Question 1

Merchant banks are different from traditional commercial banks in what way(s)?

Accepted Answer

A) Merchant banks can engage in investment banking activities. 
B) Merchant banks can arrange for foreign exchange transactions. 
C) Merchant banks can assist their clients in hedging exchange rate risk. 
D) All of the above 
A) Merchant banks can engage in investment banking activities. 
B) Merchant banks can arrange for foreign exchange transactions. 
C) Merchant banks can assist their clients in hedging exchange rate risk. 
D) All of the above A

Question 2

An Offshore banking center is

Accepted Answer

A) a country whose banking system is organized to permit external accounts beyond the normal economic activity of the county. 
B) is external to any government, frequently located on old oil drilling platforms located in international waters. 
C) a country like North Korea. 
D) none of the above 
A) a country whose banking system is organized to permit external accounts beyond the normal economic activity of the county. 
B) is external to any government, frequently located on old oil drilling platforms located in international waters. 
C) a country like North Korea. 
D) none of the above A

Question 3

Proceeding the Asian crisis,

Accepted Answer

A) domestic price bubbles in East Asia, particularly in real estate, were fostered by capital inflows from bankers from the G-10 countries. 
B) the liberalization of financial markets coupled with capital inflows from bankers from the G-10 countries contributed to bubbles in financial asset prices. 
C) the close interrelationships common among commercial firms and financial institutions in Asia resulted in poor investment decision making. 
D) all of the above 
A) domestic price bubbles in East Asia, particularly in real estate, were fostered by capital inflows from bankers from the G-10 countries. 
B) the liberalization of financial markets coupled with capital inflows from bankers from the G-10 countries contributed to bubbles in financial asset prices. 
C) the close interrelationships common among commercial firms and financial institutions in Asia resulted in poor investment decision making. 
D) all of the above D

Question 4

Banks that both perform traditional commercial banking functions and engage in investment banking activities are often called

Accepted Answer

A) international service banks. 
B) investment banks. 
C) commercial banks. 
D) merchant banks. 
A) international service banks. 
B) investment banks. 
C) commercial banks. 
D) merchant banks.

Question 5

Currently,the biggest bank in the world is

Accepted Answer

A) Citigroup. 
B) Bank of America. 
C) UBS. 
D) The World Bank. 
A) Citigroup. 
B) Bank of America. 
C) UBS. 
D) The World Bank.

Question 6

The rate charged by banks with excess funds is referred to as the interbank offered rate; they will accept interbank deposits at the interbank bid rate.

Accepted Answer

A) The spread is generally 1/8 of 1 percent for most major Eurocurrencies. 
B) The spread is generally referred to as "the TED spread". 
C) The spread is generally referred to as the bid-ask commission. 
D) None of the above 
A) The spread is generally 1/8 of 1 percent for most major Eurocurrencies. 
B) The spread is generally referred to as "the TED spread". 
C) The spread is generally referred to as the bid-ask commission. 
D) None of the above

Question 7

A bank may establish a multinational operation for the reason of wholesale defensive strategy.The underlying rationale being that

Accepted Answer

A) banks follow their multinational customers abroad to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidiaries. 
B) multinational banking operations help a bank prevent the erosion of its traveler's check, tourist, and foreign business markets from foreign bank competition. 
C) by maintaining foreign branches and foreign currency balances, banks may reduce transaction costs and foreign exchange risk on currency conversion if government controls can be circumvented. 
D) multinational banks are often not subject to the same regulations as domestic banks.There may be reduced need to publish adequate financial information, lack of required deposit insurance and reserve requirements on foreign currency deposits, and the absence of territorial restrictions. 
A) banks follow their multinational customers abroad to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidiaries. 
B) multinational banking operations help a bank prevent the erosion of its traveler's check, tourist, and foreign business markets from foreign bank competition. 
C) by maintaining foreign branches and foreign currency balances, banks may reduce transaction costs and foreign exchange risk on currency conversion if government controls can be circumvented. 
D) multinational banks are often not subject to the same regulations as domestic banks.There may be reduced need to publish adequate financial information, lack of required deposit insurance and reserve requirements on foreign currency deposits, and the absence of territorial restrictions.

Question 8

The current exchange rate is £1.00 = $2.00.Compute the correct balances in Bank A's correspondent account(s)with Bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at Bank B for $90,000 using its correspondent relationship with Bank B.

