When there are no intervening cash flows between the time a deposit is made and the maturity of the deposit, the interest rates are said to be ________. A) discount rate B) compound interest rate C) covered interest rate D) spot interest rates ANSWER Answer: D
Date: September 19th, 2020
When one of the counterparties to an agreement globally may possibly fail to honor its contract, it is known as ________ risk. A) interest rate B) business C) transaction D) default ANSWER Answer: D
Date: September 19th, 2020
When the possibility exists that the government of a nation may impose some form of exchange controls or tax on foreign investment, the risk is known as ________ risk. A) political B) exchange controls C) business risk D) government ANSWER Answer: A
Date: September 19th, 2020
The entire process resulting from a check issue and mail by a payer company to a payee company (i.e., mail float, processing float, and clearing float) is disbursement float to the payer company and is collection float to the payee company. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If interest rate parity is in effect, there are ________. A) no profitable opportunities for covered interest arbitrage B) many opportunities for covered interest arbitrage C) currency dealers will arbitrage interest rate differentials in different countries D) currency dealers will be motivated to arbitrage forward market contracts ANSWER Answer: A
Date: September 19th, 2020
When it is said that there exists covered interest arbitrage opportunities, the term covered means the arbitrage is not exposed to A) exchange rate risk. B) manipulation by speculators. C) central bank interventions. D) government actions against the arbitrageurs. ANSWER Answer: A
Date: September 19th, 2020
What is the name for the bank market for deposits and loans that is denominated in a currency different to the currency of the country in which a bank is operating? A) internal currency market B) foreign exchange market C) external currency market D) interbank market ANSWER Answer: C
Date: September 19th, 2020
An example of an external currency market that was the first to form was the market where the dollar-denominated deposits were known as A) Euros. B) Eurodollars. C) petrodollars. D) exchange traded funds. ANSWER Answer: B
Date: September 19th, 2020
Interbank interest rates in various cities around the world are often the basis for interest rates in contractual loan agreements. What is the most important of these rates? A) London Interbank Offer Rate (LIBOR) B) Frankfurt Interbank Offer Rate (FIBOR) C) Hong Kong Interbank Offer Rate (HIBOR) D) Euro Interbank Offer Rate (EURIBOR) […]
Date: September 19th, 2020
When the forward premium or discount on the foreign currency equals the interest differential between the domestic and foreign interest rates divided by one plus the foreign interest rate, what is being satisfied? A) covered interest arbitrage B) interest rate parity C) domestic and foreign interest rates D) spot and forward exchange rates […]
Date: September 19th, 2020
