Question 1

Eurobonds sold in the United States may not be sold to U.S.citizens.

Accepted Answer

A) True 
 B)False

Question 2

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 dollar-denominated bonds to U.S.investors. 
D) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency (e.g.,a German MNC issuing dollar-denominated bonds to U.S.investors). 
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 dollar-denominated bonds to U.S.investors. 
D) one offered by a foreign borrower to investors in a national market and denominated in that nation's currency (e.g.,a German MNC issuing dollar-denominated bonds to U.S.investors).

Question 3

The floor value of a convertible bond

Accepted Answer

A) is the "straight bond" value. 
B) is the conversion value. 
C) is the minimum of the "straight bond" value and the conversion value. 
D) is the maximum of the "straight bond" value and the conversion value. 
A) is the "straight bond" value. 
B) is the conversion value. 
C) is the minimum of the "straight bond" value and the conversion value. 
D) is the maximum of the "straight bond" value and the conversion value.

Question 4

Euro-medium term notes

Accepted Answer

A) are typically fixed-rate corporate notes issued with maturities ranging from less than a year to about ten years. 
B) are typically fixed-rate corporate notes issued with maturities ranging from three years to about ten years. 
C) are sold just like bonds in the primary market. 
D) none of the options 
A) are typically fixed-rate corporate notes issued with maturities ranging from less than a year to about ten years. 
B) are typically fixed-rate corporate notes issued with maturities ranging from three years to about ten years. 
C) are sold just like bonds in the primary market. 
D) none of the options

Question 5

A ten-year floating-rate note (FRN)has coupons referenced to 3-month pound LIBOR,and pays coupon interest quarterly.Assume that the current 3-month LIBOR is 4 percent.If the risk premium above LIBOR that the issuer must pay is 1/8 percent,the next period's coupon payment on a £1,000 face value FRN will be

Accepted Answer

A) £31.25. 
B) £82.50. 
C) £165.00. 
D) £41.25. 
A) £31.25. 
B) £82.50. 
C) £165.00. 
D) £41.25.

Question 6

Assuming that the bond sells at par,the implicit $/£ exchange rate at maturity of a British pound-U.S.dollar dual currency bond that pays £581.40 at maturity per $1,000 of par value is

Accepted Answer

A) $1.95/£1.00. 
B) $1.72/£1.00. 
C) $1.58/£1.00. 
D) $0.5814/£1.00. 
A) $1.95/£1.00. 
B) $1.72/£1.00. 
C) $1.58/£1.00. 
D) $0.5814/£1.00.

Question 7

"Dragon" bonds are

Accepted Answer

A) dollar-denominated foreign bonds originally sold to U.S.investors. 
B) dollar-denominated bonds originally sold in Asia with non-Japanese issuers. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the options 
A) dollar-denominated foreign bonds originally sold to U.S.investors. 
B) dollar-denominated bonds originally sold in Asia with non-Japanese issuers. 
C) pound sterling-denominated foreign bonds originally sold in the U.K. 
D) none of the options

Question 8

"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 options 
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 options

Question 9

Investors in corporate bonds would still be interested in sovereign credit ratings

Accepted Answer

A) because the sovereign credit rating usually represents a ceiling on corporate credit ratings within that country. 
B) because they might play the TED spread. 
C) because they are the rating assigned by the country's regulators. 
D) none of the options 
A) because the sovereign credit rating usually represents a ceiling on corporate credit ratings within that country. 
B) because they might play the TED spread. 
C) because they are the rating assigned by the country's regulators. 
D) none of the options

Question 10

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 options 
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 options

Question 11

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Accepted Answer

A) 3.5 percent 
B) 4 percent 
C) 3.75 percent 
D) There is not enough information provided to make a determination. 
A) 3.5 percent 
B) 4 percent 
C) 3.75 percent 
D) There is not enough information provided to make a determination.

Question 12

Your firm has just issued five-year floating-rate notes indexed to six-month U.S.dollar LIBOR plus 1/4 percent.What is the amount of the first coupon payment your firm will pay per U.S.$1,000 of face value,if six-month LIBOR is currently 7.2 percent?

Accepted Answer

A) $36.00 
B) $37.25 
C) $74.50 
D) none of the options 
A) $36.00 
B) $37.25 
C) $74.50 
D) none of the options

Question 13

Purchasers of global bonds are

Accepted Answer

A) mainly institutional investors to date. 
B) desirous of the increased liquidity of the issues. 
C) have been willing to accept lower yields. 
D) all of the options 
A) mainly institutional investors to date. 
B) desirous of the increased liquidity of the issues. 
C) have been willing to accept lower yields. 
D) all of the options

Question 14

The shorter length of time in bringing a Eurodollar bond issue to market,coupled with the lower rate of interest that borrowers pay for Eurodollar bond financing in comparison to Yankee bond financing,are two major reasons why the Eurobond segment of the international bond market is roughly ________ the size of the foreign bond segment.

Accepted Answer

A) four times 
B) two times 
C) ten times 
D) one hundred times 
A) four times 
B) two times 
C) ten times 
D) one hundred times

Question 15

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 16

Which of the following best reflects a country's ability to obtain funds from abroad necessary to meet its public- and private-sector obligations to nonresidents?