Accepted Answer

A) Bank A's dollar-denominated account at B will rise by $90,000. 
B) Bank B's dollar-denominated account at A will fall by $90,000. 
C) Bank A's pound-denominated account at B will rise by £45,000. 
D) Bank B's pound-denominated account at A will rise by £45,000. 
A) Bank A's dollar-denominated account at B will rise by $90,000. 
B) Bank B's dollar-denominated account at A will fall by $90,000. 
C) Bank A's pound-denominated account at B will rise by £45,000. 
D) Bank B's pound-denominated account at A will rise by £45,000.

Question 9

ABC International can borrow $4,000,000 at LIBOR plus a lending margin of .65 percent per annum on a three-month rollover basis from Barclays in London.Three month LIBOR is currently 5.5 percent.Suppose that over the second three-month interval LIBOR falls to 5.0 percent.How much will ABC pay in interest to Barclays over the six-month period for the Eurodollar loan?

Accepted Answer

A) $50,000 
B) $100,000 
C) $118,000 
D) $120,000 
A) $50,000 
B) $100,000 
C) $118,000 
D) $120,000

Question 10

Eurocredits

Accepted Answer

A) are often so large that individual banks cannot handle them. 
B) are short- to medium-term loans of Eurocurrency extended by Eurobanks to corporations, sovereign governments, nonprime banks, or international organizations. 
C) frequently require the use of a banking syndicate. 
D) all of the above 
A) are often so large that individual banks cannot handle them. 
B) are short- to medium-term loans of Eurocurrency extended by Eurobanks to corporations, sovereign governments, nonprime banks, or international organizations. 
C) frequently require the use of a banking syndicate. 
D) all of the above

Question 11

The major legislation controlling the operation of foreign banks in the U.S.

Accepted Answer

A) specifies that foreign branch banks operating in the U.S.must comply with U.S.banking regulations just like U.S.banks. 
B) specifies that foreign branch banks operating in the U.S.must comply with their country-of-origin banking regulations just like U.S.banks operating abroad. 
C) specifies that the "shell" branches are illegal for U.S.and foreign banks. 
D) both a and c 
A) specifies that foreign branch banks operating in the U.S.must comply with U.S.banking regulations just like U.S.banks. 
B) specifies that foreign branch banks operating in the U.S.must comply with their country-of-origin banking regulations just like U.S.banks operating abroad. 
C) specifies that the "shell" branches are illegal for U.S.and foreign banks. 
D) both a and c

Question 12

Who benefits from debt-for-equity swaps?

Accepted Answer

A) The creditor bank 
B) The LDC 
C) The market maker 
D) All of the above 
A) The creditor bank 
B) The LDC 
C) The market maker 
D) All of the above

Question 13

A bank sold a 3*9 FRA.Payment is made when?

Accepted Answer

A) At the end of 3 months 
B) At the end of 6 months 
C) At the end of 9 months 
D) None of the above 
A) At the end of 3 months 
B) At the end of 6 months 
C) At the end of 9 months 
D) None of the above

Question 14

Correspondent bank services include

Accepted Answer

A) prepaid postage and packing materials. 
B) letters of introduction. 
C) foreign exchange conversions. 
D) both b and c 
A) prepaid postage and packing materials. 
B) letters of introduction. 
C) foreign exchange conversions. 
D) both b and c

Question 15

A bank may establish a multinational operation for the reason of risk reduction.The underlying rationale being that

Accepted Answer

A) by maintaining foreign branches and foreign currency balances, banks may reduce transaction costs and foreign exchange risk on currency conversion if government controls can be circumvented. 
B) greater stability of earnings is possible with international diversification.Offsetting business and monetary policy cycles across nations reduces the country-specific risk of any one nation. 
C) multinational banks are often not subject to the same regulations as domestic banks.There may be reduced need to publish adequate financial information, lack of required deposit insurance and reserve requirements on foreign currency deposits, and the absence of territorial restrictions. 
D) multinational banking operations help a bank prevent the erosion of its traveler's check, tourist, and foreign business markets from foreign bank competition. 
A) by maintaining foreign branches and foreign currency balances, banks may reduce transaction costs and foreign exchange risk on currency conversion if government controls can be circumvented. 
B) greater stability of earnings is possible with international diversification.Offsetting business and monetary policy cycles across nations reduces the country-specific risk of any one nation. 
C) multinational banks are often not subject to the same regulations as domestic banks.There may be reduced need to publish adequate financial information, lack of required deposit insurance and reserve requirements on foreign currency deposits, and the absence of territorial restrictions. 
D) multinational banking operations help a bank prevent the erosion of its traveler's check, tourist, and foreign business markets from foreign bank competition.

