Question 1

The interest rate on the syndicated loan depends on the:

Accepted Answer

A)  currency denominating the loan. 
B)  maturity of the loan. 
C)  creditworthiness of the borrower. 
D)  interbank lending rate. 
E)  all of the above. 
A)  currency denominating the loan. 
B)  maturity of the loan. 
C)  creditworthiness of the borrower. 
D)  interbank lending rate. 
E)  all of the above.

Question 2

The Basel Accord is an agreement among the major European countries to make regulations more uniform across European countries and to reduce taxes on goods traded between these countries.

Accepted Answer

A) True 
 B)False

Question 3

The forward market:

Accepted Answer

A)  for euros is very illiquid. 
B)  for Eastern European countries is very liquid. 
C)  does not exist for some currencies. 
D)  none of the above 
A)  for euros is very illiquid. 
B)  for Eastern European countries is very liquid. 
C)  does not exist for some currencies. 
D)  none of the above

Question 4

The largest global exchange is:

Accepted Answer

A)  NASDAQ 
B)  Tokyo Stock Exchange 
C)  NYSE Euronext 
D)  London Stock Exchange 
A)  NASDAQ 
B)  Tokyo Stock Exchange 
C)  NYSE Euronext 
D)  London Stock Exchange

Question 5

Shareholders have more voting power in some countries than others.

Accepted Answer

A) True 
 B)False

Question 6

The LIBOR varies among currencies because the market supply of and demand for funds vary among currencies.

Accepted Answer

A) True 
 B)False

Question 7

____ is not a bank characteristic important to customers in need of foreign exchange.

Accepted Answer

A)  Quote competitiveness 
B)  Speed of execution 
C)  Forecasting advice 
D)  Advice about current market conditions 
E)  All of the above are important bank characteristics to customers in need of foreign exchange. 
A)  Quote competitiveness 
B)  Speed of execution 
C)  Forecasting advice 
D)  Advice about current market conditions 
E)  All of the above are important bank characteristics to customers in need of foreign exchange.

Question 8

Which of the following is not true regarding ADRs?

Accepted Answer

A)  ADRs are denominated in the currency of the stock's home country. 
B)  ADRs enable U.S. investors to avoid cross-border transactions 
C)  ADRs allow non-U.S. firms to tap into U.S. market for funds. 
D)  ADRs sometimes allow for arbitrage opportunities. 
A)  ADRs are denominated in the currency of the stock's home country. 
B)  ADRs enable U.S. investors to avoid cross-border transactions 
C)  ADRs allow non-U.S. firms to tap into U.S. market for funds. 
D)  ADRs sometimes allow for arbitrage opportunities.

Question 9

Eurobonds are certificates representing bundles of stock.

Accepted Answer

A) True 
 B)False

Question 10

The legal protection of shareholders is the same among countries.

Accepted Answer

A) True 
 B)False

Question 11

Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide to hedge your position by selling Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $.0095. You expect the spot rate in 60 days to be $.0090. How many dollars will you receive for the 5,000,000 yen 60 days from now if you sell yen forward?

Accepted Answer

A)  $44,500 
B)  $45,000 
C)  $526 million 
D)  $47,500 
E)  $556 million 
A)  $44,500 
B)  $45,000 
C)  $526 million 
D)  $47,500 
E)  $556 million

Question 12

In response to the Sarbanes-Oxley Act, the reporting costs were reduced, and many non-U.S. firms that issued new shares of stock decided to place their stock in the United States.

Accepted Answer

A) True 
 B)False

Question 13

In general, companies are attracted to the stock market in which there are very limited voting rights for shareholders.

Accepted Answer

A) True 
 B)False

Question 14

Futures contracts are typically ____; forward contracts are typically ____.

Accepted Answer

A)  sold on an exchange; sold on an exchange 
B)  offered by commercial banks; sold on an exchange 
C)  sold on an exchange; offered by commercial banks 
D)  offered by commercial banks; offered by commercial banks 
A)  sold on an exchange; sold on an exchange 
B)  offered by commercial banks; sold on an exchange 
C)  sold on an exchange; offered by commercial banks 
D)  offered by commercial banks; offered by commercial banks

Question 15

Assume that the bank's bid quote of Mexican peso is $.126 and ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?

