Question 1

Which of the following statements in relation to the relative cost of transactions in the euromarkets is incorrect?

Accepted Answer

A)  Euromarket transactions transcend country boundaries and therefore are not exposed to foreign exchange risk. 
B)  They do not deal in small retail market transactions, so their administrative and operating costs per dollar transacted are lower. 
C)  Loans tend to be for large amounts to medium-to-large borrowers, and so fewer resources are devoted to credit risk assessment per dollar lent. 
D)  Since transactions are conducted outside the jurisdiction of central bank regulation, costs associated with regulatory controls are minimised. 
A)  Euromarket transactions transcend country boundaries and therefore are not exposed to foreign exchange risk. 
B)  They do not deal in small retail market transactions, so their administrative and operating costs per dollar transacted are lower. 
C)  Loans tend to be for large amounts to medium-to-large borrowers, and so fewer resources are devoted to credit risk assessment per dollar lent. 
D)  Since transactions are conducted outside the jurisdiction of central bank regulation, costs associated with regulatory controls are minimised.

Question 2

Discuss the features of a eurobond issue.

Accepted Answer

Eurobonds are sold in a multi-stage proc

Question 3

The selling process for a NIF facility involves:

Accepted Answer

A)  a tender process. 
B)  a panel may include as many as 25 financial institutions. 
C)  an issuer specifying a posted rate at which it is prepared to sell. 
D)  all of the given answers. 
A)  a tender process. 
B)  a panel may include as many as 25 financial institutions. 
C)  an issuer specifying a posted rate at which it is prepared to sell. 
D)  all of the given answers.

Question 4

Which of the following best defines a euromarket-type transaction?

Accepted Answer

A)  A transaction conducted in 'European currency units' within the European Union 
B)  A financial transaction denominated in a currency outside the currency of the country where the debt issue is made 
C)  A wholesale foreign exchange transaction of a government or institutional investor 
D)  A financial transaction in USD, conducted solely within the European markets 
A)  A transaction conducted in 'European currency units' within the European Union 
B)  A financial transaction denominated in a currency outside the currency of the country where the debt issue is made 
C)  A wholesale foreign exchange transaction of a government or institutional investor 
D)  A financial transaction in USD, conducted solely within the European markets

Question 5

Which of the following descriptive names refers to a foreign bond issue by an Australian company into the Japanese capital markets?

Accepted Answer

A)  Dragon bond 
B)  Shogun bond 
C)  Samurai bond 
D)  Eurobond 
A)  Dragon bond 
B)  Shogun bond 
C)  Samurai bond 
D)  Eurobond

Question 6

Which of the following statements regarding the eurocurrency market is correct?

Accepted Answer

A)  Eurocurrency securities are generally bearer ones 
B)  Most eurocurrency securities are listed on either the Luxembourg, London or Singapore stock exchanges 
C)  The market provides short-term direct finance 
D)  The major banks provide short-term advances and medium- to long-term eurocurrency loans 
A)  Eurocurrency securities are generally bearer ones 
B)  Most eurocurrency securities are listed on either the Luxembourg, London or Singapore stock exchanges 
C)  The market provides short-term direct finance 
D)  The major banks provide short-term advances and medium- to long-term eurocurrency loans

Question 7

Euro floating rate notes are actually bearer bonds issued in the euromarkets that have their coupon reset periodically.

Accepted Answer

A) True 
 B)False

Question 8

An ADR program that has the ADRs listed on one or more US exchange but not sold as a public offering is a _______ form of ADR program.

Accepted Answer

A)  level-one 
B)  level-two 
C)  level-three 
D)  level-four 
A)  level-one 
B)  level-two 
C)  level-three 
D)  level-four

Question 9

An Australian company that issues commercial paper denominated in Australian dollars into the USA is conducting a:

Accepted Answer

A)  eurocredit loan. 
B)  euromarket transaction. 
C)  eurodollar loan. 
D)  eurodollar deposit. 
A)  eurocredit loan. 
B)  euromarket transaction. 
C)  eurodollar loan. 
D)  eurodollar deposit.

Question 10

Which of the following does NOT relate to a convertible eurobond?

Accepted Answer

A)  A convertible bond contains an option for the holder to receive the redemption proceeds in another form. 
B)  Convertible bonds may alleviate the foreign exchange risk of investors by being denominated in their currency. 
C)  Investors cannot usually participate in rights issues, in contrast with those investing in straight eurobonds. 
D)  For an equity-related convertible bond, an investor could benefit from increased equity prices. 
A)  A convertible bond contains an option for the holder to receive the redemption proceeds in another form. 
B)  Convertible bonds may alleviate the foreign exchange risk of investors by being denominated in their currency. 
C)  Investors cannot usually participate in rights issues, in contrast with those investing in straight eurobonds. 
D)  For an equity-related convertible bond, an investor could benefit from increased equity prices.

Question 11

Discuss the features of short-term bank advances in the eurocurrency markets.How does it differ from that obtained through a domestic bank?

Accepted Answer

The eurocurrency markets are the part of

Question 12

Which of the following is a key feature of a eurocommercial paper (ECP)issue?

