Exam 3: International Financial Markets

The Bretton Woods Agreement is an agreement to standardize banks' capital requirements across countries; the resulting capital ratios are computed using risk-weighted assets.

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

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

Which of the following is not a possible bid/ask quotation for the Barbados dollar?

Large commercial banks play a major role in the international money market by accepting short-term deposits in large amounts (such as the equivalent of $1 million or more) and in various currencies, and channeling the money to corporations and government agencies that need to borrow those short-term funds in the desired currencies.

The legal protection of shareholders is the same among countries.

Assume that $1 is equal to .85 Euros and 98 yen. The value of yen in euros is

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.

A currency put option provides the right, but not the obligation, to buy a specific currency at a specific price within a specific period of time.

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:

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid-ask percentage spread is:

An MNC with receivables in Japanese Yen purchases yen forward to hedge its exposure to exchange rate fluctuations.

The international money market is primarily served by:

The largest global exchange is:

Which of the following is not true regarding the Bretton Woods Agreement?

As a result of the Smithsonian Agreement, the U.S. dollar was:

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

The existence of imperfect markets has prevented the internationalization of financial markets.

An obligation to purchase a specific amount of currency at a future point in time is called a:

The ask quote is the price for which a bank offers to sell a currency.