Mail float is the delay between the deposit of a check by a payee and the actual availability of the funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Collection float results from the lapse between the time that a firm deducts a payment from its checking account ledger and the time that funds are actually withdrawn from its accounts. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The empirical evidence indicates that interest rate parity is the norm, especially during periods of financial market ________. A) arbitrage B) turbulence C) profit-taking D) tranquility ANSWER Answer: D
Date: September 19th, 2020
What is the market portfolio? A) the large, well-diversified portfolio that investors should hold according to finance theory B) the large, well-diversified portfolio without international securities C) the portfolio that represents a global portfolio D) the portfolio with strictly domestic securities ANSWER Answer: A
Date: September 19th, 2020
Explain the bid—ask spread in the external currency market? What will be an ideal response? ANSWER Answer: The bid-ask spread in the external currency market is the difference between the bid rate, which is the interest rate that the bank pays on its deposits and the ask rate, which is the interest rate […]
Date: September 19th, 2020
The risk that is associated with an asset’s return arising from the covariance of the return with the return on a large, well-diversified portfolio is known as ________ risk. A) business B) exchange rate C) market D) systematic ANSWER Answer: D
Date: September 19th, 2020
Assuming that a firm has done all it can to stimulate customers to pay promptly and to select vendors offering the most attractive and flexible credit terms, it can further speed collections and slow disbursements by taking advantage of the “float&qu existing in the collection and payment systems. Indicate whether the statement is true or […]
Date: September 19th, 2020
Because systematic risk measures how much an asset’s return co-moves with the market, it ________. A) can be diversified away with the appropriate hedging B) cannot be diversified away C) is partially driven by idiosyncratic risk D) can be completely eliminated using international securities ANSWER Answer: B
Date: September 19th, 2020
Identify an external currency market and how it operates? What will be an ideal response? ANSWER Answer: An external currency market is an interbank market for deposits and loans that are denominated in currencies that are not the currency of the country in which the bank is operating. Its settlement procedures are identical […]
Date: September 19th, 2020
Given an example of how a money market hedge is constructed? What will be an ideal response? ANSWER Answer: If the underlying business transaction gives you a liability in foreign currency, you can borrow domestic currency, convert the principal from the borrowing into foreign currency, and invest the foreign currency thereby acquiring a […]
Date: September 19th, 2020
