Question 1

Taxes on interest paid by nonresidents are called

Accepted Answer

A) interest taxes 
B) non-resident taxes 
C) non-resident interest taxes 
D) withholding taxes 
A) interest taxes 
B) non-resident taxes 
C) non-resident interest taxes 
D) withholding taxes D

Question 2

An underwriting syndicate consists of all of the following except:

Accepted Answer

A) lead manager 
B) managing group 
C) underwriting syndicate 
D) managing syndicate 
A) lead manager 
B) managing group 
C) underwriting syndicate 
D) managing syndicate D

Question 3

In any given year,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% A

Question 4

Fixed-rate notes issued by a corporation with maturities ranging from less than 1 year to about 10 years in the international bond markets are called

Accepted Answer

A) international straight-fixed rate notes 
B) euro-medium term notes 
C) euro floating-rate bonds 
D) international equity-related bonds 
A) international straight-fixed rate notes 
B) euro-medium term notes 
C) euro floating-rate bonds 
D) international equity-related bonds

Question 5

Bonds with fixed coupon payments in regular intervals and a designated maturity date are called

Accepted Answer

A) straight-fixed rate bonds 
B) euro-medium term bonds 
C) floating-rate bonds 
D) equity-related bonds 
A) straight-fixed rate bonds 
B) euro-medium term bonds 
C) floating-rate bonds 
D) equity-related bonds

Question 6

A "global bond" issue

Accepted Answer

A) is a very large international bond offering by several borrowers pooled together 
B) is a very large international bond offering by a single borrower that is simultaneously sold in several national bond markets 
C) has higher yields for the purchasers 
D) has a lower liquidity 
A) is a very large international bond offering by several borrowers pooled together 
B) is a very large international bond offering by a single borrower that is simultaneously sold in several national bond markets 
C) has higher yields for the purchasers 
D) has a lower liquidity

Question 7

Assume Bank of Montreal has two zero-coupon bonds outstanding,each for a face value $100,000,000.Bond A matures in 10 years and sells at a discount of 35% off face value and bond B matures in 20 years and sells at a discount of 60% off face value.Calculate the implied yield to maturity of each bond.

Accepted Answer

Bond A: 650,000,000(1 + i)¹⁰ = 1

Question 8

A five-year Floating-rate note (FRN)has coupons referenced to six-month dollar LIBOR,and pays coupon interest semiannually.Assume that the current six-month LIBOR is 6 percent.If the risk premium above LIBOR that the issuer must pay is 1/8 percent,the next period's coupon rate on a $1,000 face value FRN will be:

Accepted Answer

A) $29.375 
B) $30.000 
C) $30.625 
D) $61.250 
A) $29.375 
B) $30.000 
C) $30.625 
D) $61.250

Question 9

A "bearer bond" is one that

Accepted Answer

A) shows the owner's name on the bond 
B) the owner's name is recorded by the issuer 
C) possession is evidence of ownership 
D) a and b 
A) shows the owner's name on the bond 
B) the owner's name is recorded by the issuer 
C) possession is evidence of ownership 
D) a and b

Question 10

What happens to the present value of the bonds in 4.,if the implied yield to maturity increases by 1%?

Accepted Answer

Bond A: 100,000,000/(1.054)¹⁰ = 59,100,872

Question 11

A- Canada Inc.has issued a dual-currency bond that pays $555.10 at maturity per SF1,000 of par value.The company's cash flows are exclusively in Canadian dollars.
a)What is the implicit $/SF exchange rate at maturity?
b)Will the company be better or worse off if the actual exchange rate at maturity is $0.6123/SF?

Accepted Answer

a)$555.10/SF 1,000 =

Question 12

The implicit SF/$ exchange rate at maturity of a Swiss franc/U.S.dollar dual currency bonds that pay $581.40 at maturity per SF1,000,is

Accepted Answer

A) SF0.58/$1.00 
B) SF1.58/$1.00 
C) SF1.72/$1.00 
D) SF1.95/$1.00 
A) SF0.58/$1.00 
B) SF1.58/$1.00 
C) SF1.72/$1.00 
D) SF1.95/$1.00

Question 13

Which statement is NOT true about market makers?

Accepted Answer

A) Market makers stand ready to buy or sell on their own account 
B) Market makers quote two-way bid and ask prices 
C) Market makers trade with one another only 
D) Market makers only make the bid-ask spread and charge no other commission 
A) Market makers stand ready to buy or sell on their own account 
B) Market makers quote two-way bid and ask prices 
C) Market makers trade with one another only 
D) Market makers only make the bid-ask spread and charge no other commission

Question 14

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 these 
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 these

Question 15

Zero-coupon bonds were issued in 2005.If their implied yield to maturity is 5%,and the bonds will mature in 20 years,at what discount from the face value will they sell?