Accepted Answer

A)  12,600 
B)  775,194 
C)  793,651 
D)  12,900 
A)  12,600 
B)  775,194 
C)  793,651 
D)  12,900

Question 16

____ is not a factor that affects the bid/ask spread.

Accepted Answer

A)  Order costs 
B)  Inventory costs 
C)  Volume 
D)  All of the above factors affect the bid/ask spread 
A)  Order costs 
B)  Inventory costs 
C)  Volume 
D)  All of the above factors affect the bid/ask spread

Question 17

The U.S. dollar is not ever used as a medium of exchange in:

Accepted Answer

A)  industrialized countries outside the U.S. 
B)  in any Latin American countries. 
C)  in Eastern European countries where foreign exchange restrictions exist. 
D)  none of the above 
A)  industrialized countries outside the U.S. 
B)  in any Latin American countries. 
C)  in Eastern European countries where foreign exchange restrictions exist. 
D)  none of the above

Question 18

The preferences of corporations and governments to borrow in foreign currencies and of investors to make short-term investments in foreign currencies resulted in the creation of the international bond market.

Accepted Answer

A) True 
 B)False

Question 19

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

Accepted Answer

A)  10 
B)  13.28 
C)  30.12 
D)  39.84 
A)  10 
B)  13.28 
C)  30.12 
D)  39.84

Question 20

At any given point in time, a bank's bid quote will be greater than its ask quote.

Accepted Answer

A) True 
 B)False

The interest rate on the syndicated loan depends on the:

The Basel Accord is an agreement among the major European countries to make regulations more uniform across European countries and to reduce taxes on goods traded between these countries.

The forward market:

The largest global exchange is:

Shareholders have more voting power in some countries than others.

The LIBOR varies among currencies because the market supply of and demand for funds vary among currencies.

____ is not a bank characteristic important to customers in need of foreign exchange.

Which of the following is not true regarding ADRs?

Eurobonds are certificates representing bundles of stock.

The legal protection of shareholders is the same among countries.

In response to the Sarbanes-Oxley Act, the reporting costs were reduced, and many non-U.S. firms that issued new shares of stock decided to place their stock in the United States.

In general, companies are attracted to the stock market in which there are very limited voting rights for shareholders.

Futures contracts are typically ; forward contracts are typically .

Assume that the bank's bid quote of Mexican peso is $.126 and ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?

____ is not a factor that affects the bid/ask spread.

The U.S. dollar is not ever used as a medium of exchange in:

The preferences of corporations and governments to borrow in foreign currencies and of investors to make short-term investments in foreign currencies resulted in the creation of the international bond market.

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

At any given point in time, a bank's bid quote will be greater than its ask quote.

Multinational Financial Management: An Overview

International Flow of Funds

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 3: International Financial Markets

The interest rate on the syndicated loan depends on the:

The Basel Accord is an agreement among the major European countries to make regulations more uniform across European countries and to reduce taxes on goods traded between these countries.

The forward market:

The largest global exchange is:

Shareholders have more voting power in some countries than others.

The LIBOR varies among currencies because the market supply of and demand for funds vary among currencies.

____ is not a bank characteristic important to customers in need of foreign exchange.

Which of the following is not true regarding ADRs?

Eurobonds are certificates representing bundles of stock.

The legal protection of shareholders is the same among countries.

In response to the Sarbanes-Oxley Act, the reporting costs were reduced, and many non-U.S. firms that issued new shares of stock decided to place their stock in the United States.

In general, companies are attracted to the stock market in which there are very limited voting rights for shareholders.

Futures contracts are typically ____; forward contracts are typically ____.

Assume that the bank's bid quote of Mexican peso is $.126 and ask price is $.129. If you have Mexican pesos, what is the amount of pesos that you need to purchase $100,000?

____ is not a factor that affects the bid/ask spread.

The U.S. dollar is not ever used as a medium of exchange in:

The preferences of corporations and governments to borrow in foreign currencies and of investors to make short-term investments in foreign currencies resulted in the creation of the international bond market.

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

At any given point in time, a bank's bid quote will be greater than its ask quote.

Multinational Financial Management: An Overview

International Flow of Funds

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Futures contracts are typically ; forward contracts are typically .