Question 1

A euro floating rate note differs from regular eurobonds in that it:

Accepted Answer

A)  has a longer maturity. 
B)  differs substantially in default risk. 
C)  has coupons that are regularly reset. 
D)  is not taxed. 
A)  has a longer maturity. 
B)  differs substantially in default risk. 
C)  has coupons that are regularly reset. 
D)  is not taxed. C

Question 2

One of the advantages of attaching a provision with a loan for it to be converted into a transferable loan certificate is that:

Accepted Answer

A)  the original lender receives interest payments from the new holder. 
B)  the loan is off the balance sheet of the original lender. 
C)  the certificate can be sold to third parties who receive interest payments from the original lender. 
D)  the loan remains on the books of the original lender. 
A)  the original lender receives interest payments from the new holder. 
B)  the loan is off the balance sheet of the original lender. 
C)  the certificate can be sold to third parties who receive interest payments from the original lender. 
D)  the loan remains on the books of the original lender. B

Question 3

The rate at which an issuer is willing to sell a euronote is called the:

Accepted Answer

A)  ask rate. 
B)  bid rate. 
C)  posted rate. 
D)  going rate. 
A)  ask rate. 
B)  bid rate. 
C)  posted rate. 
D)  going rate. C

Question 4

A probable advantage of Australian dollar eurobonds for borrowers is that:

Accepted Answer

A)  there is a secondary market on the Australian Securities Exchange. 
B)  because they are sold in Australia, they don't necessarily require a prospectus. 
C)  many foreign companies have financing needs in Australian dollars. 
D)  they are generally registered in Australia. 
A)  there is a secondary market on the Australian Securities Exchange. 
B)  because they are sold in Australia, they don't necessarily require a prospectus. 
C)  many foreign companies have financing needs in Australian dollars. 
D)  they are generally registered in Australia.

Question 5

A _______ is an unsecured,negotiable,short-term note that is issued in euromarkets and many domestic markets.

Accepted Answer

A)  eurocurrency term loan 
B)  eurocommercial paper 
C)  eurobond 
D)  euro floating rate note 
A)  eurocurrency term loan 
B)  eurocommercial paper 
C)  eurobond 
D)  euro floating rate note

Question 6

One of the advantages to the corporation of an underwriting syndicate for the issue of notes under a euronote issuance facility is that it:

Accepted Answer

A)  approves the prospectus before distribution to the public. 
B)  submits a combined bid for purchase that the corporation compares with other bids. 
C)  monitors and coordinates the actions of the different underwriters. 
D)  gives access to a line of credit extending beyond the life of the promissory note. 
A)  approves the prospectus before distribution to the public. 
B)  submits a combined bid for purchase that the corporation compares with other bids. 
C)  monitors and coordinates the actions of the different underwriters. 
D)  gives access to a line of credit extending beyond the life of the promissory note.

Question 7

Consider the following five statements. i.A eurobond is a bond issued by a foreign borrower in a currency that is not the currency of the country in which the bond is issued.
ii.Eurobonds tend to be bought mainly by banks and institutional investors,rather than by individuals.
iii.Straight eurobonds are fixed-interest securities with periodic coupon payments.
iv.FRNs are coupon instruments; however,the coupon is reset periodically throughout the term of the note.
v.Convertible notes give the holder the option to convert the bond,on predetermined terms,into another form of instrument such as equity.
Which of the following are correct?

Accepted Answer

A)  i, ii, iii and iv are true. 
B)  i, ii, iv and v are true. 
C)  i, ii, and iv are true. 
D)  i, iii, iv and v are true. 
A)  i, ii, iii and iv are true. 
B)  i, ii, iv and v are true. 
C)  i, ii, and iv are true. 
D)  i, iii, iv and v are true.

Question 8

Which of the following is NOT an advantage for US investors in ADRs?

Accepted Answer

A)  ADRs are paid dividends in US dollars. 
B)  ADRs are denominated in US dollars. 
C)  ADRs are subject to US legal jurisdiction. 
D)  The ADR market is relatively illiquid. 
A)  ADRs are paid dividends in US dollars. 
B)  ADRs are denominated in US dollars. 
C)  ADRs are subject to US legal jurisdiction. 
D)  The ADR market is relatively illiquid.

