Global Finance

_is a loan instrument which promises to pay a fixed sum on a fixed date, and to pay interest to the lender

• Securities

• Bond

• Derivatives

• Shares

Which of the following is a Bretton Woods institution?

• The International Monetary Fund (IMF)

• The World Trade Organization (WTO)

• The International Labor Organization (ILO)

• The Securities and Exchange Commission (SEC)

The Washington consensus includes all but which one of the following?

• Market reforms

• Liberalizing FDI

• Nationalizing key industries

• Deregulation

A country's exporters favour all but which one of the following?

• A weak domestic currency

• A strong domestic currency

• A stable currency market

• A well regulated currency market

Lessons from the Asian financial crisis of 1997-8 included all but which one of the following?

• Global capital flows are invariably beneficial in developing economies

• Financial contagion can spread from one country to another

• Financial crisis can spread to the entire economy

• IMF conditions requiring market reforms can cause more economic hardship

Hedge funds are criticized for which one of the following reasons?

• Their activities can annoy corporate decision makers

• Their speculative activities can distort markets

• They make lots of money

• They attract people who like to gamble

Risks arising in derivatives trading include all but which one of the following?

• The value of securities is hard to assess

• Much of the trading is unregulated

• There are potentially huge profits to be made in such trading

• Speculative investors are active in trading

Why has globalization increased financial risks?

• Global production now involves many countries

• Global supply chains need increased sources of capital

• Global companies seek differing locations as part of their financial strategy

• Global capital flows can be highly volatile

Swelling sovereign debt is a worry in all but which one of the following circumstances?

• When tax revenues fall

• When economic growth slows

• When public spending is falling

• When public spending is spiraling out of control

Which of the following is an advantage of the pegged exchange rate?

• It protects the country against economic downturn

• It attracts foreign investors

• It leads to financial stability

• It deters speculators on the country's currency