Chapter 8 Currency Qs and As
1. What is the IMM?
International Monetary Market
2. What is the level of leverage used in currency future trading?
high leverage due to low initial margin requirements
3. What is the LIFFE?
London International Financial Futu
Economies of Scale: In microeconomics, economies of scale are the cost advantages that an
enterprise obtains due to expansion. There are factors that cause a producers average cost per
unit to fall as the scale of output is increased. "Economies of scale"
Chapter One: Multinational Enterprise and Multinational Financial Management.
A.)MNC supercedes the classical economic theory which is based of the doctrine of comparative
advantage (ability of a firm to produce a good at a lower opportunity cost than its
*Must formally document each hedging transaction from the outset
*Matches gains or losses form the derivative with gains or losses from the underlying transaction
*Removes these Hedging gains and losses from current income, however, any
European Markets By Brandon
What is the Eurocurrency Market composed of?
eurobanks who accept/maintain deposits of foreign currency
What is the dominant currency of the Eurocurrency Market?
the US dollar
What spurred the growth of the Eurodollar Marke
International Finances By Brandon
What are the three general sources of funds?
1. Internally-generated cash
2. Short-term external funds
3. Long-term external funds
What are the two main forms of corporate governance?
1. Anglo-Saxon (AS) Model
1.) the value of the multinational financial system rests in its ability to arbitrage in:
1. tax systems
2. financial markets
3. regulatory systems
2.) What is unbundling?
breaking up transfers into individual components
3.) What is tr
Measuring and Managing
1. Economic Exposure =
transaciton exposure + operation exposure
2. How does accouting exposure arise?
When translating from foreign currency to parent currency during the consolidation of book
3. What are the four basic me
Swaps and Interest Rates:
1. what is a Coupon Swap?
in interest rate swap where a fixed rate is exchanged for a floating rate
2. what is a Basis Swap?
in interest rate swap where a floating rate is exchanged for a floating rate based on different
Chapter 7 Q and As
1. What are the two levels of participation in the FX Market?
Wholesale (95%) - major banks
Retail - business customers
2. What are the two types of currency markets?
spot and forward
3. Who are the major participants in the spot market
Finance 456 Article Questions By Brandon
1. According to the BIS 2007 Preliminary Report on Foreign Exchange and Derivatives
Market Activity in April 2007, foreign exchange markets have seen little rise in activity
False - there has been an unprecedented
Bill of Lading: A bill of lading (sometimes abbreviated as B/L) is a document issued by a carrier
which details a shipment of merchandise and gives title of that shipment to a specified party.
[ Bills of lading are one of three important documents used in