Chapter 18 Test Bank

Chapter 18 Test Bank - CHAPTER 18 International Aspects of...

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CHAPTER 18 International Aspects of Financial Management I. DEFINITIONS Topic: AMERICAN DEPOSITORY RECEIPT 1. A security that is issued in the United States that represents shares of a foreign stock and allows that stock to be traded in the United States is called a(n) ___________________. A) American depository receipt B) Yankee bond C) Yankee stock D) Eurostock E) foreign obligation trust certificate Answer: A Topic: CROSS-RATE 2. The implicit exchange rate between currencies found from explicit exchange rates quoted in some third currency is called a(n) ___________________. A) open exchange rate B) cross-rate C) backward rate D) forward rate E) interest rate Answer: B Topic: EUROBONDS 3. International bonds issued in multiple countries, but denominated in a common currency, are called _____________________. A) Treasury bonds B) Bulldog bonds C) Eurobonds D) Yankee bonds E) Samurai bonds Answer: C Topic: EUROCURRENCY 4. Money deposited in a financial center outside the country whose currency is involved is called: A) A foreign depository receipt. B) An international exchange certificate. C) Euroyen. D) Eurocurrency. E) Eurodollars.
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Answer: D
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Topic: FOREIGN BONDS 5. International bonds issued in a single country, and denominated in that country's currency, are called _____________. A) Treasury bonds B) Eurobonds C) gilts D) Brady bonds E) foreign bonds Answer: E Topic: GILTS 6. Gilts are government securities issued by ______________________. A) Britain and Ireland B) Japan C) Germany D) Australia and New Zealand E) Italy Answer: A Topic: LONDON INTERBANK OFFER RATE 7. The rate most international banks charge one another for overnight Eurodollar loans is called the __________________________ A) Eurodollar yield to maturity B) London Interbank Offer Rate C) Paris Opening Interest Rate D) United States Treasury Bill Rate E) International Prime Rate Answer: B Topic: FOREIGN EXCHANGE MARKET 8. The foreign exchange market is where: A) One country's stocks are exchanged for another's. B) One country's bonds are exchanged for another's. C) One country's currency is traded for another's. D) International banks make loans to one another. E) International businesses finalize import/export relationships with one another. Answer: C Topic: EXCHANGE RATE 9. The price of one country's currency expressed in terms of another country's currency is (the): A) By definition, one unit of currency. B) Time value of money (expressed via the first country's short-term interest rate). C) Depository rate. D) Exchange rate. E) Foreign interest rate.
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Answer: D
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Topic: SPOT TRADE 10. An agreement to trade currencies based on today's exchange rate, with the trade being settled within two business days, is called a ____________________. A)
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This note was uploaded on 05/10/2011 for the course FIN 3716 taught by Professor Fang during the Spring '10 term at LSU.

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Chapter 18 Test Bank - CHAPTER 18 International Aspects of...

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