Chapter 12: The Global Capital Marketing

What are the 2 main reasons that make the Global Capital Market growing rapidly?

• The advancement of Information technology and Deregulation of Government

• Globalization and The change in way human communicate

• Globalization and Deregulation of Government

• The change in way human communicate and The advancement of Information technology

When did the World Trade Organization brokered a deal that removed many of the restrictions on cross-border trade in financial services?

• Earlier 1980

• Late 1980

• Late 1997

• Earlier 1990

Which country in the late 1970’s created some changes that later on could make them one of the biggest investors among other countries in the world?

• US

• Japan

• Australia

• Singapore

Feldstein stated that patient money is still relatively rare because its owners and managers still prefer to keep most of it at home.

• True

• False

Answer explanation

To Feldstein, patient money is still relatively rare, primarily because although capital is free to move internationally, its owners and managers still prefer to keep most of it at home.

What drives speculative flows in global capital markets?

• Low investment risk

• Lack of information

• Need basic analysis

• Easy to maintain

Why is direct comparison of cross-border investment opportunities difficult for investors?

• Information technology barriers

• Economic policy differences

• Different accounting conventions in each country

• Frequent economic changes

Answer explanation

This gap is worsened by the different accounting conventions in each country, which makes the direct comparison of cross-border investment opportunities difficult for investors.

Here are the attractions of the Eurobond Market, except…

• An absence of regulatory interference.

• Less stringent disclosure requirements than in most international bond markets.

• Less stringent disclosure requirements than in most domestic bond markets.

• A favorable tax status

Eurocurrency allows banks to offer higher interest rates than in the home currency because their strict regulation to control the supply of money.

• True

• False

A system under which the exchange rate for converting one currency into another is continuously adjusted depending on the laws of supply and demand is...

• Floating Exchange Rate

• Floating Eurobond rate

• Fixed Eurobond Rate

• Fixed Exchange Rate

The larger pool of investors in an international market implies that

• investors will be able to pay more

• investors will be able to pay less

• borrowers will be able to pay more

• borrowers will be able to pay less