Accepted Answer

A) 10% 
B) 25.42% 
C) 37.68% 
D) cannot be determined, need more information 
A) 10% 
B) 25.42% 
C) 37.68% 
D) cannot be determined, need more information

Question 16

ZZZ Corp.wants to issue zero-coupon bonds with a 10-year maturity.The implied yield to maturity on these bonds is 5% and ZZZ Corp.wants to raise $10,000,000.(Assume no transaction costs).How much money will ZZZ Corp.have to pay at maturity of the bond?

Accepted Answer

10,000,000

Question 17

ABC Corporation,a Canadian firm,wants to float a bond issue in the United Kingdom.Which choices does the company have?
 Discuss the main characteristics of each option.What do you recommend?

Accepted Answer

ABC Corporation can issue foreign bonds

Question 18

A "foreign bond" 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) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency 
C) for example, a German MNC issuing yen-denominated bonds to U.S.investors 
D) b and c 
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) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency 
C) for example, a German MNC issuing yen-denominated bonds to U.S.investors 
D) b and c

Question 19

Floating-rate notes (FRN)

Accepted Answer

A) experience very volatile price changes between reset dates 
B) are typically medium-term bonds with coupon payments indexed to some reference rate (e.g.LIBOR) 
C) appeal to investors with strong need to preserve the principal value of the investment should they need to liquidate prior to the maturity of the bonds 
D) b and c 
A) experience very volatile price changes between reset dates 
B) are typically medium-term bonds with coupon payments indexed to some reference rate (e.g.LIBOR) 
C) appeal to investors with strong need to preserve the principal value of the investment should they need to liquidate prior to the maturity of the bonds 
D) b and c

Question 20

A five-year $1,000 face value floating-rate note (FRN)has coupons referenced to six-month dollar LIBOR,and pays coupon interest semiannually.Assume that the last six-month LIBOR was 6.5 percent and the current six-month LIBOR is 6 percent.If the risk premium above LIBOR that the issuer must pay is .25% by how much did the coupon payment change?

Accepted Answer

A) increase by $2.5 
B) decrease by $2.5 
C) increase by $5 
D) decrease by $5 
A) increase by $2.5 
B) decrease by $2.5 
C) increase by $5 
D) decrease by $5

Taxes on interest paid by nonresidents are called

An underwriting syndicate consists of all of the following except:

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

Fixed-rate notes issued by a corporation with maturities ranging from less than 1 year to about 10 years in the international bond markets are called

Bonds with fixed coupon payments in regular intervals and a designated maturity date are called

A "global bond" issue

Assume Bank of Montreal has two zero-coupon bonds outstanding,each for a face value $100,000,000.Bond A matures in 10 years and sells at a discount of 35% off face value and bond B matures in 20 years and sells at a discount of 60% off face value.Calculate the implied yield to maturity of each bond.

A "bearer bond" is one that

What happens to the present value of the bonds in 4.,if the implied yield to maturity increases by 1%?

The implicit SF/$ exchange rate at maturity of a Swiss franc/U.S.dollar dual currency bonds that pay $581.40 at maturity per SF1,000,is

Which statement is NOT true about market makers?

A "Eurobond" issue is

Zero-coupon bonds were issued in 2005.If their implied yield to maturity is 5%,and the bonds will mature in 20 years,at what discount from the face value will they sell?

ZZZ Corp.wants to issue zero-coupon bonds with a 10-year maturity.The implied yield to maturity on these bonds is 5% and ZZZ Corp.wants to raise $10,000,000.(Assume no transaction costs).How much money will ZZZ Corp.have to pay at maturity of the bond?

ABC Corporation,a Canadian firm,wants to float a bond issue in the United Kingdom.Which choices does the company have? Discuss the main characteristics of each option.What do you recommend?

A "foreign bond" issue is

Floating-rate notes (FRN)

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

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond 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

Exam 7: Futures and Options on Foreign Exchange

Taxes on interest paid by nonresidents are called

An underwriting syndicate consists of all of the following except:

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

Fixed-rate notes issued by a corporation with maturities ranging from less than 1 year to about 10 years in the international bond markets are called

Bonds with fixed coupon payments in regular intervals and a designated maturity date are called

A "global bond" issue

A "bearer bond" is one that

What happens to the present value of the bonds in 4.,if the implied yield to maturity increases by 1%?

The implicit SF/$ exchange rate at maturity of a Swiss franc/U.S.dollar dual currency bonds that pay $581.40 at maturity per SF1,000,is

Which statement is NOT true about market makers?

A "Eurobond" issue is

Zero-coupon bonds were issued in 2005.If their implied yield to maturity is 5%,and the bonds will mature in 20 years,at what discount from the face value will they sell?

ZZZ Corp.wants to issue zero-coupon bonds with a 10-year maturity.The implied yield to maturity on these bonds is 5% and ZZZ Corp.wants to raise $10,000,000.(Assume no transaction costs).How much money will ZZZ Corp.have to pay at maturity of the bond?

ABC Corporation,a Canadian firm,wants to float a bond issue in the United Kingdom.Which choices does the company have? Discuss the main characteristics of each option.What do you recommend?

A "foreign bond" issue is

Floating-rate notes (FRN)

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

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond 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