Question 1

Large commercial banks play a major role in the international money market by accepting short-term deposits in various currencies, and channeling the money to corporations and government agencies that need to borrow those short-term funds in the desired currencies.

Accepted Answer

A) True 
 B)False

Question 2

Global regulations require that shareholders in all countries have the same rights wherever there are stock markets.

Accepted Answer

A) True 
 B)False  False

Question 3

The international money market is primarily served by:​

Accepted Answer

A)   ​the governments of European countries, which directly intervene in foreign currency markets.
B)   ​government agencies such as the International Monetary Fund that promote development of countries.
C)   ​several large banks that accept deposits and provide loans in various currencies.
D)   ​small banks that convert foreign currency for tourists and business visitors.E) B) and D)
F) B) and C)

Question 4

The degree of financial information that must be provided by public companies is the same in all countries.

Accepted Answer

A) True 
 B)False  False

Question 5

Shareholders have more voting power in some countries than in others.

Accepted Answer

A) True 
 B)False

Question 6

An MNC with receivables in Japanese yen purchases yen forward to hedge its exposure to exchange rate fluctuations.

Accepted Answer

A) True 
 B)False

Question 7

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.

Accepted Answer

A)   $13.64
B)   $15.00
C)   $16.50
D)   16.50 euros
E)   None of these are correct.F) A) and B)
G) D) and E)

Question 8

In general, investors are attracted to stock markets in countries that allow very limited voting rights for shareholders.

Accepted Answer

A) True 
 B)False

Question 9

​Futures contracts are typically ____; forward contracts are typically ____.

Accepted Answer

A)   ​sold on an exchange; sold on an exchange
B)   ​sold in an over-the-counter market; sold on an exchange
C)   ​sold on an exchange; sold in an over-the-counter market
D)   ​offered by commercial banks; offered by commercial banksE) A) and C)
F) C) and D)

Question 10

You observe a quotation of the Japanese yen (¥)  of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the ____ quotation of ____ ¥/$.​

Accepted Answer

A)   ​direct; 142.86
B)   ​indirect; 142.86
C)   ​indirect; 150
D)   ​direct; 150
E)   ​indirect; 0F) A) and B)
G) All of the above

Question 11

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Accepted Answer

A)   ​10
B)   ​13.28
C)   ​30.12
D)   ​39.84E) B) and C)
F) All of the above

Question 12

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:​

Accepted Answer

A)   ​about 4.99%.
B)   ​about 4.88%.
C)   ​about 4.65%.
D)   ​about 4.43%.E) A) and D)
F) A) and C) C

Question 13

Which of the following cannot be used to invest internationally?

Accepted Answer

A)   investment in MNC stocks
B)   American depository receipts (ADRs) 
C)   exchange-traded funds (ETFs) 
D)   international mutual funds
E)   All of these can be used to invest internationally.F) A) and B)
G) All of the above

Question 14

Global regulations prevent the internationalization of money markets.

Accepted Answer

A) True 
 B)False

Question 15

When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:​

Accepted Answer

A)   ​closing prices in the United States during the previous day.
B)   ​closing prices in Canada during the previous day.
C)   ​prevailing prices in locations where the foreign exchange markets are already open.
D)   ​officially set by central banks before the U.S. market opens.E) A) and B)
F) All of the above

Question 16

A Japanese yen is worth $.0080, and a Fijian dollar (F$)  is worth $.5900. What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen) ?

Accepted Answer

A)   73.75.
B)   125.
C)   1.69.
D)   0.014.
E)   None of these are correct.F) A) and B)
G) C) and E)

Question 17

Contagion effects represent a decline in a country's stock market and the effects are isolated in that market.

Accepted Answer

A) True 
 B)False

Question 18

A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency.

Accepted Answer

A) True 
 B)False

Question 19

Assume that $1 is equal to .85 euros and 98 yen. The value of the yen in euros is _______.

Accepted Answer

A)   .01
B)   118
C)   1.18
D)   .0087E) A) and D)
F) A) and C)

Question 20

The interest rate on a syndicated loan depends all of the following except:

Accepted Answer

A)   currency denominating the loan.
B)   maturity of the loan.
C)   creditworthiness of the borrower.
D)   loan provisions set by the International Monetary Fund.E) A) and C)
F) All of the above

Exam 3: International Financial Markets

Large commercial banks play a major role in the international money market by accepting short-term deposits in various currencies, and channeling the money to corporations and government agencies that need to borrow those short-term funds in the desired currencies.

Correct AnswerverifiedShow Answer

Global regulations require that shareholders in all countries have the same rights wherever there are stock markets.

Correct AnswerverifiedFalse

The international money market is primarily served by:​

Correct AnswerverifiedShow Answer

The degree of financial information that must be provided by public companies is the same in all countries.

Correct AnswerverifiedFalse

Shareholders have more voting power in some countries than in others.

Correct AnswerverifiedShow Answer

An MNC with receivables in Japanese yen purchases yen forward to hedge its exposure to exchange rate fluctuations.

Correct AnswerverifiedShow Answer

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.

Correct AnswerverifiedShow Answer

In general, investors are attracted to stock markets in countries that allow very limited voting rights for shareholders.

Correct AnswerverifiedShow Answer

​Futures contracts are typically ____; forward contracts are typically ____.

Correct AnswerverifiedShow Answer

You observe a quotation of the Japanese yen (¥) of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the ____ quotation of ____ ¥/$.​

Correct AnswerverifiedShow Answer

Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?​

Correct AnswerverifiedShow Answer

Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:​

Correct AnswerverifiedC

Which of the following cannot be used to invest internationally?

Correct AnswerverifiedShow Answer

Global regulations prevent the internationalization of money markets.

Correct AnswerverifiedShow Answer

When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:​

Correct AnswerverifiedShow Answer

A Japanese yen is worth $.0080, and a Fijian dollar (F$) is worth $.5900. What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen) ?

Correct AnswerverifiedShow Answer

Contagion effects represent a decline in a country's stock market and the effects are isolated in that market.

Correct AnswerverifiedShow Answer

A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency.

Correct AnswerverifiedShow Answer

Assume that $1 is equal to .85 euros and 98 yen. The value of the yen in euros is _______.

Correct AnswerverifiedShow Answer

The interest rate on a syndicated loan depends all of the following except:

Correct AnswerverifiedShow Answer

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False

The international money market is primarily served by:

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False

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Futures contracts are typically ; forward contracts are typically .

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You observe a quotation of the Japanese yen (¥) of $0.007. You are, however, interested in the number of yen per dollar. Thus, you calculate the quotation of ¥/$.

Correct Answer
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Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars?

Correct Answer
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Assume that a bank's bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid/ask percentage spread is:

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C

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When the foreign exchange market opens in the United States each morning, the opening exchange rate quotations will be based on the:

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