A bond that promises to pay the owner a single payment denominated in euros or pounds is known as a ________ bond. A) debenture B) variable interest rate C) pure discount D) foreign ANSWER Answer: C
Date: September 19th, 2020
The term covered means the investment is ________ transaction foreign exchange risk. A) hedged against B) exposed to C) completely free from D) structured to activate forward contracts that free it from ANSWER Answer: A
Date: September 19th, 2020
The difference between the interest rate that a bank charges on its loans and the interest rate that the banks pay their depositors is known as the A) percent spread. B) arbitrage opportunity. C) bid-ask spread. D) covered interest arbitrage opportunity. ANSWER Answer: C
Date: September 19th, 2020
When parity conditions are not in effect in currency and money markets, traders could make extraordinary profits from a practice known as ________. A) covered interest rate parity B) covered interest rate arbitrage C) triangular arbitrage D) forward market arbitrage ANSWER Answer: B
Date: September 19th, 2020
Which one of the following is NOT a reason for using hedges such as a synthetic forward? A) In some currency markets, forward contracts may not be available, but they can be manufactured using a money market hedge. B) Individual companies are not able to borrow and lend at the interest rates available in the […]
Date: September 19th, 2020
What are the savings of marginal bad debts under the proposed plan? (See Table 14.7) A) $500,000 B) $50,000 C) $10,000 D) $5,000 ANSWER B
Date: September 19th, 2020
What is the cost of the marginal cash discount? (See Table 14.7) A) $768,750 B) $300,000 C) $307,500 D) $230,625 ANSWER D
Date: September 19th, 2020
What is the net result of increasing the cash discount? (See Table 14.7) A) +$33,750 B) -$33,750 C) +$128,750 D) -$58,750 ANSWER C
Date: September 19th, 2020
When countries have pegged exchange rate systems, they often set up ________ to improve the credibility of the system in the eyes of the global traders. A) target zone systems B) futures markets for currencies C) currency board systems D) sterilized interventions ANSWER Answer: C
Date: September 19th, 2020
Which one of the following systems would most often be used by a developing economy? A) target zone B) currency board C) floating exchange rate D) crawling peg ANSWER Answer: D
Date: September 19th, 2020