Accepted Answer

A) Fiscal assessment 
B) External assessment 
C) Monetary assessment 
D) Institutional assessment 
A) Fiscal assessment 
B) External assessment 
C) Monetary assessment 
D) Institutional assessment

Question 17

The Wall Street Journal publishes daily values of yields to maturity for Japanese,German,British,and Canadian Government bonds.

Accepted Answer

A) Bond market participants can thereby compare the yield curve of the various countries. 
B) Bond market participants can thereby compare the term structure of interest rates of the various countries. 
C) Bond market participants can thereby compare the yield curve of the various countries,as well as the term structure of interest rates of the various countries. 
D) none of the options 
A) Bond market participants can thereby compare the yield curve of the various countries. 
B) Bond market participants can thereby compare the term structure of interest rates of the various countries. 
C) Bond market participants can thereby compare the yield curve of the various countries,as well as the term structure of interest rates of the various countries. 
D) none of the options

Question 18

Market makers in the secondary bond market

Accepted Answer

A) stand ready to buy or sell for their own account. 
B) quote bid and ask spreads. 
C) trade directly with one another,through a broker or with retail customers. 
D) all of the options 
A) stand ready to buy or sell for their own account. 
B) quote bid and ask spreads. 
C) trade directly with one another,through a broker or with retail customers. 
D) all of the options

Question 19

In any given year,rightly 80 percent of new international bonds are likely to be

Accepted Answer

A) Eurobonds. 
B) foreign currency bonds. 
C) domestic bonds. 
D) none of the options 
A) Eurobonds. 
B) foreign currency bonds. 
C) domestic bonds. 
D) none of the options

Question 20

The withholding tax on bond income was originally called the interest equalization tax.

Accepted Answer

A) You can thank John F.Kennedy for imposing this tax. 
B) You can thank Ronald Reagan for imposing this tax. 
C) You can thank Jimmy Carter for imposing this tax. 
D) You can thank George Washington for imposing this tax. 
A) You can thank John F.Kennedy for imposing this tax. 
B) You can thank Ronald Reagan for imposing this tax. 
C) You can thank Jimmy Carter for imposing this tax. 
D) You can thank George Washington for imposing this tax.

Eurobonds sold in the United States may not be sold to U.S.citizens.

A "foreign bond" issue is

The floor value of a convertible bond

Euro-medium term notes

Assuming that the bond sells at par,the implicit $/£ exchange rate at maturity of a British pound-U.S.dollar dual currency bond that pays £581.40 at maturity per $1,000 of par value is

"Dragon" bonds are

"Bulldog" bonds are

Investors in corporate bonds would still be interested in sovereign credit ratings

A "Eurobond" issue is

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Your firm has just issued five-year floating-rate notes indexed to six-month U.S.dollar LIBOR plus 1/4 percent.What is the amount of the first coupon payment your firm will pay per U.S.$1,000 of face value,if six-month LIBOR is currently 7.2 percent?

Purchasers of global bonds are

Eurobonds are usually

Which of the following best reflects a country's ability to obtain funds from abroad necessary to meet its public- and private-sector obligations to nonresidents?

The Wall Street Journal publishes daily values of yields to maturity for Japanese,German,British,and Canadian Government bonds.

Market makers in the secondary bond market

In any given year,rightly 80 percent of new international bonds are likely to be

The withholding tax on bond income was originally called the interest equalization tax.

International Monetary System

Globalization and the Multinational Firm

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

Exam 12: International Bond Market

Eurobonds sold in the United States may not be sold to U.S.citizens.

A "foreign bond" issue is

The floor value of a convertible bond

Euro-medium term notes

Assuming that the bond sells at par,the implicit $/£ exchange rate at maturity of a British pound-U.S.dollar dual currency bond that pays £581.40 at maturity per $1,000 of par value is

"Dragon" bonds are

"Bulldog" bonds are

Investors in corporate bonds would still be interested in sovereign credit ratings

A "Eurobond" issue is

Find the yield to maturity for this floating rate note: The reset date is today; coupons are paid annually according to the formula (LIBOR + ¼ percent); since issuance,there has not been a change in the issuer's credit rating.The bond has ten years to maturity and LIBOR = 3.5 percent.

Your firm has just issued five-year floating-rate notes indexed to six-month U.S.dollar LIBOR plus 1/4 percent.What is the amount of the first coupon payment your firm will pay per U.S.$1,000 of face value,if six-month LIBOR is currently 7.2 percent?

Purchasers of global bonds are

Eurobonds are usually

Which of the following best reflects a country's ability to obtain funds from abroad necessary to meet its public- and private-sector obligations to nonresidents?

The Wall Street Journal publishes daily values of yields to maturity for Japanese,German,British,and Canadian Government bonds.

Market makers in the secondary bond market

In any given year,rightly 80 percent of new international bonds are likely to be

The withholding tax on bond income was originally called the interest equalization tax.

International Monetary System

Globalization and the Multinational Firm

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