Accepted Answer

A)  An ECP issue is a fixed-interest security with annual coupon payments. 
B)  The ECP facility is not underwritten by a syndicate of banks. 
C)  Generally, an issuer employs a lead manager, and often co-lead managers. 
D)  An ECP issue is a medium-term facility with maturities generally longer than ten years. 
A)  An ECP issue is a fixed-interest security with annual coupon payments. 
B)  The ECP facility is not underwritten by a syndicate of banks. 
C)  Generally, an issuer employs a lead manager, and often co-lead managers. 
D)  An ECP issue is a medium-term facility with maturities generally longer than ten years.

Question 13

A _______ is an unsecured,negotiable,medium-term note that is issued in euromarkets and many domestic markets.

Accepted Answer

A)  eurocurrency term loan 
B)  eurocommercial paper 
C)  eurobond 
D)  euro floating rate note 
A)  eurocurrency term loan 
B)  eurocommercial paper 
C)  eurobond 
D)  euro floating rate note

Question 14

Foreign issuers who wish to issue any short-term debt securities into the US debt markets are allowed to do so under rule 144A.

Accepted Answer

A) True 
 B)False

Question 15

Borrowers who wish to access the euromarkets require a credit rating of:

Accepted Answer

A)  AA or above. 
B)  BB or above. 
C)  BBB or above. 
D)  B or above. 
A)  AA or above. 
B)  BB or above. 
C)  BBB or above. 
D)  B or above.

Question 16

Eurobonds are generally discount bonds,unlike foreign bonds that pay periodic interest coupons.

Accepted Answer

A) True 
 B)False

Question 17

An important function of an underwriting bank for a euronote issuance facility (NIF)is to:

Accepted Answer

A)  provide the funding for the corporation. 
B)  approve the prospectus before distribution to the public. 
C)  dilute the corporation's equity. 
D)  buy the unsold notes and resell them to investors. 
A)  provide the funding for the corporation. 
B)  approve the prospectus before distribution to the public. 
C)  dilute the corporation's equity. 
D)  buy the unsold notes and resell them to investors.

Question 18

When an Australian company borrows in the euromarkets and the Australian dollar depreciates more than the interest rate advantage,the actual cost of the loan is:

Accepted Answer

A)  lower than if the company had borrowed in Australia. 
B)  higher than if the company had borrowed in Australia. 
C)  unaffected, as the company has a natural hedge. 
D)  offset by the principal increase. 
A)  lower than if the company had borrowed in Australia. 
B)  higher than if the company had borrowed in Australia. 
C)  unaffected, as the company has a natural hedge. 
D)  offset by the principal increase.

Question 19

A eurobond is a:

Accepted Answer

A)  debt instrument sold only in Europe. 
B)  bond denominated in euros. 
C)  bond sold primarily in countries other than the country of the currency in which it is denominated. 
D)  bond sold primarily to European investors. 
A)  debt instrument sold only in Europe. 
B)  bond denominated in euros. 
C)  bond sold primarily in countries other than the country of the currency in which it is denominated. 
D)  bond sold primarily to European investors.

Question 20

Which of the following is NOT a major factor in the credit rating process conducted by agencies such as Standard & Poor's?

Accepted Answer

A)  Sovereign risk of the country of the issuer 
B)  Industry risk associated with the type of issuer 
C)  Financial capacity of the issuer 
D)  Return attached to the particular issue 
A)  Sovereign risk of the country of the issuer 
B)  Industry risk associated with the type of issuer 
C)  Financial capacity of the issuer 
D)  Return attached to the particular issue

Exam 11: International Debt Markets

Which of the following statements in relation to the relative cost of transactions in the euromarkets is incorrect?

Discuss the features of a eurobond issue.

The selling process for a NIF facility involves:

Which of the following best defines a euromarket-type transaction?

Which of the following descriptive names refers to a foreign bond issue by an Australian company into the Japanese capital markets?

Which of the following statements regarding the eurocurrency market is correct?

Euro floating rate notes are actually bearer bonds issued in the euromarkets that have their coupon reset periodically.

An ADR program that has the ADRs listed on one or more US exchange but not sold as a public offering is a _______ form of ADR program.

An Australian company that issues commercial paper denominated in Australian dollars into the USA is conducting a:

Which of the following does NOT relate to a convertible eurobond?

Discuss the features of short-term bank advances in the eurocurrency markets.How does it differ from that obtained through a domestic bank?

Which of the following is a key feature of a eurocommercial paper (ECP)issue?

A _______ is an unsecured,negotiable,medium-term note that is issued in euromarkets and many domestic markets.

Foreign issuers who wish to issue any short-term debt securities into the US debt markets are allowed to do so under rule 144A.

Borrowers who wish to access the euromarkets require a credit rating of:

Eurobonds are generally discount bonds,unlike foreign bonds that pay periodic interest coupons.

An important function of an underwriting bank for a euronote issuance facility (NIF)is to:

When an Australian company borrows in the euromarkets and the Australian dollar depreciates more than the interest rate advantage,the actual cost of the loan is:

A eurobond is a:

Which of the following is NOT a major factor in the credit rating process conducted by agencies such as Standard & Poor's?

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters