting an economy. 
B)  specific to the firm or individuals who invest in a portfolio. 
C)  attributable to factors pertaining to an individual firm. 
D)  specific to the company that facilitates the investment portfolio. 
A)  attributable to macroeconomic forces affecting an economy. 
B)  specific to the firm or individuals who invest in a portfolio. 
C)  attributable to factors pertaining to an individual firm. 
D)  specific to the company that facilitates the investment portfolio.

Question 15

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include:

Accepted Answer

A)  governments 
B)  corporations with surplus cash 
C)  pension funds 
D)  insurance companies 
A)  governments 
B)  corporations with surplus cash 
C)  pension funds 
D)  insurance companies

Question 16

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

Accepted Answer

A)  consumer market 
B)  value chain 
C)  supply chain 
D)  capital market 
A)  consumer market 
B)  value chain 
C)  supply chain 
D)  capital market

Question 17

_____ can inject risk into foreign currency borrowing.

Accepted Answer

A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates 
A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates

Question 18

Describe a fixed-rate bond.

Accepted Answer

The most common kind of bond is a fixed-

Question 19

A Eurocurrency is any currency:

Accepted Answer

A)  banked outside of its country of origin. 
B)  that is traded in European countries. 
C)  that originates in European countries. 
D)  used to buy gold and related commodities. 
A)  banked outside of its country of origin. 
B)  that is traded in European countries. 
C)  that originates in European countries. 
D)  used to buy gold and related commodities.

Question 20

The main factor that makes the Eurocurrency market attractive to both depositors and borrowers is that it:

Accepted Answer

A)  is separated from the foreign exchange market. 
B)  lacks government regulation. 
C)  is associated with low-risk. 
D)  gives high levels of investor protection. 
A)  is separated from the foreign exchange market. 
B)  lacks government regulation. 
C)  is associated with low-risk. 
D)  gives high levels of investor protection.

Eurocurrency can be created anywhere in the world.

_____ are sold outside of the borrower's country and are denominated in the currency of the country in which they are issued.

In a(n) _____, the limited pool of investors implies that borrowers must pay more to persuade investors to lend them their money.

Which of the following is a drawback of the Eurocurrency market?

The risk associated with a portfolio:

When using the Euromarkets, companies:

A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if U.S. dollar appreciates against the Chinese currency.

Which of the following is a reason why the global capital market is increasingly becoming speculative?

What is a capital market? Define market makers.

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

The liquidity of the market is _____ in a purely domestic capital market.

Historically, substantial regulatory barriers separated national equity markets from each other.

The systematic risk is the:

Systematic risk refers to movements in a stock portfolio's value that are:

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include:

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

_____ can inject risk into foreign currency borrowing.

Describe a fixed-rate bond.

A Eurocurrency is any currency:

The main factor that makes the Eurocurrency market attractive to both depositors and borrowers is that it:

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

Eurocurrency can be created anywhere in the world.

_____ are sold outside of the borrower's country and are denominated in the currency of the country in which they are issued.

In a(n) _____, the limited pool of investors implies that borrowers must pay more to persuade investors to lend them their money.

Which of the following is a drawback of the Eurocurrency market?

The risk associated with a portfolio:

When using the Euromarkets, companies:

A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if U.S. dollar appreciates against the Chinese currency.

Which of the following is a reason why the global capital market is increasingly becoming speculative?

What is a capital market? Define market makers.

Government limitations are more severe for securities denominated in foreign currencies than for domestic securities.

The liquidity of the market is _____ in a purely domestic capital market.

Historically, substantial regulatory barriers separated national equity markets from each other.

The systematic risk is the:

Systematic risk refers to movements in a stock portfolio's value that are:

Market makers are the financial service companies that connect investors and borrowers. Those who want to borrow money typically include:

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

_____ can inject risk into foreign currency borrowing.

Describe a fixed-rate bond.

A Eurocurrency is any currency:

The main factor that makes the Eurocurrency market attractive to both depositors and borrowers is that it:

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