Exam 3: International Financial Markets

Assume a Japanese firm invoices exports to the U.S. in U.S. dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the U.S. dollar to ____ against the yen, it would likely wish to hedge. It could hedge by ____ dollars forward.

The bid/ask spread for small retail transactions is commonly in the range of ____ percent.

Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid-ask percentage spread is:

Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The value of the Peruvian Sol in Canadian dollars is:

The government enforcement of securities laws varies among countries.

When obtaining a loan, the risk premium paid above LIBOR depends on the:

A forward contract can be used to lock in the ____ of a specified currency for a future point in time.

A syndicated loan:

Institutional investors such as commercial banks, mutual funds, insurance companies, and pension funds from many countries are major participants in the international bond market.

The international money market is primarily served by:

According to the text, the forward rate is commonly used for:

Futures contracts are sold on exchanges and are consequently ____ than forward contracts, which can be ____ to satisfy an MNC's needs.

Under the gold standard, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold.

If companies can rely on stock markets to obtain funds, they will have to rely more heavily on the ____ market to raise long-term funds.

The main participants in the international money market are:

Which of the following is probably not appropriate for an MNC wishing to reduce its exposure to British pound payables?

According to the text, the average foreign exchange trading around the world ____ per day.

Which of the following is true?

The ADR of a British firm is convertible into 3 shares of stock. The share price of the firm was 30 pounds when the British market closed. When the U.S. market opens, the pound is worth $1.63. The price of this ADR should be $____.

Global regulations require that shareholders in all countries have the same rights wherever there are stock markets.