Question 16

Since international banks have the facilities to trade foreign exchange,

Accepted Answer

A) they generally also make a market as a dealer in foreign exchange. 
B) they generally also make a market as a dealer in foreign exchange derivatives. 
C) they generally also trade foreign exchange products for their own account. 
D) none of the above 
A) they generally also make a market as a dealer in foreign exchange. 
B) they generally also make a market as a dealer in foreign exchange derivatives. 
C) they generally also trade foreign exchange products for their own account. 
D) none of the above

Question 17

A foreign branch bank

Accepted Answer

A) is a small service facility staffed by parent bank personnel that is designed to assist MNC clients of the parent bank in dealings with the bank's correspondents. 
B) operates like a local bank, but legally is a part of the parent bank. 
C) is subject to domestic regulation only 
D) all of the above 
A) is a small service facility staffed by parent bank personnel that is designed to assist MNC clients of the parent bank in dealings with the bank's correspondents. 
B) operates like a local bank, but legally is a part of the parent bank. 
C) is subject to domestic regulation only 
D) all of the above

Question 18

Consider the balance sheets of Bank A and Bank B.Bank A is in Milan,Bank B is in New York.The current exchange rate is €1.00 = $1.25.Show the correct balances in each account if a currency trader employed at Bank A buys €100,000 from a currency trader at Bank B for $125,000 using its correspondent relationship with Bank B.

Accepted Answer

Instructors note: numerical co

Question 19

The Eurocurrency market

Accepted Answer

A) is only in Europe. 
B) is an external banking system that runs parallel to the domestic banking system of the country that issued the currency. 
C) has languished following monetary union in Europe. 
D) none of the above 
A) is only in Europe. 
B) is an external banking system that runs parallel to the domestic banking system of the country that issued the currency. 
C) has languished following monetary union in Europe. 
D) none of the above

Question 20

Approximately ___ percent of wholesale Eurobank external liabilities come from fixed time deposits,the remainder from Negotiable Certificates of Deposit.

Accepted Answer

A) 50% 
B) 75% 
C) 90% 
D) None of the above 
A) 50% 
B) 75% 
C) 90% 
D) None of the above

Merchant banks are different from traditional commercial banks in what way(s)?

An Offshore banking center is

Proceeding the Asian crisis,

Banks that both perform traditional commercial banking functions and engage in investment banking activities are often called

Currently,the biggest bank in the world is

The rate charged by banks with excess funds is referred to as the interbank offered rate; they will accept interbank deposits at the interbank bid rate.

A bank may establish a multinational operation for the reason of wholesale defensive strategy.The underlying rationale being that

The current exchange rate is £1.00 = $2.00.Compute the correct balances in Bank A's correspondent account(s)with Bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at Bank B for $90,000 using its correspondent relationship with Bank B.

Eurocredits

The major legislation controlling the operation of foreign banks in the U.S.

Who benefits from debt-for-equity swaps?

A bank sold a 3*9 FRA.Payment is made when?

Correspondent bank services include

A bank may establish a multinational operation for the reason of risk reduction.The underlying rationale being that

Since international banks have the facilities to trade foreign exchange,

A foreign branch bank

The Eurocurrency market

Approximately ___ percent of wholesale Eurobank external liabilities come from fixed time deposits,the remainder from Negotiable Certificates of Deposit.

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 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 11: International Banking and Money Market

Merchant banks are different from traditional commercial banks in what way(s)?

An Offshore banking center is

Proceeding the Asian crisis,

Banks that both perform traditional commercial banking functions and engage in investment banking activities are often called

Currently,the biggest bank in the world is

The rate charged by banks with excess funds is referred to as the interbank offered rate; they will accept interbank deposits at the interbank bid rate.

A bank may establish a multinational operation for the reason of wholesale defensive strategy.The underlying rationale being that

The current exchange rate is £1.00 = $2.00.Compute the correct balances in Bank A's correspondent account(s)with Bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at Bank B for $90,000 using its correspondent relationship with Bank B.

Eurocredits

The major legislation controlling the operation of foreign banks in the U.S.

Who benefits from debt-for-equity swaps?

A bank sold a 3*9 FRA.Payment is made when?

Correspondent bank services include

A bank may establish a multinational operation for the reason of risk reduction.The underlying rationale being that

Since international banks have the facilities to trade foreign exchange,

A foreign branch bank

The Eurocurrency market

Approximately ___ percent of wholesale Eurobank external liabilities come from fixed time deposits,the remainder from Negotiable Certificates of Deposit.

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 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