Question 9

Deregulation of the international financial system and the process of globalisation in the early 1980s encourage:

Accepted Answer

A)  banks to raise funds in the international markets. 
B)  investors into the international markets as they could earn higher returns. 
C)  borrowers to diversify debt across a number of international markets. 
D)  all of the given answers. 
A)  banks to raise funds in the international markets. 
B)  investors into the international markets as they could earn higher returns. 
C)  borrowers to diversify debt across a number of international markets. 
D)  all of the given answers.

Question 10

Eurocurrency markets are:

Accepted Answer

A)  domestic European money markets. 
B)  domestic European capital markets. 
C)  international markets providing intermediated bank finance. 
D)  international markets providing foreign exchange transactions. 
A)  domestic European money markets. 
B)  domestic European capital markets. 
C)  international markets providing intermediated bank finance. 
D)  international markets providing foreign exchange transactions.

Question 11

For a large eurocurrency loan,the _____ generally acts as a provider of funds.

Accepted Answer

A)  co-manager 
B)  lead manager 
C)  participating manager 
D)  agent bank 
A)  co-manager 
B)  lead manager 
C)  participating manager 
D)  agent bank

Question 12

Loans with provisions that allow their conversion into securities and sale with an endorsement to third parties (who are then registered as the new lenders)are:

Accepted Answer

A)  eurocurrency medium-term notes. 
B)  transferable loan certificates. 
C)  sub-participating loans. 
D)  novation loans. 
A)  eurocurrency medium-term notes. 
B)  transferable loan certificates. 
C)  sub-participating loans. 
D)  novation loans.

Question 13

A/An _______ is a foreign debt security denominated in US dollars issued into the US capital markets by a Japanese firm.

Accepted Answer

A)  junk bond 
B)  Yankee bond 
C)  AMEX bond 
D)  Samurai bond 
A)  junk bond 
B)  Yankee bond 
C)  AMEX bond 
D)  Samurai bond

Question 14

A Yankee bond is a bond that is issued by a US company into a foreign country and denominated in that country's currency.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statement is NOT an example of overseas borrowing by the Australian company Telstra?

Accepted Answer

A)  Telstra organises a loan through a major bank in Germany. 
B)  Telstra purchases debentures from a European company. 
C)  Telstra sells eurocommercial paper in overseas markets. 
D)  Telstra sells debentures denominated in Yen to overseas investors. 
A)  Telstra organises a loan through a major bank in Germany. 
B)  Telstra purchases debentures from a European company. 
C)  Telstra sells eurocommercial paper in overseas markets. 
D)  Telstra sells debentures denominated in Yen to overseas investors.

Question 16

The advantage(s)of an ADR program for a corporation is/are:

Accepted Answer

A)  it affords a company access to the large US capital markets. 
B)  it increases the profile of a company expanding internationally. 
C)  it provides a broader investor base for the corporation. 
D)  all of the given answers. 
A)  it affords a company access to the large US capital markets. 
B)  it increases the profile of a company expanding internationally. 
C)  it provides a broader investor base for the corporation. 
D)  all of the given answers.

Question 17

Currently the yields for fixed-interest euromarket securities (MTNs)are 6.5% per annum.An existing MTN with a face value of USD 1 million,paying 7.3% per annum coupons and maturing in three years trades currently at a price of:

Accepted Answer

A)  $982 371.28 
B)  $1 000 000.00 
C)  $1 049 367.68 
D)  $1 678 976.97 
A)  $982 371.28 
B)  $1 000 000.00 
C)  $1 049 367.68 
D)  $1 678 976.97

Question 18

The preliminary prospectus for an issue of eurobonds is called a:

Accepted Answer

A)  letter of commitment. 
B)  leading prospectus. 
C)  red herring. 
D)  tombstone. 
A)  letter of commitment. 
B)  leading prospectus. 
C)  red herring. 
D)  tombstone.

