Question 1

The supply of Eurodollar deposits is the result of

Accepted Answer

A) Federal Reserve Board policy 
B) World Bank policy 
C) a resolution of the member governments of the Organization of Economic Cooperation and Development OECD 
D) depositors holding dollars in non-US banks 
A) Federal Reserve Board policy 
B) World Bank policy 
C) a resolution of the member governments of the Organization of Economic Cooperation and Development OECD 
D) depositors holding dollars in non-US banks D

Question 2

The period over which the borrower may take down the loan is known as the

Accepted Answer

A) drawdown 
B) all-in-costs 
C) inverse floater 
D) swap 
A) drawdown 
B) all-in-costs 
C) inverse floater 
D) swap A

Question 3

Which one of the following is the MOST obvious example of the globalization of financial markets?

Accepted Answer

A) the creation of the European Union 
B) the rise of the Euromarkets 
C) the end of the Soviet Union 
D) the Asian currency crisis of 1997 
A) the creation of the European Union 
B) the rise of the Euromarkets 
C) the end of the Soviet Union 
D) the Asian currency crisis of 1997 B

Question 4

The period over which the borrower may take down a Eurocurrency loan is known as the ______.

Accepted Answer

A) maturity of the loan 
B) LIBOR rate 
C) Drawdown 
D) Margin 
A) maturity of the loan 
B) LIBOR rate 
C) Drawdown 
D) Margin

Question 5

The rate of interest paid at which high-quality borrowers can borrow at lower rates in the eurocurency markets is known as the ____ rate.

Accepted Answer

A) LIBOR 
B) prime 
C) LIBIL 
D) LIBID 
A) LIBOR 
B) prime 
C) LIBIL 
D) LIBID

Question 6

Which one of the following was NOT a cause for the creation of the Eurodollar market?

Accepted Answer

A) reserve requirements that lower a bank's profits 
B) special charges and taxes levied on domestic banking transactions 
C) interest rate ceilings on deposits and loans 
D) the lack of a requirement to hold a fractional reserve at the Federal Reserve of all deposits 
A) reserve requirements that lower a bank's profits 
B) special charges and taxes levied on domestic banking transactions 
C) interest rate ceilings on deposits and loans 
D) the lack of a requirement to hold a fractional reserve at the Federal Reserve of all deposits

Question 7

Debt denominated in a foreign currency that is launched,priced and traded in Asia is referred to as a _________ bond.

Accepted Answer

A) shogun 
B) samurai 
C) Asian-tiger 
D) dragon 
A) shogun 
B) samurai 
C) Asian-tiger 
D) dragon

Question 8

Eurocurrency spreads are __________ the domestic money market spreads.

Accepted Answer

A) wider than 
B) narrower than 
C) very similar to 
D) exactly the same as 
A) wider than 
B) narrower than 
C) very similar to 
D) exactly the same as

Question 9

Suppose that the current 90-day London interbank offer rate is 11% all rates are stated on an annualized basis.If next period's LIBOR is 10.5%,then a Eurodollar rate priced at LIBOR plus 1% will cost

Accepted Answer

A) 12% this period and 11.5% next period 
B) 11% this period and 10.5% next period 
C) 12% this period and 12% next period 
D) 11% this period and 11% next period 
A) 12% this period and 11.5% next period 
B) 11% this period and 10.5% next period 
C) 12% this period and 12% next period 
D) 11% this period and 11% next period

Question 10

One advantage of the Euro-commercial paper market over its American counterpart is

Accepted Answer

A) flexibility that allows borrowers a range of currencies 
B) larger size of transactions 
C) greater liquidity 
D) greater transparency 
A) flexibility that allows borrowers a range of currencies 
B) larger size of transactions 
C) greater liquidity 
D) greater transparency

Question 11

Which one of the following have NOT led to a closer relationship between interest rates in national and Eurocurrency money markets?

Accepted Answer

A) tax treaties that reduce the incidence of double taxation on foreign?source income 
B) elimination of currency controls 
C) reduced cost of transatlantic telecommunications 
D) increased government regulation of U.S.interest rates 
A) tax treaties that reduce the incidence of double taxation on foreign?source income 
B) elimination of currency controls 
C) reduced cost of transatlantic telecommunications 
D) increased government regulation of U.S.interest rates

Question 12

The ________ ,which resembles the U.S.commercial paper market,allows borrowers to issue their own short-term euronotes.

Accepted Answer

A) Eurobond market 
B) eurobank 
C) note issuance facility 
D) revolving underwriter facility 
A) Eurobond market 
B) eurobank 
C) note issuance facility 
D) revolving underwriter facility

Question 13

A dollar or other freely convertible currency deposited in a bank outside its country of origin is known as

Accepted Answer

A) a Eurocurrency 
B) fiat money 
C) a dragon bond 
D) a drawdown 
A) a Eurocurrency 
B) fiat money 
C) a dragon bond 
D) a drawdown

Question 14

If the current 180-day inter-bank Eurodollar rate is 15% all rates are stated on an annualized basis)and next period's LIBOR is 13%,then a Eurocurrency loan priced at LIBOR plus 1% will cost

Accepted Answer

A) 16% this period and 16% next period 
B) 15% this period and 14% next period 
C) 16% this period and 14% next period 
D) 15% this period and 15% next period 
A) 16% this period and 16% next period 
B) 15% this period and 14% next period 
C) 16% this period and 14% next period 
D) 15% this period and 15% next period

Question 15

Eurodollar deposits represent the liabilities of

Accepted Answer

A) European non-financial corporations 
B) the Organization of Petroleum Exporting Countries OPEC 
C) European banks and U.S.bank branches abroad 
D) European banks exclusively 
A) European non-financial corporations 
B) the Organization of Petroleum Exporting Countries OPEC 
C) European banks and U.S.bank branches abroad 
D) European banks exclusively

Question 16

Suppose the U.S.government imposes added taxes on interest paid on American bank deposits.What is the likely effect of this regulation?

Accepted Answer

A) raise Eurodollar interest rates 
B) reduce Eurodollar interest rates 
C) have no effect 
D) capital flight 
A) raise Eurodollar interest rates 
B) reduce Eurodollar interest rates 
C) have no effect 
D) capital flight

Question 17

One reason Eurocurrency deposit rates are higher than domestic rates is due to the fact that

Accepted Answer

A) they have no relationship to domestic rates 
B) they must be higher to attract domestic depositors 
C) most borrowers are well-known 
D) a smaller percentage of deposits can be lent out 
A) they have no relationship to domestic rates 
B) they must be higher to attract domestic depositors 
C) most borrowers are well-known 
D) a smaller percentage of deposits can be lent out

Question 18

In recent years,the Eurocurrency market has grown ___ the Eurobond market.

Accepted Answer

A) more slowly than 
B) at about the same rate as 
C) much more rapidly than 
D) with no clear pattern emerges relative to 
A) more slowly than 
B) at about the same rate as 
C) much more rapidly than 
D) with no clear pattern emerges relative to

Question 19

One reason for the multicurrency clause in the euro markets is to avoid

Accepted Answer

A) government actions to block funds 
B) local traders from arbitraging away profits 
C) exchange rate risk 
D) political instability 
A) government actions to block funds 
B) local traders from arbitraging away profits 
C) exchange rate risk 
D) political instability

Question 20

Historically,most Eurobonds have been ________ denominated.

Accepted Answer

A) U.S.dollar 
B) yen 
C) euro 
D) pound 
A) U.S.dollar 
B) yen 
C) euro 
D) pound

The supply of Eurodollar deposits is the result of

The period over which the borrower may take down the loan is known as the

Which one of the following is the MOST obvious example of the globalization of financial markets?

The period over which the borrower may take down a Eurocurrency loan is known as the ______.

The rate of interest paid at which high-quality borrowers can borrow at lower rates in the eurocurency markets is known as the ____ rate.

Which one of the following was NOT a cause for the creation of the Eurodollar market?

Debt denominated in a foreign currency that is launched,priced and traded in Asia is referred to as a _________ bond.

Eurocurrency spreads are __________ the domestic money market spreads.

Suppose that the current 90-day London interbank offer rate is 11% all rates are stated on an annualized basis.If next period's LIBOR is 10.5%,then a Eurodollar rate priced at LIBOR plus 1% will cost

One advantage of the Euro-commercial paper market over its American counterpart is

Which one of the following have NOT led to a closer relationship between interest rates in national and Eurocurrency money markets?

The ________ ,which resembles the U.S.commercial paper market,allows borrowers to issue their own short-term euronotes.

A dollar or other freely convertible currency deposited in a bank outside its country of origin is known as

If the current 180-day inter-bank Eurodollar rate is 15% all rates are stated on an annualized basis)and next period's LIBOR is 13%,then a Eurocurrency loan priced at LIBOR plus 1% will cost

Eurodollar deposits represent the liabilities of

Suppose the U.S.government imposes added taxes on interest paid on American bank deposits.What is the likely effect of this regulation?

One reason Eurocurrency deposit rates are higher than domestic rates is due to the fact that

In recent years,the Eurocurrency market has grown ___ the Eurobond market.

One reason for the multicurrency clause in the euro markets is to avoid

Historically,most Eurobonds have been ________ denominated.

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters

Exam 13: Functions of Euromarkets

The supply of Eurodollar deposits is the result of

The period over which the borrower may take down the loan is known as the

Which one of the following is the MOST obvious example of the globalization of financial markets?

The period over which the borrower may take down a Eurocurrency loan is known as the ______.

The rate of interest paid at which high-quality borrowers can borrow at lower rates in the eurocurency markets is known as the ____ rate.

Which one of the following was NOT a cause for the creation of the Eurodollar market?

Debt denominated in a foreign currency that is launched,priced and traded in Asia is referred to as a _________ bond.

Eurocurrency spreads are __________ the domestic money market spreads.

Suppose that the current 90-day London interbank offer rate is 11% all rates are stated on an annualized basis.If next period's LIBOR is 10.5%,then a Eurodollar rate priced at LIBOR plus 1% will cost

One advantage of the Euro-commercial paper market over its American counterpart is

Which one of the following have NOT led to a closer relationship between interest rates in national and Eurocurrency money markets?

The ________ ,which resembles the U.S.commercial paper market,allows borrowers to issue their own short-term euronotes.

A dollar or other freely convertible currency deposited in a bank outside its country of origin is known as

If the current 180-day inter-bank Eurodollar rate is 15% all rates are stated on an annualized basis)and next period's LIBOR is 13%,then a Eurocurrency loan priced at LIBOR plus 1% will cost

Eurodollar deposits represent the liabilities of

Suppose the U.S.government imposes added taxes on interest paid on American bank deposits.What is the likely effect of this regulation?

One reason Eurocurrency deposit rates are higher than domestic rates is due to the fact that

In recent years,the Eurocurrency market has grown ___ the Eurobond market.

One reason for the multicurrency clause in the euro markets is to avoid

Historically,most Eurobonds have been ________ denominated.

Introduction

The Determination of Exchange Rates

The International Monetary System

Parity Conditions in International Finance and Currency Forecasting

The Balance of Payments and International Economic Linkages

Country Risk Analysis

The Foreign Exchange Market

Currency Futures and Options Markets

Swaps and Interest Rate Derivatives

Measuring and Managing Translation and Transaction Exposure

Measuring and Managing Economic Exposure

International Financing and National Capital Markets

The Cost of Capital for Foreign Investments

Examining International Portfolio Investing

Corporate Strategy and Foreign Direct Investment

Capital Budgeting for the Multinational Corporation

Financing Foreign Trade

Current Asset Management and Short-Term Financing

Managing the Multinational Financial System

Filters