Question 1

Banks have been heavily involved in selling their services across national boundaries since:

Accepted Answer

A) the industry's very beginning. 
B) the 1950s. 
C) the 1980s. 
D) the turn of the century. 
E) None of the options is correct.

Question 2

A foreign currency contract that gives the holder of the contract the right to sell a foreign currency at a specified price on or before the published expiration date is called a:

Accepted Answer

A) call currency option. 
B) put currency option. 
C) long hedge currency futures contract. 
D) short-hedge currency futures contract. 
E) None of the options is correct.

Question 3

Internet-based banks are not allowed in some countries such as Japan.

Accepted Answer

A) True 
 B)False

Question 4

A bank's net foreign-currency-denominated assets in a given currency are equal to the volume of its assets denominated in that currency less any liabilities that the bank has issued denominated in the same currency.

Accepted Answer

A) True 
 B)False

Question 5

Suppose Citibank holds assets denominated in euros of 120 million and liabilities denominated in euros of 180 million.They also have euro purchases of 40 million and euro sales of 70 million.What is Citibank's net exposure to currency risk?

Accepted Answer

A) + 120 million euros 
B) - 90 million euros 
C) + 90 million euros 
D) - 60 million euros 
E) + 60 million euros

Question 6

The State Bank of Virginia owns 55 percent of the shares of the Bank of Budapest.What type of arrangement is this?

Accepted Answer

A) A representative office 
B) An agency office 
C) A branch office 
D) A subsidiary 
E) An export trading company

Question 7

Which of the following is (are)the key component(s)included in the International Banking Act (IBA)of 1978?

Accepted Answer

A) Foreign banks are required to follow the same branching laws as U.S.banks. 
B) Legal reserves requirements determined by the Federal Reserve Board are compulsory against deposits accepted by U.S.branch or agency offices of foreign banks with consolidated assets of $1 billion or more. 
C) U.S.branches of foreign banks are eligible for deposit insurance under stipulated conditions. 
D) U.S.branches of foreign banks have access to certain Federal Reserve services,such as the ability to borrow from the Federal Reserve banks. 
E) All of the options are correct.

Question 8

A(n)______________________ branch is a special foreign office which merely records the receipt of deposits and other international transactions.Often these branches contain little more than a desk,a telephone,fax machine,and computer and are used as a way around regulations.

Accepted Answer

The answer of A(n)______________________ branch is a special foreign office...

Question 9

____________________________________________ is the risk that has to do with the fluctuations in currency prices.

Accepted Answer

The answer of ____________________________________________ is the risk that has to...

Question 10

A device which aids customers in selling goods abroad is known by the acronym _________ and was originally developed by the Japanese.

Accepted Answer

The answer of A device which aids customers in selling...

Question 11

A foreign currency contract that obligates the holder of the contract to make delivery of a foreign currency sometime in the future is called a:

Accepted Answer

A) call currency option. 
B) put currency option. 
C) long-hedge currency futures contract. 
D) short-hedge currency futures contract. 
E) None of options is correct.

Question 12

The Foreign Bank Supervision Enhancement Act of 1991 places the responsibility for supervising U.S.branches of foreign banks with the:

Accepted Answer

A) Office of the Comptroller of the Currency. 
B) Federal Reserve Board. 
C) Federal Deposit Insurance Corporation. 
D) Secretary of Commerce. 
E) None of options is correct.

Question 13

Suppose the international banks operating in Venezuela have to meet the same legal reserve requirements as domestic banks to avoid massive threats to economic health in the nation.This would be in support of which reason for regulating international banks?

Accepted Answer

A) Protecting the safety of depositor funds 
B) Promoting stable growth in money and credit 
C) Providing foreign currency controls 
D) Protecting domestic financial institutions 
E) Restricting the outflow of scarce capital

Question 14

Under U.S.regulations,a U.S.international bank can invest more than 50 percent of its consolidated capital and surplus in an export trading company.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a reason for the growth of the currency swap market in recent years?

Accepted Answer

A) It has helped thousands of businesses and governments hedge currency risk. 
B) It has provided central banks with a new instrument to trade. 
C) It has helped shape money and credit conditions in various countries. 
D) It has helped strengthen home nations' economies. 
E) All of the options are reasons for the growth of the currency swap market in recent years.

Question 16

The primary source for international bank statistics is:

Accepted Answer

A) the FDIC. 
B) the OCC. 
C) the BIS. 
D) the ETC. 
E) the United Nations.

Question 17

When a foreign government takes actions that interfere with the repayment of an international loan,it causes a special type of risk called ______________.

Accepted Answer

The answer of When a foreign government takes actions that...

Question 18

Which of the following is one of the customer services supplied by banks in international markets?

Accepted Answer

A) Underwriting notes and bond issues in the U.S.bond market 
B) Helping customer market their products in the domestic market 
C) Helping customers hedge against foreign currency risk 
D) Making loans to domestic customers 
E) All of the options are customer services offered by banks in the international market.

Question 19

A time draft is a payment for purchase of goods and services across national borders which is payable upon presentation to the bank.

Accepted Answer

A) True 
 B)False

Question 20

A foreign currency contract where one party trades currencies with another and trades it back at the end of the contract is called a:

Accepted Answer

A) currency option contract. 
B) currency forward contract. 
C) currency swap contract. 
D) currency futures contract. 
E) None of the options is correct.

Exam 20: International Banking and the Future of Banking and Financial Services

Banks have been heavily involved in selling their services across national boundaries since:

A foreign currency contract that gives the holder of the contract the right to sell a foreign currency at a specified price on or before the published expiration date is called a:

Internet-based banks are not allowed in some countries such as Japan.

A bank's net foreign-currency-denominated assets in a given currency are equal to the volume of its assets denominated in that currency less any liabilities that the bank has issued denominated in the same currency.

Suppose Citibank holds assets denominated in euros of 120 million and liabilities denominated in euros of 180 million.They also have euro purchases of 40 million and euro sales of 70 million.What is Citibank's net exposure to currency risk?

The State Bank of Virginia owns 55 percent of the shares of the Bank of Budapest.What type of arrangement is this?

Which of the following is (are) the key component(s) included in the International Banking Act (IBA) of 1978?

A(n)______________________ branch is a special foreign office which merely records the receipt of deposits and other international transactions.Often these branches contain little more than a desk,a telephone,fax machine,and computer and are used as a way around regulations.

____________________________________________ is the risk that has to do with the fluctuations in currency prices.

A device which aids customers in selling goods abroad is known by the acronym _________ and was originally developed by the Japanese.

A foreign currency contract that obligates the holder of the contract to make delivery of a foreign currency sometime in the future is called a:

The Foreign Bank Supervision Enhancement Act of 1991 places the responsibility for supervising U.S.branches of foreign banks with the:

Suppose the international banks operating in Venezuela have to meet the same legal reserve requirements as domestic banks to avoid massive threats to economic health in the nation.This would be in support of which reason for regulating international banks?

Under U.S.regulations,a U.S.international bank can invest more than 50 percent of its consolidated capital and surplus in an export trading company.

Which of the following is a reason for the growth of the currency swap market in recent years?

The primary source for international bank statistics is:

When a foreign government takes actions that interfere with the repayment of an international loan,it causes a special type of risk called ______________.

Which of the following is one of the customer services supplied by banks in international markets?

A time draft is a payment for purchase of goods and services across national borders which is payable upon presentation to the bank.

A foreign currency contract where one party trades currencies with another and trades it back at the end of the contract is called a: