Question 1

The Third State Bank of Laramie has opened an office in Morocco.This office does not take deposits but makes commitments to make loans,issues letters of credit,and provides technical assistance to companies in Morocco.What type of office has the Third State Bank of Laramie opened in Morocco?

Accepted Answer

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

Question 2

An increasing number of nations are recognizing the need of coordinating the regulatory activities so that all financial firms,serving international markets,operate under similar rules.This is known as:

Accepted Answer

A) reconciliation 
B) accord 
C) consolidation 
D) convergence 
E) harmonization

Question 3

A call currency option:

Accepted Answer

A) obligates the holder to purchase currency or currency futures contracts at a fixed price any time before the option expires. 
B) gives the holder the right to purchase currency or currency futures contracts at a fixed price any time before the option expires. 
C) obligates the holder to sell currency or currency futures contracts at a fixed price any time before the option expires. 
D) gives the holder the right to sell currency or currency futures contracts at a fixed price any time before the option expires. 
E) None of options is correct.

Question 4

An investor takes a call option on euro futures contracts at strike price of $0.65.If the market price of euro futures reduces to $0.62,the call option will:

Accepted Answer

A) be "in the money". 
B) be exercised before the option expires. 
C) go unexercised. 
D) increase upside profits. 
E) increase downside risk.

Question 5

The ___________________________________________ is an agreement between the U.S. ,Japan,Canada,and several other nations of Western Europe to adopt common capital standards for all of their banks.

Accepted Answer

The answer of The ___________________________________________ is an agreement between the...

Question 6

A put option on currency futures is often used to protect against a rise in currency prices.

Accepted Answer

A) True 
 B)False

Question 7

The Goudge Grilling Company has just ordered a shipment of grills from Frankfurt.Payment for the grills must be in euros when the grills are delivered.Euros have changed in value in the last 30 days.They have gone from $1.42 to $1.44.If this trend continues which of the following currency contracts can help the Goudge Grilling Company hedge their currency risk?

Accepted Answer

A) Put currency option 
B) Short-hedge currency futures contract 
C) Long-hedge currency futures contract 
D) Currency swap contract 
E) None of the options is correct.

Question 8

International banking regulation(s)that do not apply to most domestic banking activity include:

Accepted Answer

A) foreign exchange controls. 
B) restricting the outflow of scarce capital. 
C) protecting domestic financial institutions from foreign competition. 
D) protecting domestic markets from foreign competition. 
E) All of the options are correct.

Question 9

A(n)______________________________________ is a receipt issued by a U.S.bank which makes it easier for a foreign business borrower to sell securities in the U.S.

Accepted Answer

The answer of A(n)______________________________________ is a receipt issued by a...

Question 10

China has the highest overall savings rate in the world.

Accepted Answer

A) True 
 B)False

Question 11

____________________________________________ refers to the market for foreign currency or trading one currency for another.

Accepted Answer

The answer of ____________________________________________ refers to the market for foreign...

Question 12

An international loan risk evaluation system that uses expert opinion is the ______________.

Accepted Answer

The answer of An international loan risk evaluation system that...

Question 13

The State Bank of Nebraska owns a company that has more than half of its income from activities associated with exporting goods and services from the U.S.This company offers export insurance coverage,transportation and warehousing in Europe,trade financing,and other services.What type of company does the State Bank of Nebraska own?

Accepted Answer

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

Question 14

A(n)____________________________________________ is the exchange of different national currencies between two parties who need foreign currencies to repay loans or cover other expenses.

Accepted Answer

The answer of A(n)____________________________________________ is the exchange of different national...

Question 15

Long hedges in currency futures are designed to protect a bank or its customer from increases in the price of the currency it must eventually acquire.

Accepted Answer

A) True 
 B)False

Question 16

An international bank's net position in a foreign currency is measured by the difference between the volume of that currency purchased and the volume of that currency sold.

Accepted Answer

A) True 
 B)False

Question 17

Recently,FOREX trading activity among leading commercial and investment bank dealers has sharply increased due to:

Accepted Answer

A) volatility among leading currencies. 
B) increase in security underwriting for corporations. 
C) provision of foreign marketing assistance to customers. 
D) introduction of payments and cash management services. 
E) supply of foreign currencies directly to customers.

Question 18

If an international bank has adopted a net short position in a particular currency,and that currency's exchange value increases,the bank will achieve a profit from trading the currency.

Accepted Answer

A) True 
 B)False

Question 19

A(n)____________________________________________ grants the buyer the right to deliver or take delivery of a designated currency at a specified price until it expires.

Accepted Answer

The answer of A(n)____________________________________________ grants the buyer the right to...

Question 20

Under the terms of the International Lending and Supervision Act,the size of loan rescheduling fees that U.S.banks charge their international borrowers,is restricted.

Accepted Answer

A) True 
 B)False

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

The Third State Bank of Laramie has opened an office in Morocco.This office does not take deposits but makes commitments to make loans,issues letters of credit,and provides technical assistance to companies in Morocco.What type of office has the Third State Bank of Laramie opened in Morocco?

An increasing number of nations are recognizing the need of coordinating the regulatory activities so that all financial firms,serving international markets,operate under similar rules.This is known as:

A call currency option:

An investor takes a call option on euro futures contracts at strike price of $0.65.If the market price of euro futures reduces to $0.62,the call option will:

The ___________________________________________ is an agreement between the U.S. ,Japan,Canada,and several other nations of Western Europe to adopt common capital standards for all of their banks.

A put option on currency futures is often used to protect against a rise in currency prices.

International banking regulation(s) that do not apply to most domestic banking activity include:

A(n)______________________________________ is a receipt issued by a U.S.bank which makes it easier for a foreign business borrower to sell securities in the U.S.

China has the highest overall savings rate in the world.

____________________________________________ refers to the market for foreign currency or trading one currency for another.

An international loan risk evaluation system that uses expert opinion is the ______________.

A(n)____________________________________________ is the exchange of different national currencies between two parties who need foreign currencies to repay loans or cover other expenses.

Long hedges in currency futures are designed to protect a bank or its customer from increases in the price of the currency it must eventually acquire.

An international bank's net position in a foreign currency is measured by the difference between the volume of that currency purchased and the volume of that currency sold.

Recently,FOREX trading activity among leading commercial and investment bank dealers has sharply increased due to:

If an international bank has adopted a net short position in a particular currency,and that currency's exchange value increases,the bank will achieve a profit from trading the currency.

A(n)____________________________________________ grants the buyer the right to deliver or take delivery of a designated currency at a specified price until it expires.

Under the terms of the International Lending and Supervision Act,the size of loan rescheduling fees that U.S.banks charge their international borrowers,is restricted.