bTokyo Stock Exchange . cNYSE Euronext . dLondon Stock Exchange .
ANS: C PTS: 1
81. Which of the following is not true about syndicated loans? aA borrower that receives a syndicated loan incurs various fees besides the . interest rate. bThe loans are only denominated in U.S. dollars. . cThe loans are provided by a group of banks to a borrower. . dThe loans are usually formed in 6 weeks or less. .
ANS: B PTS: 1
82. The interest rate on the syndicated loan depends on the: acurrency denominating the loan. . bmaturity of the loan. . ccreditworthiness of the borrower. . dinterbank lending rate. . eall of the above. .
ANS: E PTS: 1
83. Assume a U.S. firm has to pay for Korean imports in 60 days. It expects that Korean won
will depreciate, but it still wants to hedge its risk. What type of hedging is more appropriate in this situation: aBuy dollars forward . bSell dollars forward . cPurchase call option . dPurchase put option .
ANS: C PTS: 1
84. Certificates representing bundles of stock of non-U.S. firms are called: aEurobonds . bADRs . cFRNs . dEurobor .
ANS: B PTS: 1
85. Assume that the spot rate of the Singapore dollar is $.664. The ADR of a Singapore firm
is convertible into 3 shares of stock. The price of an ADR is $20. What is the share price of the firm in Singapore dollars? a10 . b13.28 . c30.12 . d39.84 .
ANS: A PTS: 1
86. Which of the following is not true regarding ADRs? aADRs are denominated in the currency of the stock's home country. . bADRs enable U.S. investors to avoid cross-border transactions . cADRs allow non-U.S. firms to tap into U.S. market for funds. . dADRs sometimes allow for arbitrage opportunities. .
ANS: A PTS: 1
94. Which of the following is not a possible bid/ask quotation for the Barbados dollar? a$.50/$.51 . b$.49/$.50 . c$.52/$.51 . d$.51/$.52 . eAll of the above are possible bid/ask quotations. .
ANS: C PTS: 1
95. Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide
to hedge your position by selling Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $.0095. You expect the spot rate in 60 days to be $.0090. How many dollars will you receive for the 5,000,000 yen 60 days from now if you sell yen forward? a$44,500 . b$45,000 . c$526 million . d$47,500 . e$556 million .
ANS: D PTS: 1
96. Which of the following is probably not an example of the use of forward contracts by an
MNC? aHedging pound payables by selling pounds forward . bHedging peso receivables by selling pesos forward . cHedging yen payables by purchasing yen forward . dHedging peso payables by purchasing pesos forward . eAll of the above are examples of using forward contracts. .
ANS: A PTS: 1
97. A quotation representing the value of a foreign currency in dollars is referred to as a(n)
____ quotation; a quotation representing the number of units of a foreign currency per dollar is referred to as a(n) ____ quotation. adirect; indirect . bindirect; direct . cdirect; direct . dindirect; indirect . ecannot be answered without more information .
ANS: A PTS: 1
98. You observe a quotation of the Japanese yen (￥) of $0.007. You are, however, interested
in the number of yen per dollar. Thus, you calculate the ____ quotation of ____ ￥/$. adirect; 142.86 . bindirect; 142.86 . cindirect; 150 . ddirect; 150 . eindirect; 0 .
ANS: B PTS: 1
99. Which of the following is not true regarding electronic communications networks
(ECNs)? aThey have a visible trading floor. . bTrades are executed by a computer network. . cThey have been created in many countries to match orders between buyers . and sellers. dThey allow investors to place orders on their computers. . eAll of the above are true. .
ANS: A PTS: 1
100. Which of the following is probably not appropriate for an MNC wishing to reduce its
exposure to British pound payables? aPurchase pounds forward . bBuy a pound futures contract . cBuy a pound put option . dBuy a pound call option .
ANS: C PTS: 1
101. Futures contracts are sold on exchanges and are consequently ____ than forward
contracts, which can be ____ to satisfy an MNC's needs. amore standardized; standardized . bmore standardized; custom-tailored . cmore custom-tailored; standardized . dmore custom-tailored; custom-tailored . eless standardized; custom-tailored .
ANS: B PTS: 1
102. An MNC's short-term financing decisions are satisfied in the ____ market, while its
medium debt financing decisions are satisfied in the ____ market. ainternational money; international credit . binternational money; international bond . cinternational credit; international money . dinternational bond; international credit . einternational money; international stock .
ANS: A PTS: 1