Question 1

Two major clearing systems for international bond transactions are

Accepted Answer

A) Euroclear and Clearstream International. 
B) Euroclear and Clearasil. 
C) Deutsche Börse Clearing and Cedel International. 
D) None of the above 
A) Euroclear and Clearstream International. 
B) Euroclear and Clearasil. 
C) Deutsche Börse Clearing and Cedel International. 
D) None of the above

Question 2

In contrast to many domestic bonds, which make _________ coupon payments, coupon interest on Eurobonds is typically paid _________.

Accepted Answer

A) semiannual; annually 
B) annual; semiannually 
C) quarterly; semiannually 
D) quarterly; annually 
A) semiannual; annually 
B) annual; semiannually 
C) quarterly; semiannually 
D) quarterly; annually

Question 3

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 4

Assuming that the bond sells at par, the implicit $/£ exchange rate at maturity of a British pound-U.S. dollar dual currency bonds that pay £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 5

Eurobond market makers and dealers are members of the ______________, a self-regulatory body based in Zurich.

Accepted Answer

A) International Currency Market Association (ICM
A)  
B) International Bond Marketers Association (IBM
A)  
C) International Bond Regulators Association (IBR
A)  
D) International Capital Market Association (ICM
A)  
A) International Currency Market Association (ICM
A)  
B) International Bond Marketers Association (IBM
A)  
C) International Bond Regulators Association (IBR
A)  
D) International Capital Market Association (ICM
A)

Question 6

Consider a British pound-U.S. dollar dual currency bonds that pay £581.40 at maturity per $1,000 of par value. If at maturity, the exchange rate is $1.90 = £1.00,

Accepted Answer

A) you should insist on getting paid in dollars. 
B) investors holding this bond are better off for the exchange rate. 
C) the issuer of the bond is worse off for the exchange rate. 
D) both b and c 
A) you should insist on getting paid in dollars. 
B) investors holding this bond are better off for the exchange rate. 
C) the issuer of the bond is worse off for the exchange rate. 
D) both b and c

Question 7

With regard to clearing procedures for bond transactions

Accepted Answer

A) it is a system for transferring ownership of bonds. 
B) it is a system for ensuring payment from buyers to sellers. 
C) most Eurobond trades clear through two major clearing systems. 
D) all of the above 
A) it is a system for transferring ownership of bonds. 
B) it is a system for ensuring payment from buyers to sellers. 
C) most Eurobond trades clear through two major clearing systems. 
D) all of the above

Question 8

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 9

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 10

Find the value of a three-year dual currency bond with annual coupons (paid in U.S. dollars at a 5 percent coupon rate) that pays £500 per $1,000 par value at maturity. The cash flows of the bond are:   The dollar-based yield to maturity is i$ = 3%; the spot exchange rate is $1.80 = £1.00; expected inflation over the next three years is π$ = 2% in the U.S. and π£ = 3% in the U.K.

Accepted Answer

A) $927.62 
B) $941.30 
C) $965.06 
D) $987.06 
A) $927.62 
B) $941.30 
C) $965.06 
D) $987.06

Question 11

Global bond issues were first offered in

Accepted Answer

A) 1889. 
B) 1989. 
C) 1999. 
D) 2007. 
A) 1889. 
B) 1989. 
C) 1999. 
D) 2007.

Question 12

A convertible bond pays interest annually at a coupon rate of 5% on a par value of $1,000. The bond has 10 years maturity remaining and the discount rate on other-wise identical non-convertible debt is 5%. The bond is convertible into shares of common stock at a conversion price of $25 per share (i.e. the bond is exchangeable for 40 shares). Today's closing stock price was $31.25. What is the floor value of this bond?

Accepted Answer

A) $800.00 
B) $1,000 
C) $1,250 
D) None of the above 
A) $800.00 
B) $1,000 
C) $1,250 
D) None of the above

Question 13

The coupon interest on Eurobonds

Accepted Answer

A) is paid annually. 
B) is paid in cash. 
C) is paid in arrears. 
D) all of the above 
A) is paid annually. 
B) is paid in cash. 
C) is paid in arrears. 
D) all of the above

Question 14

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 15

Six-month U.S. dollar LIBOR is currently 4.375%; your firm issued floating-rate notes indexed to six-month U.S. dollar LIBOR plus 50 basis points. What is the amount of the next semi-annual coupon payment per U.S. $1,000 of face value?

Accepted Answer

A) $43.75 
B) $48.75 
C) $24.375 
D) $46.875 
A) $43.75 
B) $48.75 
C) $24.375 
D) $46.875

Question 16

Find the value today of a 2-year dual currency bond with annual coupons (paid in U.S. dollars at a 5 percent coupon rate) that pays £500 per $1,000 par value at maturity. The cash flows of the bond are:   The dollar-based yield to maturity is i$ = 3%; the spot exchange rate is $1.80 = £1.00; the pound-based yield to maturity is i£ = 4%.

