Question 1

Which of the following is a drawback of the Eurocurrency market?

Accepted Answer

A)  Increased governmental controls 
B)  High reserve ratio requirements 
C)  Low interest rates on deposits 
D)  Exposure to foreign exchange risk 
A)  Increased governmental controls 
B)  High reserve ratio requirements 
C)  Low interest rates on deposits 
D)  Exposure to foreign exchange risk

Question 2

Eurodollars _____.

Accepted Answer

A)  refer to the exchange value of dollar with Euro 
B)  are used to pay for imports from Europe 
C)  are dollars banked outside of the United States 
D)  refer to the exchange buffer that Euro has against dollar 
A)  refer to the exchange value of dollar with Euro 
B)  are used to pay for imports from Europe 
C)  are dollars banked outside of the United States 
D)  refer to the exchange buffer that Euro has against dollar

Question 3

Foreign bonds sold in the United States are called bulldogs.

Accepted Answer

A) True 
 B)False

Question 4

_____ can inject risk into foreign currency borrowing.

Accepted Answer

A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates 
A)  Movements in exchange rates 
B)  Use of fixed-exchange rates 
C)  Issue of domestic bonds 
D)  Use of pegged exchange rates

Question 5

Historically substantial regulatory barriers separated national equity markets from each other.

Accepted Answer

A) True 
 B)False

Question 6

A Eurocurrency is the currency used by the countries of the European Union.

Accepted Answer

A) True 
 B)False

Question 7

Explain Eurobonds with an example.

Accepted Answer

Eurobonds are normally underwritten by a

Question 8

Write a brief note on foreign exchange risks and the cost of capital.

Accepted Answer

A firm can borrow funds at a lower cost

Question 9

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Accepted Answer

A)  A global market reduces the liquidity of investments and increases the chances of incurring losses. 
B)  Investments in the global capital market are faced with a lack of quality information. 
C)  Investments in the global capital market are not conducive to diversification. 
D)  The cost of capital is more in a global market and this increases the level of risk associated with it. 
A)  A global market reduces the liquidity of investments and increases the chances of incurring losses. 
B)  Investments in the global capital market are faced with a lack of quality information. 
C)  Investments in the global capital market are not conducive to diversification. 
D)  The cost of capital is more in a global market and this increases the level of risk associated with it.

Question 10

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

Accepted Answer

A) True 
 B)False

Question 11

Explain various types of capital market loans.

Accepted Answer

Capital market loans to corporations are

Question 12

A Chinese firm borrows 1 million U.S.dollars from an American bank.The cost of this loan will be less if U.S.dollar appreciates against the Chinese currency.

Accepted Answer

A) True 
 B)False

Question 13

Hedge funds _____.

Accepted Answer

A)  are public investment funds that invest in corporate bonds and shares 
B)  make long bets rather than short bets 
C)  are investment funds managed by the government 
D)  make short bets on assets that they think will decline in value 
A)  are public investment funds that invest in corporate bonds and shares 
B)  make long bets rather than short bets 
C)  are investment funds managed by the government 
D)  make short bets on assets that they think will decline in value

Question 14

Eurobonds are normally underwritten by an international syndicate of banks.

Accepted Answer

A) True 
 B)False

Question 15

The liquidity of the market is limited in a purely domestic capital market.

Accepted Answer

A) True 
 B)False

Question 16

Global capital market often lack information about the fundamental quality of foreign investments.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of debt loans?

Accepted Answer

A)  Management has the discretion in paying the amount to investors. 
B)  Debt loans should be repaid at regular intervals. 
C)  Returns from debt loans are variable in nature. 
D)  Corporations need not pay back the debt loans if they incur losses. 
A)  Management has the discretion in paying the amount to investors. 
B)  Debt loans should be repaid at regular intervals. 
C)  Returns from debt loans are variable in nature. 
D)  Corporations need not pay back the debt loans if they incur losses.

Question 18

Explain how equity loans and debt loans differ in terms of attractiveness to businesses.

Accepted Answer

Investors purchase stock both for their

Question 19

_____ are international bonds,normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated.

Accepted Answer

A)  Micro bonds 
B)  Foreign bonds 
C)  Eurobonds 
D)  Regulatory bonds 
A)  Micro bonds 
B)  Foreign bonds 
C)  Eurobonds 
D)  Regulatory bonds

Question 20

An important drawback of a purely domestic capital market is that the _____.

Accepted Answer

A)  investments does not receive protection from governments 
B)  investments are riskier than in global capital markets 
C)  market lacks a strong regulatory mechanism 
D)  cost of capital tends to be higher than it is in a global market 
A)  investments does not receive protection from governments 
B)  investments are riskier than in global capital markets 
C)  market lacks a strong regulatory mechanism 
D)  cost of capital tends to be higher than it is in a global market

Which of the following is a drawback of the Eurocurrency market?

Eurodollars _____.

Foreign bonds sold in the United States are called bulldogs.

_____ can inject risk into foreign currency borrowing.

Historically substantial regulatory barriers separated national equity markets from each other.

A Eurocurrency is the currency used by the countries of the European Union.

Explain Eurobonds with an example.

Write a brief note on foreign exchange risks and the cost of capital.

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

Explain various types of capital market loans.

A Chinese firm borrows 1 million U.S.dollars from an American bank.The cost of this loan will be less if U.S.dollar appreciates against the Chinese currency.

Hedge funds _____.

Eurobonds are normally underwritten by an international syndicate of banks.

The liquidity of the market is limited in a purely domestic capital market.

Global capital market often lack information about the fundamental quality of foreign investments.

Which of the following statements is true of debt loans?

Explain how equity loans and debt loans differ in terms of attractiveness to businesses.

_____ are international bonds,normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated.

An important drawback of a purely domestic capital market is that the _____.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 12: The Global Capital Market

Which of the following is a drawback of the Eurocurrency market?

Eurodollars _____.

Foreign bonds sold in the United States are called bulldogs.

_____ can inject risk into foreign currency borrowing.

Historically substantial regulatory barriers separated national equity markets from each other.

A Eurocurrency is the currency used by the countries of the European Union.

Explain Eurobonds with an example.

Write a brief note on foreign exchange risks and the cost of capital.

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Foreign bonds are sold within the borrower's country and are denominated in the currency of the country in which they are issued.

Explain various types of capital market loans.

A Chinese firm borrows 1 million U.S.dollars from an American bank.The cost of this loan will be less if U.S.dollar appreciates against the Chinese currency.

Hedge funds _____.

Eurobonds are normally underwritten by an international syndicate of banks.

The liquidity of the market is limited in a purely domestic capital market.

Global capital market often lack information about the fundamental quality of foreign investments.

Which of the following statements is true of debt loans?

Explain how equity loans and debt loans differ in terms of attractiveness to businesses.

_____ are international bonds,normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated.

An important drawback of a purely domestic capital market is that the _____.

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters