Question 1

Suppose the French government imposes an interest rate ceiling on French bank deposits.What is the likely effect of this regulation?

Accepted Answer

A) reduce Eurofranc interest rates 
B) raise Eurofranc interest rates 
C) reduce the U.S.prime rate of interest 
D) raise the U.S.prime rate of interest

Question 2

Another name for the spread in a Eurocurrency loan is the _______.

Accepted Answer

A) drawdown 
B) term 
C) LIBOR rate 
D) Margin

Question 3

What is the relationship between the euro currency of the European Union and Eurocurrency?

Accepted Answer

A) The two have nothing to do with each other 
B) the euro is the underlying currency of the Eurocurrency markets 
C) the euro is the dominant and most common currency in the Eurocurrency markets 
D) the Eurocurrencies were first established using the European Union's euro

Question 4

The dominant currency of the Eurocurrency markets is the

Accepted Answer

A) U.S.dollar 
B) Euro 
C) Yen 
D) Pound

Question 5

Which one of the following does NOT cause eurocurrency spreads to be narrower than in domestic money markets?

Accepted Answer

A) Eurobanks don't have to maintain reserves on Eurodollar deposits 
B) Eurobanks face lower regulatory expenses 
C) national banks are often required to lend money to certain borrowers at concessionary rates 
D) U.S.Federal Reserve bank regulations to cap interest rates charged on loans in the U.S.

Exam 13: Functions of Euromarkets

Suppose the French government imposes an interest rate ceiling on French bank deposits.What is the likely effect of this regulation?

Another name for the spread in a Eurocurrency loan is the _______.

What is the relationship between the euro currency of the European Union and Eurocurrency?

The dominant currency of the Eurocurrency markets is the

Which one of the following does NOT cause eurocurrency spreads to be narrower than in domestic money markets?