Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Eurocurrency can be created anywhere in the world.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following statements is true of debt loans?

Accepted Answer

A)  Management has the discretion in paying the amount to investors. 
B)  Debt loans should be repaid at regular intervals. 
C)  Returns from debt loans are variable in nature. 
D)  Corporations need not pay back the debt loans if they incur losses. 
A)  Management has the discretion in paying the amount to investors. 
B)  Debt loans should be repaid at regular intervals. 
C)  Returns from debt loans are variable in nature. 
D)  Corporations need not pay back the debt loans if they incur losses. B

Question 4

Eurobonds are ____.

Accepted Answer

A)  denominated in the currency of the country in which they are issued 
B)  normally underwritten by an international syndicate of banks 
C)  denominated in a currency that is accepted by the European Union 
D)  are sold outside the borrower's county with reference to the originating currency 
A)  denominated in the currency of the country in which they are issued 
B)  normally underwritten by an international syndicate of banks 
C)  denominated in a currency that is accepted by the European Union 
D)  are sold outside the borrower's county with reference to the originating currency

Question 5

An equity loan is made when ____.

Accepted Answer

A)  a corporation pledge equities or other assets to borrow money 
B)  corporations avail cash loans from individuals 
C)  a corporation sells stock to investors 
D)  corporations issue bonds to individual investors 
A)  a corporation pledge equities or other assets to borrow money 
B)  corporations avail cash loans from individuals 
C)  a corporation sells stock to investors 
D)  corporations issue bonds to individual investors

Question 6

Financial services is an information-intensive industry.

Accepted Answer

A) True 
 B)False

Question 7

Borrowers can hedge against foreign exchange risks by entering into a forward contract.

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

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

The element of risk into investing in foreign assets is more with _____ exchange rates.

Accepted Answer

A)  floating 
B)  pegged 
C)  fixed 
D)  managed 
A)  floating 
B)  pegged 
C)  fixed 
D)  managed

Question 12

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

Accepted Answer

A)  Increased governmental controls 
B)  High reserve ratio requirements 
C)  Low interest rates on deposits 
D)  Exposure to foreign exchange risk 
A)  Increased governmental controls 
B)  High reserve ratio requirements 
C)  Low interest rates on deposits 
D)  Exposure to foreign exchange risk

Question 13

Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency because Eurocurrency deposits ____.

Accepted Answer

A)  are funded by the European union 
B)  lack government regulations 
C)  are associated with low risk 
D)  have minimum foreign exchange risk 
A)  are funded by the European union 
B)  lack government regulations 
C)  are associated with low risk 
D)  have minimum foreign exchange risk

Question 14

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

Accepted Answer

A borrower can hedge against unpredictab

Question 15

Eurobonds are normally underwritten by an international syndicate of banks.

Accepted Answer

A) True 
 B)False

Question 16

What is a Eurocurrency?

Accepted Answer

A Eurocurrency is any currency banked ou

Question 17

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

Accepted Answer

A) True 
 B)False

Question 18

ABB Bank is a financial corporation located in England and uses euro as its official currency. The company borrows 1 million U.S. dollars from a bank based in United States. ABB will be at a disadvantage if ____.

Accepted Answer

A)  Euro appreciates against all currencies 
B)  U.S. dollar appreciates against Euro 
C)  U.S. dollar depreciates against Euro 
D)  fixed exchange rates are used for the transaction 
A)  Euro appreciates against all currencies 
B)  U.S. dollar appreciates against Euro 
C)  U.S. dollar depreciates against Euro 
D)  fixed exchange rates are used for the transaction

Question 19

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

Accepted Answer

A) True 
 B)False

Question 20

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

Accepted Answer

A) True 
 B)False

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

Eurocurrency can be created anywhere in the world.

Which of the following statements is true of debt loans?

Eurobonds are ____.

An equity loan is made when ____.

Financial services is an information-intensive industry.

Borrowers can hedge against foreign exchange risks by entering into a forward contract.

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

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

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

The element of risk into investing in foreign assets is more with _____ exchange rates.

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

Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency because Eurocurrency deposits ____.

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

Eurobonds are normally underwritten by an international syndicate of banks.

What is a Eurocurrency?

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

ABB Bank is a financial corporation located in England and uses euro as its official currency. The company borrows 1 million U.S. dollars from a bank based in United States. ABB will be at a disadvantage if ____.

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 12: The Global Capital Market

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

Eurocurrency can be created anywhere in the world.

Which of the following statements is true of debt loans?

Eurobonds are ____.

An equity loan is made when ____.

Financial services is an information-intensive industry.

Borrowers can hedge against foreign exchange risks by entering into a forward contract.

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

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

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

The element of risk into investing in foreign assets is more with _____ exchange rates.

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

Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency because Eurocurrency deposits ____.

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

Eurobonds are normally underwritten by an international syndicate of banks.

What is a Eurocurrency?

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

ABB Bank is a financial corporation located in England and uses euro as its official currency. The company borrows 1 million U.S. dollars from a bank based in United States. ABB will be at a disadvantage if ____.

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters