International Finance Quiz 5

The legal protection of shareholders is the same among countries.

• True

• False

The term LIBOR refers to international bonds that were issued in London.

• True

• False

Under the gold standard, each currency was convertible into gold at a specified rate, and the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold.

• True

• False

Which of the following is not true about syndicated loans?

• A borrower that receives a syndicated loan incurs various fees besides the interest rate.

• The loans must be denominated in U.S. dollars.

• The loans are provided by a group of banks to a borrower.

• All of these are true.

If a U.S. firm will need C$200,000 in 90 days to pay for imports from Canada and it wishes to avoid the risk from exchange rate fluctuations, it could:

• purchase a 90-day forward contract on Canadian dollars.

• sell a 90-day forward contract on Canadian dollars.

• purchase Canadian dollars 90 days from now at the spot rate.

• sell Canadian dollars 90 days from now at the spot rate.

The main participants in the international money market are:

• consumers.

• small firms.

• large corporations.

• small European firms needing European currencies for international trade.

Futures contracts are typically ____; forward contracts are typically ____.

• sold on an exchange; sold on an exchange

• sold in an over-the-counter market; sold on an exchange

• sold on an exchange; sold in an over-the-counter market

• offered by commercial banks; offered by commercial banks

A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.

• $13.64

• $15.00

• $16.50

• 16.50 euros

• None of these are correct.

An MNC's short-term financing decisions are satisfied in the ____ market, while its medium-term debt financing decisions are satisfied in the ____ market.

• international money; international credit

• international money; international bond

• international credit; international money

• international bond; international credit

• international money; international stock

Which currency is used the most to denominate Eurobonds?

• the British pound

• the Japanese yen

• the U.S. dollar

• the Swiss franc