Question 19

Using American depository receipts,a foreign borrower may issue new equity to the public in the US market with the aid of a custodian bank in that country.

Accepted Answer

A) True 
 B)False

Question 20

The generally lower default risk of eurocurrency loans is a result of the fact that:

Accepted Answer

A)  eurocurrency markets are more regulated than domestic markets. 
B)  loans are made to medium-to-large corporations and governments. 
C)  loans are for very high denominations. 
D)  many loans only pay interest at maturity. 
A)  eurocurrency markets are more regulated than domestic markets. 
B)  loans are made to medium-to-large corporations and governments. 
C)  loans are for very high denominations. 
D)  many loans only pay interest at maturity.

A euro floating rate note differs from regular eurobonds in that it:

One of the advantages of attaching a provision with a loan for it to be converted into a transferable loan certificate is that:

The rate at which an issuer is willing to sell a euronote is called the:

A probable advantage of Australian dollar eurobonds for borrowers is that:

A _______ is an unsecured,negotiable,short-term note that is issued in euromarkets and many domestic markets.

One of the advantages to the corporation of an underwriting syndicate for the issue of notes under a euronote issuance facility is that it:

Which of the following is NOT an advantage for US investors in ADRs?

Deregulation of the international financial system and the process of globalisation in the early 1980s encourage:

Eurocurrency markets are:

For a large eurocurrency loan,the _____ generally acts as a provider of funds.

Loans with provisions that allow their conversion into securities and sale with an endorsement to third parties (who are then registered as the new lenders)are:

A/An _______ is a foreign debt security denominated in US dollars issued into the US capital markets by a Japanese firm.

A Yankee bond is a bond that is issued by a US company into a foreign country and denominated in that country's currency.

Which of the following statement is NOT an example of overseas borrowing by the Australian company Telstra?

The advantage(s)of an ADR program for a corporation is/are:

Currently the yields for fixed-interest euromarket securities (MTNs)are 6.5% per annum.An existing MTN with a face value of USD 1 million,paying 7.3% per annum coupons and maturing in three years trades currently at a price of:

The preliminary prospectus for an issue of eurobonds is called a:

Using American depository receipts,a foreign borrower may issue new equity to the public in the US market with the aid of a custodian bank in that country.

The generally lower default risk of eurocurrency loans is a result of the fact that:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Exam 11: International Debt Markets

A euro floating rate note differs from regular eurobonds in that it:

One of the advantages of attaching a provision with a loan for it to be converted into a transferable loan certificate is that:

The rate at which an issuer is willing to sell a euronote is called the:

A probable advantage of Australian dollar eurobonds for borrowers is that:

A _______ is an unsecured,negotiable,short-term note that is issued in euromarkets and many domestic markets.

One of the advantages to the corporation of an underwriting syndicate for the issue of notes under a euronote issuance facility is that it:

Which of the following is NOT an advantage for US investors in ADRs?

Deregulation of the international financial system and the process of globalisation in the early 1980s encourage:

Eurocurrency markets are:

For a large eurocurrency loan,the _____ generally acts as a provider of funds.

Loans with provisions that allow their conversion into securities and sale with an endorsement to third parties (who are then registered as the new lenders)are:

A/An _______ is a foreign debt security denominated in US dollars issued into the US capital markets by a Japanese firm.

A Yankee bond is a bond that is issued by a US company into a foreign country and denominated in that country's currency.

Which of the following statement is NOT an example of overseas borrowing by the Australian company Telstra?

The advantage(s)of an ADR program for a corporation is/are:

Currently the yields for fixed-interest euromarket securities (MTNs)are 6.5% per annum.An existing MTN with a face value of USD 1 million,paying 7.3% per annum coupons and maturing in three years trades currently at a price of:

The preliminary prospectus for an issue of eurobonds is called a:

Using American depository receipts,a foreign borrower may issue new equity to the public in the US market with the aid of a custodian bank in that country.

The generally lower default risk of eurocurrency loans is a result of the fact that:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters