Question 1

Eurocurrency can be created anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 2

How does a global capital market,as compared to a purely domestic market,benefit investors?

Accepted Answer

The answer of How does a global capital market,as compared...

Question 3

What are foreign bonds?

Accepted Answer

The answer of What are foreign bonds?...

Question 4

Hedge funds position themselves to make "long bets" on assets that they think will increase in value.

Accepted Answer

A) True 
 B)False

Question 5

Describe the factors that make the Eurobond market attractive.

Accepted Answer

The answer of Describe the factors that make the Eurobond...

Question 6

Explain various types of capital market loans.

Accepted Answer

The answer of Explain various types of capital market loans....

Question 7

Eurobonds fall within the regulatory domain of European Economic Community.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true of the deregulation of financial industry?

Accepted Answer

A)  Countries can strengthen the global capital market by encouraging strict regulations. 
B)  Financial services have historically been the most deregulated of all industries. 
C)  Deregulation helped the development of an international capital market. 
D)  Deregulation compels financial services companies to remain as domestic companies.

Question 9

The cost of capital is higher in a global market than in a purely domestic capital market.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of fixed-rate bonds?

Accepted Answer

A)  Returns from fixed-rate bonds are dependent on the profitability of the issuing company. 
B)  Investors get back the face value of the bond at maturity of fixed-rate bonds. 
C)  Fixed-rate bonds issue cash payoffs only at maturity of fixed-rate bonds. 
D)  Investors get a share of the company's profit when using fixed-rate bonds.

Question 11

ABB Bank is a financial corporation located in England and uses euro as its official currency.The company borrows 1 million U.S.dollars from a bank based in United States.ABB will be at a disadvantage if _____.

Accepted Answer

A)  Euro appreciates against all currencies 
B)  U.S. dollar appreciates against Euro 
C)  U.S. dollar depreciates against Euro 
D)  fixed exchange rates are used for the transaction

Question 12

Systematic risk refers to movements in a stock portfolio's value that are _____.

Accepted Answer

A)  attributable to macroeconomic forces affecting an economy 
B)  specific to the firm or individuals who invest in a portfolio 
C)  attributable to factors pertaining to an individual firm 
D)  specific to the company that facilitates the investment portfolio

Question 13

Depositors are not protected against bank failures in the Eurocurrency market.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Accepted Answer

A)  A global market reduces the liquidity of investments and increases the chances of incurring losses. 
B)  Investments in the global capital market are faced with a lack of quality information. 
C)  Investments in the global capital market are not conducive to diversification. 
D)  The cost of capital is more in a global market and this increases the level of risk associated with it.

Question 15

Domestic currency deposits are regulated in most industrialized countries.

Accepted Answer

A) True 
 B)False

Question 16

How can a borrower hedge against unpredictable movements in exchange rates?

Accepted Answer

The answer of How can a borrower hedge against unpredictable...

Question 17

An Italian corporation issues a bond denominated in dollars.This is an example of a _____.

Accepted Answer

A)  foreign bond 
B)  Eurobond 
C)  micro bond 
D)  regulatory bond

Question 18

What is a capital market? Define market makers.

Accepted Answer

The answer of What is a capital market? Define market...

Question 19

A debt loan requires a corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

Accepted Answer

A) True 
 B)False

Question 20

As investors increase the number of stocks in their portfolio,the portfolio's risk _____.

Accepted Answer

A)  increases initially and declines later 
B)  declines slowly and steadily 
C)  increases exponentially beyond a point 
D)  declines rapidly in the beginning

Exam 12: The Global Capital Market

Eurocurrency can be created anywhere in the world.

How does a global capital market,as compared to a purely domestic market,benefit investors?

What are foreign bonds?

Hedge funds position themselves to make "long bets" on assets that they think will increase in value.

Describe the factors that make the Eurobond market attractive.

Explain various types of capital market loans.

Eurobonds fall within the regulatory domain of European Economic Community.

Which of the following statements is true of the deregulation of financial industry?

The cost of capital is higher in a global market than in a purely domestic capital market.

Which of the following is true of fixed-rate bonds?

ABB Bank is a financial corporation located in England and uses euro as its official currency.The company borrows 1 million U.S.dollars from a bank based in United States.ABB will be at a disadvantage if _____.

Systematic risk refers to movements in a stock portfolio's value that are _____.

Depositors are not protected against bank failures in the Eurocurrency market.

Which of the following is a reason why the global capital market is increasingly becoming speculative?

Domestic currency deposits are regulated in most industrialized countries.

How can a borrower hedge against unpredictable movements in exchange rates?

An Italian corporation issues a bond denominated in dollars.This is an example of a _____.

What is a capital market? Define market makers.

A debt loan requires a corporation to repay a predetermined portion of the loan amount at regular intervals regardless of how much profit it is making.

As investors increase the number of stocks in their portfolio,the portfolio's risk _____.