Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.
If ABC Software simulta
C) conducting a currency swap
Scenario: ABC Software
ABC Software is a producer of educational software for children below the age of twelve. The company has operations in Switzerland and would like to expand its foreign operations with a new facility in China.ABC Software has had dif
C) is a country or territory who financial sector features very few regulations and few, if any, taxes
Which of the following is an exchange rate that requires delivery of the traded currency within two business days?
A) prime rate
B) spot rate
C) cross rate
D) forward rate
B) spot rate
Liquidity refers to the ease with which bondholders and shareholders may convert their investments to cash.
TRUE
FALSE
TRUE
________ is the simultaneous purchase and sale of foreign exchange for two different dates.
A) currency swap
B) currency arbitrage
C) currency speculation
D) currency hedging
A) currency swap
Which of the following factors is responsible for growth in the international equity market?
A) centrally planned economies
B) government partnerships
C) spread of countertrade
D) advent of cybermarkets
D) advent of cybermarkets
________ refers to shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows.
A) a bond
B) debt
C) stock
D) a draft
C) stock
International banks participate in the swap market by acting as broker or by undertaking half of a swap for its own account.
TRUE
FALSE
TRUE
A currency used as an intermediary to convert funds between two other currencies in the foreign exchange market is called a ________.
A) vehicle currency
B) local currency
C) community currency
D) private currency
A) vehicle currency
Fully convertible currencies are also called ________.
A) hard currencies
B) soft currencies
C) external currencies
D) unlimited currencies
A) hard currencies
Foreign bonds issued and traded in Asia outside Japan and normally denominated in dollars are called ________.
A) samurai bonds
B) Yankee bonds
C) dragon bonds
D) bulldog bonds
C) dragon bonds
Scenario: Sally Goes to Japan
Sally Johnson has identified a market for her company's products in Japan. She is excited about expanding her company, but knows that she needs to learn how the foreign exchange market works before she can successfully sell h
A) this is a direct quote on the yen
A(n) ________ is a system that allocates financial resources in the form of debt and equity according to their most efficient uses.
A) forward market
B) international equity market
C) eurocurrency market
D) capital market
D) capital market
Companies use interest arbitrage to find better interest rates abroad than those that are available in their home countries.
TRUE
FALSE
TRUE
Scenario: Trader's Paradise
Trader's Paradise is a global merchant that sells a variety of products. The company operates in forty-eight different countries (some developed, some developing) and some former communist countries. The company faces substanti
D) hard or convertible currency
Which of the following terms refers to a stock market with no central geographic location?
A) international bond market
B) foreign exchange market
C) cybermarket
D) capital market
C) cybermarket
Which of the following is used by governments for the convertibility of currencies in their countries?
A) multiple exchange rates
B) import deposit requirements
C) OTC market
D) countertrade
C) OTC market
In the interbank market, the process of aggregating the currencies that one bank owes another and then carrying out that transaction is called ________.
A) swapping
B) hedging
C) clearing
D) dumping
C) clearing
While designating an exchange rate, the numerator indicates the ________.
A) base currency
B) transaction currency
C) quoted currency
D) cross currency
C) quoted currency
________ is a decentralized exchange encompassing a global computer network of foreign exchange traders and other market participants.
A) Over-the-counter market
B) Securities exchanges
C) Eurocurrency market
D) Interbank market
A) Over-the-counter market