Question 1

With regard to dual-currency bonds versus comparable straight fixed-rate bonds,

Accepted Answer

A) dual currency bonds usually trade at a premium to reflect the value of the forward contract implicit in their repayment schedule. 
B) the interest on dual-currency bonds is usually lower than on comparable straight fixed-rate debt. 
C) the interest on dual-currency bonds is usually higher than on comparable straight fixed-rate debt. 
D) none of the above 
A) dual currency bonds usually trade at a premium to reflect the value of the forward contract implicit in their repayment schedule. 
B) the interest on dual-currency bonds is usually lower than on comparable straight fixed-rate debt. 
C) the interest on dual-currency bonds is usually higher than on comparable straight fixed-rate debt. 
D) none of the above

Question 2

A "Eurobond" issue is

Accepted Answer

A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. 
B) usually a bearer bond. 
C) for example a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlands. 
D) all of the above 
A) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currency. 
B) usually a bearer bond. 
C) for example a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlands. 
D) all of the above

Question 3

U.S.security regulations require Yankee bonds and U.S.corporate bonds sold to U.S.citizens to be

Accepted Answer

A) municipal bonds. 
B) registered bonds. 
C) bearer bonds. 
D) none of the above 
A) municipal bonds. 
B) registered bonds. 
C) bearer bonds. 
D) none of the above

Question 4

"Bulldog" bonds are

Accepted Answer

A) dollar-denominated foreign bonds originally sold to U.S.investors. 
B) yen-denominated foreign bonds originally sold in Japan. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the above 
A) dollar-denominated foreign bonds originally sold to U.S.investors. 
B) yen-denominated foreign bonds originally sold in Japan. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the above

Question 5

Eurobonds are usually

Accepted Answer

A) bearer bonds. 
B) registered bonds. 
C) bulldog bonds. 
D) foreign currency bonds. 
A) bearer bonds. 
B) registered bonds. 
C) bulldog bonds. 
D) foreign currency bonds.

Question 6

In terms of the types of instruments offered,

Accepted Answer

A) the Yankee bond market has been more innovative than the international bond market. 
B) the international bond market has been much more innovative than the U.S.market. 
C) the most innovations have come from Milan, just like any other fashion. 
D) none of the above 
A) the Yankee bond market has been more innovative than the international bond market. 
B) the international bond market has been much more innovative than the U.S.market. 
C) the most innovations have come from Milan, just like any other fashion. 
D) none of the above

Question 7

Find the present value of a 30-year bond that pays an annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of €1,000 when the yield to maturity is 5%.

Accepted Answer

A) €1,018.81 
B) €1,027.23 
C) €1,153.73 
D) none of the above 
A) €1,018.81 
B) €1,027.23 
C) €1,153.73 
D) none of the above

Question 8

Unlike a bond issue,in which the entire issue is brought to market at once,_______ is partially sold on a continuous basis through an issuance facility that allows the borrower to obtain funds only as needed on a flexible basis.

Accepted Answer

A) a Euro-medium term note issue 
B) bearer bond 
C) a Euro-long term note issue 
D) a Euro-short term note issue 
A) a Euro-medium term note issue 
B) bearer bond 
C) a Euro-long term note issue 
D) a Euro-short term note issue

Question 9

Find the present value of a 3-year bond that pays an annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of €1,000 when the yield to maturity is 5%.

Accepted Answer

A) €1,018.81 
B) €1,027.23 
C) €1,099.96 
D) none of the above 
A) €1,018.81 
B) €1,027.23 
C) €1,099.96 
D) none of the above

Question 10

In any given year,about what percent of new international bonds are likely to be Eurobonds rather than foreign bonds?

Accepted Answer

A) 80% 
B) 45% 
C) 25% 
D) 15% 
A) 80% 
B) 45% 
C) 25% 
D) 15%

Question 11

A five-year,4 percent Euroyen bond sells at par.A comparable risk five-year,5.5 percent yen/dollar dual-currency bond pays $833.33 at maturity per ¥100,000 of face value.It sells for ¥110,000.What is the implied ¥/$ exchange rate at maturity?

Accepted Answer

A) ¥131/$1.00 
B) ¥120/$1.00 
C) ¥110/$1.00 
D) ¥103/$1.00 
A) ¥131/$1.00 
B) ¥120/$1.00 
C) ¥110/$1.00 
D) ¥103/$1.00

Question 12

Underwriters for an international bond issue will commit their own capital to buy the issue from the borrower at a discount from the issue price.The discount,or underwriting spread,is typically

Accepted Answer

A) in the 1 to 1.5 percent range. 
B) in the 2 to 2.5 percent range. 
C) in the 3 to 3.5 percent range. 
D) in the 4 to 4.5 percent range. 
A) in the 1 to 1.5 percent range. 
B) in the 2 to 2.5 percent range. 
C) in the 3 to 3.5 percent range. 
D) in the 4 to 4.5 percent range.

Question 13

Proportionately more domestic bonds than international bonds are denominated in the ____________ while more international bonds than domestic bonds are denominated in the _________________

Accepted Answer

A) Euro and the yen, the dollar and the pound sterling. 
B) Dollar and the pound sterling, the euro and the yen. 
C) Euro and the pound sterling, the dollar and the yen. 
D) Dollar and the yen, the euro and the pound sterling. 
A) Euro and the yen, the dollar and the pound sterling. 
B) Dollar and the pound sterling, the euro and the yen. 
C) Euro and the pound sterling, the dollar and the yen. 
D) Dollar and the yen, the euro and the pound sterling.