Accepted Answer

A) $927.77 
B) $941.30 
C) $965.06 
D) $880.65 
A) $927.77 
B) $941.30 
C) $965.06 
D) $880.65

Question 17

Shelf registration

Accepted Answer

A) allows the shelves in a set of bookshelves to remain level. 
B) allows an issuer to preregister a securities issue, and then "shelve" the securities for later sale. 
C) allows an investment bank to increase the fees they charge by charging for storage of the "shelved" securities. 
D) eliminates the information disclosure that many foreign firms found objectionable in the foreign bond market. 
A) allows the shelves in a set of bookshelves to remain level. 
B) allows an issuer to preregister a securities issue, and then "shelve" the securities for later sale. 
C) allows an investment bank to increase the fees they charge by charging for storage of the "shelved" securities. 
D) eliminates the information disclosure that many foreign firms found objectionable in the foreign bond market.

Question 18

A five-year, 4 percent euro denominated bond sells at par. A comparable risk five-year, 5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value. It sells for €1,250. What is the implied $/€ exchange rate at maturity?

Accepted Answer

A) $1.2266/€1.00 
B) €0.8153/$1.00 
C) $1.25/€1.00 
D) $1.50/€1.00 
A) $1.2266/€1.00 
B) €0.8153/$1.00 
C) $1.25/€1.00 
D) $1.50/€1.00

Question 19

Zero-coupon bonds issued in 2006 are due in 2016. If they were originally sold at 55 percent of face value, the implied yield to maturity at issuance is

Accepted Answer

A) 1.062%. 
B) 6.16%. 
C) 8.31%. 
D) cannot be determined, need more information. 
A) 1.062%. 
B) 6.16%. 
C) 8.31%. 
D) cannot be determined, need more information.

Question 20

A 1-year, 4 percent pound denominated bond sells at par. A comparable risk 1-year, 5.5 percent pound/dollar dual-currency bond pays $2,000 at maturity per £1,000 of face value. It sells for £900. What is the implied direct $/£ exchange rate at maturity?

Accepted Answer

A) £0.4405/$1.00 
B) $1.2048/£1.00 
C) $2.2701/£1.00 
D) $2.0000/£1.00 
A) £0.4405/$1.00 
B) $1.2048/£1.00 
C) $2.2701/£1.00 
D) $2.0000/£1.00

Two major clearing systems for international bond transactions are

In contrast to many domestic bonds, which make _ coupon payments, coupon interest on Eurobonds is typically paid _.

A "global bond" issue

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

Eurobond market makers and dealers are members of the ______________, a self-regulatory body based in Zurich.

Consider a British pound-U.S. dollar dual currency bonds that pay £581.40 at maturity per $1,000 of par value. If at maturity, the exchange rate is $1.90 = £1.00,

With regard to clearing procedures for bond transactions

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

Eurobonds are usually

Global bond issues were first offered in

The coupon interest on Eurobonds

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?

Six-month U.S. dollar LIBOR is currently 4.375%; your firm issued floating-rate notes indexed to six-month U.S. dollar LIBOR plus 50 basis points. What is the amount of the next semi-annual coupon payment per U.S. $1,000 of face value?

Shelf registration

A five-year, 4 percent euro denominated bond sells at par. A comparable risk five-year, 5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value. It sells for €1,250. What is the implied $/€ exchange rate at maturity?

Zero-coupon bonds issued in 2006 are due in 2016. If they were originally sold at 55 percent of face value, the implied yield to maturity at issuance is

A 1-year, 4 percent pound denominated bond sells at par. A comparable risk 1-year, 5.5 percent pound/dollar dual-currency bond pays $2,000 at maturity per £1,000 of face value. It sells for £900. What is the implied direct $/£ exchange rate at maturity?

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

Exam 12: International Bond Market

Two major clearing systems for international bond transactions are

In contrast to many domestic bonds, which make _________ coupon payments, coupon interest on Eurobonds is typically paid _________.

A "global bond" issue

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

Eurobond market makers and dealers are members of the ______________, a self-regulatory body based in Zurich.

Consider a British pound-U.S. dollar dual currency bonds that pay £581.40 at maturity per $1,000 of par value. If at maturity, the exchange rate is $1.90 = £1.00,

With regard to clearing procedures for bond transactions

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

Eurobonds are usually

Global bond issues were first offered in

The coupon interest on Eurobonds

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?

Six-month U.S. dollar LIBOR is currently 4.375%; your firm issued floating-rate notes indexed to six-month U.S. dollar LIBOR plus 50 basis points. What is the amount of the next semi-annual coupon payment per U.S. $1,000 of face value?

Shelf registration

A five-year, 4 percent euro denominated bond sells at par. A comparable risk five-year, 5.5 percent euro/dollar dual-currency bond pays $1,500 at maturity per €1,000 of face value. It sells for €1,250. What is the implied $/€ exchange rate at maturity?

Zero-coupon bonds issued in 2006 are due in 2016. If they were originally sold at 55 percent of face value, the implied yield to maturity at issuance is

A 1-year, 4 percent pound denominated bond sells at par. A comparable risk 1-year, 5.5 percent pound/dollar dual-currency bond pays $2,000 at maturity per £1,000 of face value. It sells for £900. What is the implied direct $/£ exchange rate at maturity?

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

In contrast to many domestic bonds, which make _ coupon payments, coupon interest on Eurobonds is typically paid _.