Question 14

In any year,the Eurobond segment of the international bond market accounts for approximately what percent of new bond offering?

Accepted Answer

A) 10% 
B) 25% 
C) 50% 
D) 80% 
A) 10% 
B) 25% 
C) 50% 
D) 80%

Question 15

The credit rating of an international borrower

Accepted Answer

A) depends on the volatility of the exchange rate. 
B) depends on the volatility, but not absolute level, of the exchange rate. 
C) is usually never higher than the rating assigned to the sovereign government of the country in which it resides. 
D) is unrelated to the rating assigned to the sovereign government of the country in which it resides. 
A) depends on the volatility of the exchange rate. 
B) depends on the volatility, but not absolute level, of the exchange rate. 
C) is usually never higher than the rating assigned to the sovereign government of the country in which it resides. 
D) is unrelated to the rating assigned to the sovereign government of the country in which it resides.

Question 16

Find the present value of a 2-year Treasury bond that pays a semi-annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of $1,000 when the yield to maturity is 5%.

Accepted Answer

A) $1,018.81 
B) $1,231.15 
C) $699.07 
D) none of the above 
A) $1,018.81 
B) $1,231.15 
C) $699.07 
D) none of the above

Question 17

Zero coupon bonds

Accepted Answer

A) pay interest at zero percent. 
B) are sold at a discount from par value. 
C) are attractive to Japanese investors who are not required to pay taxes on capital gains. 
D) both a) and b). 
A) pay interest at zero percent. 
B) are sold at a discount from par value. 
C) are attractive to Japanese investors who are not required to pay taxes on capital gains. 
D) both a) and b).

Question 18

"Investment grade" ratings are in the following categories:

Accepted Answer

A) Moody's: AAA to BBB - S&P's: Aaa to Baa 
B) Moody's: Aaa to Baa - S&P's: AAA to BBB 
C) Moody's: AAA to A - S&P's: Aaa to A 
D) Moody's: Aaa to A - S&P's: AAA to A 
A) Moody's: AAA to BBB - S&P's: Aaa to Baa 
B) Moody's: Aaa to Baa - S&P's: AAA to BBB 
C) Moody's: AAA to A - S&P's: Aaa to A 
D) Moody's: Aaa to A - S&P's: AAA to A

Question 19

The role of an underwriter is to

Accepted Answer

A) help negotiate terms with the borrower. 
B) ascertain market conditions. 
C) manage the issuance. 
D) all of the above. 
A) help negotiate terms with the borrower. 
B) ascertain market conditions. 
C) manage the issuance. 
D) all of the above.

Question 20

With a bearer bond,

Accepted Answer

A) possession is evidence of ownership. 
B) the issuer keeps records indicating only who the current owner of a bond is. 
C) the owner's name is on the bond. 
D) the owner's name is assigned to the bond serial number, but not indicated on the bond. 
A) possession is evidence of ownership. 
B) the issuer keeps records indicating only who the current owner of a bond is. 
C) the owner's name is on the bond. 
D) the owner's name is assigned to the bond serial number, but not indicated on the bond.

Exam 12: International Bond Market

With regard to dual-currency bonds versus comparable straight fixed-rate bonds,

A "Eurobond" issue is

U.S.security regulations require Yankee bonds and U.S.corporate bonds sold to U.S.citizens to be

"Bulldog" bonds are

Eurobonds are usually

In terms of the types of instruments offered,

Find the present value of a 30-year bond that pays an annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of €1,000 when the yield to maturity is 5%.

Unlike a bond issue,in which the entire issue is brought to market at once,_______ is partially sold on a continuous basis through an issuance facility that allows the borrower to obtain funds only as needed on a flexible basis.

Find the present value of a 3-year bond that pays an annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of €1,000 when the yield to maturity is 5%.

In any given year,about what percent of new international bonds are likely to be Eurobonds rather than foreign bonds?

A five-year,4 percent Euroyen bond sells at par.A comparable risk five-year,5.5 percent yen/dollar dual-currency bond pays $833.33 at maturity per ¥100,000 of face value.It sells for ¥110,000.What is the implied ¥/$ exchange rate at maturity?

Underwriters for an international bond issue will commit their own capital to buy the issue from the borrower at a discount from the issue price.The discount,or underwriting spread,is typically

Proportionately more domestic bonds than international bonds are denominated in the ____________ while more international bonds than domestic bonds are denominated in the _________________

In any year,the Eurobond segment of the international bond market accounts for approximately what percent of new bond offering?

The credit rating of an international borrower

Find the present value of a 2-year Treasury bond that pays a semi-annual coupon,has a coupon rate of 6%,a yield to maturity of 5%,a par value of $1,000 when the yield to maturity is 5%.

Zero coupon bonds

"Investment grade" ratings are in the following categories:

The role of an underwriter is to

With a bearer bond,

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Proportionately more domestic bonds than international bonds are denominated in the while more international bonds than domestic bonds are denominated in the _____